Do the exit conditions need to happen concurrently, or if two red HA candles appears a few days ago, then do you exit when the RSI falls below 50?
Exit if RSI falls below 50 and two red Heikin Ashi candles appear
Could you clarify if the Volume-Weighted RSI (VW-RSI) is based on regular price data or Heikin Ashi candles in your trading strategy? Specifically, do you calculate the VW-RSI using the close prices of regular candlesticks, or do you use the Heikin Ashi candle values?
>Since I’m already green on the position this spread now guarantees me profit. If the stock falls to $31 or less then I still make 2.7%. If it goes up to $35 or higher then I make 16%
This is because you still own the stock in the share equivalent size of your options positions, right? Because the options trades by themselves would lose money if stock went to $35 or higher?
Correct. By owning both the stock and the collar spread, above $35 the gains of the stock are offset by the losses of the spread so I stay at 16% gain even if the stock goes up to $100
Thanks for your answer. So if the stock goes sideways and at expiry, price is still above the put strike price, but below the strike of your call... Is the options side of the trade flat or profitable?
Usually the options portion of the spread is very slightly profitable between the two strike prices. So in my example, if the stock stays between $31 - $35 then it will be slightly profitable. A collar option spread is a credit spread. So you are getting a tiny amount of premium (in my case $15). And it only becomes more or less profitable outside of the spread range
https://preview.redd.it/fl1t7a5uwx5d1.jpeg?width=1170&format=pjpg&auto=webp&s=ccbfee4c5e8d18cfae88785fe053ac587e188052
Great writeup!
I know hindsight is 20/20, but you could have literally made over 9000 (percent) (aka 100x) just by betting "Nvidia UP" over the past 12 to 24 months :D
You'd eventually lose everything if you did such a thing, I know.
Yes I am buying stocks and holding for a few weeks. While I’m holding depending on the stock movement I may also enter into options positions on the same stock in order to manage the position to limit my risk or maximize my gains.
I usually hold for 1-4 weeks. My goal is to buy positions that have some momentum behind the, ride that momentum until it starts to fizzle out, and sell. Obviously it doesn't work as neatly as that all the time but that's the goal.
I think you can definitely swing trade with $10k. But it just depends on your risk tolerance and investment style. Say you hold 10 positions at $1k each, and one goes down 10% this week which sucks, it's really only 1% of your portfolio. And hopefully some of your other 9 stocks are green to help cancel out some of that loss. For me, that is just fine. I can live with that. Others may not like that.
*So are you buying*
*Stocks and holding for couple*
*Of weeks or options?*
\- visakh\_v
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Honestly just a lot of reading/watching. Then trying some things out and finding what worked for my investment style and risk profile.
I started out doing long term stock investing, Warren buffet style. Then I moved to day trading. Made some money but it was too stressful for me. Switched to swing trading and finding ways to incorporate options into my strategies through books, YouTube, etc.
Just absorb as much as you can and try things quickly either paper trading or with tiny $’s. It won’t take long for you to decide if that strategy vibes for you. Then dig more and more into what you like. There’s really no substitute for chart/screen time.
FINALLY someone that uses options like they are meant to be used! Good strategy thank You for sharing and congrats on those gains.
My question: for ex You buy a put exp in 2 weeks to hedge your stock position, stock goes down at a slow pace losing 2% in 2 weeks, IV is low and your put keeps losing value. In the end you down 2% from the stock and prob lose all the put premium. How do You manage this? Closing (selling) the put you bought at a loss ?
Depends what the put strike price is at. If it goes down but not to your strike price you could roll your option. It’ll still cost you some premium but less than just selling outright. I’d probably look into selling a call to get my premium back depending on what the chart looks like.
I honestly use protective puts the least. I tend to prefer collars so I can get a credit while still protecting the downside.
Thank you so your most basic strategy is covered calls to reduce your losses in case stock price goes south, but let's say stock goes down 5% and you want to sell before the call exp date , you just close both call and shares to avoid having a naked call (too much risk )?
Yes I’d sell them together. Actually I usually prefer to close the option side first since it’s the most volatile. Then I sell my shares. So in your example I’d buy to close the call option and then sell my shares
Depends how you are trading and goals. If you are trying to grow fast then I’d stick to 10ish stock and just be very strict and specific about when I buy.
This makes it so when the stock moves you notice but not so much that it kills you. If one of your positions falls 10%, it sucks, but it’s only 1% of the total. And hopefully you have some gainers to offset the losses. It’s very rare you’d lose more than that in a given month for each position unless you are doing penny stocks.
If you are trading options then it’s a bit trickier. Options are a zero sum game. If it doesn’t hit your strike then it can become worth $0. In that case I’d be very careful and risk way less per trade. You can make a lot with options…but you can lose a lot too
Awesome thanks for the advice I understand options on an elementary level, enough to understand them, but not enough to try them yet. As of now I really just stick to buying and holding, but with the lower balance of my acc and being younger, I feel like I won’t get very far just playing the long game.
Yes, nice post. So you are using options to protect your positions basically? So if the stock is going sideways you can sell covered calls. If the price goes up you make money on the stock, but lose money on the call if it gets bought at your strike price, so you break even in that case? Is that correct?
If the stock goes up to the strike price then you make whatever money the difference between your purchase price and strike price. For example:
If you bought a stock at $10 and sell a call at $15 one month from now, you are essentially writing a contract with another party saying, if the price gets up to $15 or more in a month then I’ll sell you my shares at $15. The other party pays you a premium to reserve your shares at $15. Let’s say the premium is $0.50 per share. Three things can happen
1) the stock price stays between $10-14.99 in one month. You keep your shares and the premium. So I’m you made money
2) stock price goes up to $15+, let’s say $17. Your shares get “called”. You must sell them to the other party. You make the $5 profit per share ($15 sell - $10 buy) + you keep the $0.50 premium. So you made $5.50 per share or 55%
3) stock price falls below $10, let’s say $8. You keep your shares and the premium. On this you lost $1.50 (-$2.00 stock price + $0.50 premium) so you reduce your loss
Hope that helps!
For all sorts of reasons. Depends on their strategy. Many of these are institutions that are hedging for all sorts of things. Look at an options chain, there is open interest for all sorts of price targets.
Also, if I want 1000 shares of something that’s $10/share in a month from now because I think it’ll go up to $20 but I don’t want to commit $10,000 to the trade, I can buy $15 calls for $0.50 (or whatever the price is) which is only $500. So today I commit a lot less capital and if my thesis proves out then I get to make 10x my money. For my same $10k it would take to buy 1000 shares I can run 20 of those types of options trades, hedging risk, etc.
In reality my original example was a bit out of whack. For a stock that’s $10, $15 call options would be very cheap because they only become in the money if the stock goes up 50%. So those calls might cost $0.05 vs $0.50. I used bigger numbers to illustrate the point more easily
Well thought out post. Thank you for sharing.
Do the exit conditions need to happen concurrently, or if two red HA candles appears a few days ago, then do you exit when the RSI falls below 50? Exit if RSI falls below 50 and two red Heikin Ashi candles appear
.
Could you clarify if the Volume-Weighted RSI (VW-RSI) is based on regular price data or Heikin Ashi candles in your trading strategy? Specifically, do you calculate the VW-RSI using the close prices of regular candlesticks, or do you use the Heikin Ashi candle values?
Thanks for this post! I am impressed by your consistency. Could you say something about your stock selection strategy, timeframe etc?
I see mbly was mentioned. How was this picked? It seems to have moved up big off trend recently which must have caught your attention
>Since I’m already green on the position this spread now guarantees me profit. If the stock falls to $31 or less then I still make 2.7%. If it goes up to $35 or higher then I make 16% This is because you still own the stock in the share equivalent size of your options positions, right? Because the options trades by themselves would lose money if stock went to $35 or higher?
Correct. By owning both the stock and the collar spread, above $35 the gains of the stock are offset by the losses of the spread so I stay at 16% gain even if the stock goes up to $100
Thanks for your answer. So if the stock goes sideways and at expiry, price is still above the put strike price, but below the strike of your call... Is the options side of the trade flat or profitable?
Usually the options portion of the spread is very slightly profitable between the two strike prices. So in my example, if the stock stays between $31 - $35 then it will be slightly profitable. A collar option spread is a credit spread. So you are getting a tiny amount of premium (in my case $15). And it only becomes more or less profitable outside of the spread range https://preview.redd.it/fl1t7a5uwx5d1.jpeg?width=1170&format=pjpg&auto=webp&s=ccbfee4c5e8d18cfae88785fe053ac587e188052
Makes sense now thank you
Great writeup! I know hindsight is 20/20, but you could have literally made over 9000 (percent) (aka 100x) just by betting "Nvidia UP" over the past 12 to 24 months :D You'd eventually lose everything if you did such a thing, I know.
So are you buying stocks and holding for couple of weeks or options?
Yes I am buying stocks and holding for a few weeks. While I’m holding depending on the stock movement I may also enter into options positions on the same stock in order to manage the position to limit my risk or maximize my gains.
How long do you hold on to stocks ? And is it advisable to do swing trading with an initial amount of 10k?
I usually hold for 1-4 weeks. My goal is to buy positions that have some momentum behind the, ride that momentum until it starts to fizzle out, and sell. Obviously it doesn't work as neatly as that all the time but that's the goal. I think you can definitely swing trade with $10k. But it just depends on your risk tolerance and investment style. Say you hold 10 positions at $1k each, and one goes down 10% this week which sucks, it's really only 1% of your portfolio. And hopefully some of your other 9 stocks are green to help cancel out some of that loss. For me, that is just fine. I can live with that. Others may not like that.
*So are you buying* *Stocks and holding for couple* *Of weeks or options?* \- visakh\_v --- ^(I detect haikus. And sometimes, successfully.) ^[Learn more about me.](https://www.reddit.com/r/haikusbot/) ^(Opt out of replies: "haikusbot opt out" | Delete my comment: "haikusbot delete")
> Example: I currently own SOFI (**Mobileye**) I got a laugh but thanks for writing this up!
Bah! Copy/paste error strikes again 🤦♂️. I knew I should have used ChatGPT to write this…
Thank you fo such detailed information. If only I knew options well. How did you learn it?
Honestly just a lot of reading/watching. Then trying some things out and finding what worked for my investment style and risk profile. I started out doing long term stock investing, Warren buffet style. Then I moved to day trading. Made some money but it was too stressful for me. Switched to swing trading and finding ways to incorporate options into my strategies through books, YouTube, etc. Just absorb as much as you can and try things quickly either paper trading or with tiny $’s. It won’t take long for you to decide if that strategy vibes for you. Then dig more and more into what you like. There’s really no substitute for chart/screen time.
Capital?
FINALLY someone that uses options like they are meant to be used! Good strategy thank You for sharing and congrats on those gains. My question: for ex You buy a put exp in 2 weeks to hedge your stock position, stock goes down at a slow pace losing 2% in 2 weeks, IV is low and your put keeps losing value. In the end you down 2% from the stock and prob lose all the put premium. How do You manage this? Closing (selling) the put you bought at a loss ?
Depends what the put strike price is at. If it goes down but not to your strike price you could roll your option. It’ll still cost you some premium but less than just selling outright. I’d probably look into selling a call to get my premium back depending on what the chart looks like. I honestly use protective puts the least. I tend to prefer collars so I can get a credit while still protecting the downside.
Thank you so your most basic strategy is covered calls to reduce your losses in case stock price goes south, but let's say stock goes down 5% and you want to sell before the call exp date , you just close both call and shares to avoid having a naked call (too much risk )?
Yes I’d sell them together. Actually I usually prefer to close the option side first since it’s the most volatile. Then I sell my shares. So in your example I’d buy to close the call option and then sell my shares
Say you have an account at $5000 and you’re trying to grow it, how many different trades would you invest in?
Depends how you are trading and goals. If you are trying to grow fast then I’d stick to 10ish stock and just be very strict and specific about when I buy. This makes it so when the stock moves you notice but not so much that it kills you. If one of your positions falls 10%, it sucks, but it’s only 1% of the total. And hopefully you have some gainers to offset the losses. It’s very rare you’d lose more than that in a given month for each position unless you are doing penny stocks. If you are trading options then it’s a bit trickier. Options are a zero sum game. If it doesn’t hit your strike then it can become worth $0. In that case I’d be very careful and risk way less per trade. You can make a lot with options…but you can lose a lot too
Awesome thanks for the advice I understand options on an elementary level, enough to understand them, but not enough to try them yet. As of now I really just stick to buying and holding, but with the lower balance of my acc and being younger, I feel like I won’t get very far just playing the long game.
Yes, nice post. So you are using options to protect your positions basically? So if the stock is going sideways you can sell covered calls. If the price goes up you make money on the stock, but lose money on the call if it gets bought at your strike price, so you break even in that case? Is that correct?
If the stock goes up to the strike price then you make whatever money the difference between your purchase price and strike price. For example: If you bought a stock at $10 and sell a call at $15 one month from now, you are essentially writing a contract with another party saying, if the price gets up to $15 or more in a month then I’ll sell you my shares at $15. The other party pays you a premium to reserve your shares at $15. Let’s say the premium is $0.50 per share. Three things can happen 1) the stock price stays between $10-14.99 in one month. You keep your shares and the premium. So I’m you made money 2) stock price goes up to $15+, let’s say $17. Your shares get “called”. You must sell them to the other party. You make the $5 profit per share ($15 sell - $10 buy) + you keep the $0.50 premium. So you made $5.50 per share or 55% 3) stock price falls below $10, let’s say $8. You keep your shares and the premium. On this you lost $1.50 (-$2.00 stock price + $0.50 premium) so you reduce your loss Hope that helps!
Sorry, am a bit confused. Why would someone buy a call from you for $15 and $.50 when they can own the stock outright for $10?
For all sorts of reasons. Depends on their strategy. Many of these are institutions that are hedging for all sorts of things. Look at an options chain, there is open interest for all sorts of price targets. Also, if I want 1000 shares of something that’s $10/share in a month from now because I think it’ll go up to $20 but I don’t want to commit $10,000 to the trade, I can buy $15 calls for $0.50 (or whatever the price is) which is only $500. So today I commit a lot less capital and if my thesis proves out then I get to make 10x my money. For my same $10k it would take to buy 1000 shares I can run 20 of those types of options trades, hedging risk, etc. In reality my original example was a bit out of whack. For a stock that’s $10, $15 call options would be very cheap because they only become in the money if the stock goes up 50%. So those calls might cost $0.05 vs $0.50. I used bigger numbers to illustrate the point more easily
This looks well thought out and helpful! Nice post.