Quint, this was excellent. Thank you.  I’ve only been a member for a few days now and I am already seeing the light at the end of this dark tunnel .

I do have a question.  I was wondering why you use the 9 day moving average rather then the 10 day. Is this a personal preference or there a specific technical reason?  Also, I’d like to know if you use Simple moving average or Exponential moving average.

Thank you!

John

hiya Quint-

I saw this video when it was posted earlier and was watching INTC today, so I nibbled some just before the close. But I use calls and am wondering how that might modify your usual advice about legging in/fading and stops?

It isn’t as much of a problem with this particular trade, but between spreads and transaction costs (at least with a lot of contracts), I’ve found that options can be fairly inefficient. It’s also hard to guesstimate an option stop that corresponds to a particular price level in the underlying, so I just look to the underlying price to guide me rather than the contract price itself.

Anyway, my rule of thumb about stops is 2 x ATR adjusted daily from the purchase price, then from the current price once a fairly good profit is in place, but I think you are right about waiting until just before the close until actually entering an order. I gather that you prefer something more along the lines of looking at recent resistance that became support and would like to hear more about your stop methodology during the course of the videos.

I am enjoying your commentary and will be interested to see how well your calls pan out. Thanks.

hi Quint-

I rarely buy options with less than 90 days left until expiry and use them purely for trading. If you buy deep in the money, then the behavior is a lot more like a future than an option and you can get most of the benefits of a normal share buy without tying up as much capital.

Example- the ask on January 15.00 call for INTC is currently 12.05, so the position’s breakeven is 27.05. The underlying closed at 26.97, so the premium paid is .08 but delta is 1.0 and in theory there isn’t any time decay at present. The advantage of course is that you are in a $2,697 position for $1,205 and will track the price movements of the underlying very closely. The main disadvantage is that there is a clock ticking, but if a trade isn’t showing life within a month or so I am out anyway without much of a loss. If it does well and expiration is approaching, I would roll over to a further month and probably a higher strike.

To each his own, but this let’s me keep 90% of my account in bonds and CDs while still enjoying some big wins now and then at the expense of some smallish losses. What I don’t think will work is legging in and fading out at least on the scale that I operate, but we’ll see what happens on a trial basis. Thanks.

Hi Quint,

I see Logi has broken out in a big way today. I know better then to chase stocks so I am not buying it on this break out.  I am iterested to know how you play a stock that breaks out in this manner.  I would think you would wait for it to consolidate and form a base before attemping. Am I correct?

John.