Posted by lionel319 @ Sat 13 Jan, 07, 04:35PM under Misc
It's been a tough fight between the BULLS and the BEARS for the past few weeks.
Finally, some light has been shaded for us. Seems like the BULLS has won the short term tug-of-war.
The resistance aroudn 2470 has been holding its place rather firm for the past few weeks. It was a bouncing game between the box range of 2385 - 2470 during that period. Everything has changed after what happened in the past 3 days. NASDAQ has shown signs of clear bullishness in the near short term.
1. 3 white soldiers formed during the past 3 days (they opened near their lows, and close near their tops, which makes the signs more significant)
2. What's more important is that, these 3 white bodys have finally breakthru the resistance at 2475.
3. DMI & MACD is showing strength in bullishness. (which can be seen from the blue line crossing above the red line)
4. Not to forget that, the volumn during the last 3 days was also above average.
5. Though the near trend seems bullish, the stochastic (not shown) shows overbought (above 80). We should anticipate for any retracement.
Finally, some light has been shaded for us. Seems like the BULLS has won the short term tug-of-war.
The resistance aroudn 2470 has been holding its place rather firm for the past few weeks. It was a bouncing game between the box range of 2385 - 2470 during that period. Everything has changed after what happened in the past 3 days. NASDAQ has shown signs of clear bullishness in the near short term.
1. 3 white soldiers formed during the past 3 days (they opened near their lows, and close near their tops, which makes the signs more significant)
2. What's more important is that, these 3 white bodys have finally breakthru the resistance at 2475.
3. DMI & MACD is showing strength in bullishness. (which can be seen from the blue line crossing above the red line)
4. Not to forget that, the volumn during the last 3 days was also above average.
5. Though the near trend seems bullish, the stochastic (not shown) shows overbought (above 80). We should anticipate for any retracement.
Posted by lionel319 @ Tue 28 Nov, 06, 02:24PM under TradeTips
| Options quotes follow a pattern that enables you to easily construct and interpret symbols once that formula is understood. The basic parts of an option symbol are: A root symbol is not the same as the ticker symbol. Please refer to the option chain for that ticker to find the corresponding root. Note: Yahoo also requires the ".X" suffix to identify the security type as an option. In conjunction with the option root symbol, you can utilize the tables below to assist you in creating or deciphering options symbols.
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Posted by lionel319 @ Wed 22 Nov, 06, 07:32PM under TradeTips
I personally use the Black Scholes Modal to calculate for the so-call Fair Market Value for all the Calls/Puts options that I am interested in buying before actually going into a trade. I will only buy those options only if they are at least equal or below the calculated Fair Market Value.
Here's the formula of the Black Scholes Modal:-
Lagend
St = Stock Price ($)
X = Strike Price ($)
r = Interest Rate (%)
T-t = Days left till expiration (year)
Here's the formula of the Black Scholes Modal:-
Lagend
St = Stock Price ($)
X = Strike Price ($)
r = Interest Rate (%)
T-t = Days left till expiration (year)
N(x) = Normal Cumulative Distribution
Roh = Volatility(%)
Ct = Calculated Fair Market Value for Call Option
Pt = Calculated Fair Market Value for Put Option
Anyway, if you are starting to get dierrhea after all those confusion above, don't worry. I've came out with the formula in EXCEL format. Just plug these formula into your EXCEL file, and you are ready to go.
Here's some differences in representation of the symbols compared to the above formula. The left column are the symbols used in the above formula, while the right column symbols are those used in my EXCEL file:-
St => S
Roh = Volatility(%)
Ct = Calculated Fair Market Value for Call Option
Pt = Calculated Fair Market Value for Put Option
Anyway, if you are starting to get dierrhea after all those confusion above, don't worry. I've came out with the formula in EXCEL format. Just plug these formula into your EXCEL file, and you are ready to go.
Here's some differences in representation of the symbols compared to the above formula. The left column are the symbols used in the above formula, while the right column symbols are those used in my EXCEL file:-
St => S
X => X
r => ir
Roh => v
T-t => t
d1 Formula
=(LN(S/X)+(ir+0.5*v*v)*(t))/(t^1/v)
d2 Formula
=d1-(t^0.5)*v
Ct Formula
=S*NORMSDIST(d1) - X * EXP( -ir *t) * NORMSDIST(d2)
Pt Formula
=X * EXP( -ir *t) * NORMSDIST(-d2) - S*NORMSDIST(-d1)
That's it. Anyway, if you still couldn't figure out the way of getting it done, just leave your email in the comment, and I will send you the Excel Spreadsheet.
(Note:- For a better understanding, visit here [http://www.riskglossary.com/link/black_scholes_1973.htm] )
T-t => t
d1 Formula
=(LN(S/X)+(ir+0.5*v*v)*(t))/(t^1/v)
d2 Formula
=d1-(t^0.5)*v
Ct Formula
=S*NORMSDIST(d1) - X * EXP( -ir *t) * NORMSDIST(d2)
Pt Formula
=X * EXP( -ir *t) * NORMSDIST(-d2) - S*NORMSDIST(-d1)
That's it. Anyway, if you still couldn't figure out the way of getting it done, just leave your email in the comment, and I will send you the Excel Spreadsheet.
(Note:- For a better understanding, visit here [http://www.riskglossary.com/link/black_scholes_1973.htm] )
Posted by lionel319 @ Sat 11 Nov, 06, 11:17AM under InPlay
==[ OPEN]==
Date: 11 Nov, 06
Price: $1.60 / contract (Underlying price: $29.10)
Units: 10 contracts ( Dec07 @ $30 Put)
Stop: $1.40
Target: ~ $2.60 (Underlying price: $28.00)
Risk/Reward: 3.73
LOW just breakthru the upslopping resistance line.
I see a pullback for the past few days, and it is now coming down again after the pullback.
There seems to be a soft resistance at $29.55 (horizontal resistance line).
RSI just cut thru from the top to bottom of the 50 mark.
I see all these as a short-term bearish indicator.
Furthermore, LOW will be announcing its company earning on the 20th Nov, and rumours has it that the announcement is not gonna be a good on. (research from www.earningswhispers.com)
Date: 11 Nov, 06
Price: $1.60 / contract (Underlying price: $29.10)
Units: 10 contracts ( Dec07 @ $30 Put)
Stop: $1.40
Target: ~ $2.60 (Underlying price: $28.00)
Risk/Reward: 3.73
LOW just breakthru the upslopping resistance line.
I see a pullback for the past few days, and it is now coming down again after the pullback.
There seems to be a soft resistance at $29.55 (horizontal resistance line).
RSI just cut thru from the top to bottom of the 50 mark.
I see all these as a short-term bearish indicator.
Furthermore, LOW will be announcing its company earning on the 20th Nov, and rumours has it that the announcement is not gonna be a good on. (research from www.earningswhispers.com)
Target price is around $28 for the underlying stock, which is about $1.00 from the point I entered, thus, I am setting ~~ $0.80 for my first target, and that will be ($1.60 + $0.80) $2.40.
Here's my Gameplan.
------------------------------------------------------------------------------------------------------
==[ GAME PLAN ]==
------------------------------------------------------------------------------------------------------
==[ CLOSE ]==
... Still Holding 100% ...
------------------------------------------------------------------------------------------------------
==[ CONCLUSION ]==
... Still Holding 100% ...
Posted by lionel319 @ Mon 06 Nov, 06, 02:27PM under InPlay
==[ OPEN]==
Date: 02 Nov, 06
Price: $0.25 / contract (Underlying price: $12.23)
Units: 4 contracts ( Jan07 @ $10 Put)
Stop: N/A
Target: N / A
Risk/Reward: N / A
JBLU shows a Doji Top 2 days ago.
This Doji occured on the previous overhead resistance which was set around mid June.
A day after the doji, a rather long black candle appeared, with a long top shadow.
Notice the RSI indicator? The RSI crossed from above 80 to the below 80 mark right after the Doji Top happened.
Date: 02 Nov, 06
Price: $0.25 / contract (Underlying price: $12.23)
Units: 4 contracts ( Jan07 @ $10 Put)
Stop: N/A
Target: N / A
Risk/Reward: N / A
JBLU shows a Doji Top 2 days ago.
This Doji occured on the previous overhead resistance which was set around mid June.
A day after the doji, a rather long black candle appeared, with a long top shadow.
Notice the RSI indicator? The RSI crossed from above 80 to the below 80 mark right after the Doji Top happened.
My initial plan was to short this stock, but somehow, I don't know why the system said that this stock is not allowed to be shorted. From my understsand, only stocks below $5 is not allowed to be shorted.
Anyway, I am very confident on this stock, and thus, I opted for PUT option.
Here's my Gameplan.
------------------------------------------------------------------------------------------------------
==[ GAME PLAN ]==
The cost of the contracts will be the RISK. ($0.25 x 100 x 4 = $100)
Target will be around the previous low set during early October, around $9.50.
------------------------------------------------------------------------------------------------------
==[ SELL ]==
... Still Holding 100% ...
------------------------------------------------------------------------------------------------------
==[ CONCLUSION ]==
... Still Holding 100% ...
------------------------------------------------------------------------------------------------------
==[ SELL ]==
... Still Holding 100% ...
------------------------------------------------------------------------------------------------------
==[ CONCLUSION ]==
... Still Holding 100% ...
Posted by lionel319 @ Mon 06 Nov, 06, 07:18AM under MyTrade
==[ OPEN]==
Date: 02 Nov, 06
Price: $34.00
Units: 150 (BUY)
Stop: $33.50
Target: $38.00
Risk/Reward: 6.00
T is having a 3 RISING VALLEY.
At the same time, a Rising Broadening Wedge is coming it's way.
Notice that, the price has just penetrated the recent highest peak, which is also the peak which completed the 3 rising valley, and is going thru a pullback and testing the previous resistance point at $33.75.
Target is set to $28. How do we get that?
Date: 02 Nov, 06
Price: $34.00
Units: 150 (BUY)
Stop: $33.50
Target: $38.00
Risk/Reward: 6.00
T is having a 3 RISING VALLEY.
At the same time, a Rising Broadening Wedge is coming it's way.
Notice that, the price has just penetrated the recent highest peak, which is also the peak which completed the 3 rising valley, and is going thru a pullback and testing the previous resistance point at $33.75.
Target is set to $28. How do we get that?
Range = Highest peak($34) - lowest valley($26) = $8
Percentage meeting price target = 50%
Target price = Breakthru point($34) + [ range($8) * Percentage(50%) ] = $38.
Initail Stop lost was placed at $33.50, which is 7cents below the previous minor low.
------------------------------------------------------------------------------------------------------
==[ GAME PLAN ]==
Risk / Reward is a huge 6.00.
That is why, although it hog up huge chunk of my total portfolio, I still trade it.
------------------------------------------------------------------------------------------------------
==[ CLOSE]==
Date: 03 Nov, 06
Price: $33.50
Units: 150 (SELL)
Return: -$95.00
After only one day .... yes..... ONE SINGLE day, the stock fluctuate to my stop limit and I was stopped out.
Percentage meeting price target = 50%
Target price = Breakthru point($34) + [ range($8) * Percentage(50%) ] = $38.
Initail Stop lost was placed at $33.50, which is 7cents below the previous minor low.
------------------------------------------------------------------------------------------------------
==[ GAME PLAN ]==
Risk / Reward is a huge 6.00.
That is why, although it hog up huge chunk of my total portfolio, I still trade it.
------------------------------------------------------------------------------------------------------
==[ CLOSE]==
Date: 03 Nov, 06
Price: $33.50
Units: 150 (SELL)
Return: -$95.00
After only one day .... yes..... ONE SINGLE day, the stock fluctuate to my stop limit and I was stopped out.
------------------------------------------------------------------------------------------------------
==[ CONCLUSION ]==
I seriously think i am having a big problem in my stop lost system.
I need to reevaluate my stop lost system.
All my previous stop lost seems to me too close.
Posted by lionel319 @ Thu 02 Nov, 06, 11:35AM under InPlay
==[ BUY ]==
Date: 01 Nov, 06
Price: $0.95 / contract (Underlying price: $16.43)
Units: 2 contracts ( June07 PUT @ $12.5)
Stop: N/A
Target: N / A
Risk/Reward: N / A
RHAT shows a DEAD CAT BOUNCE.
I see 3 Dead Cat Bounce within this year.
1st happened during late June.
2nd one occured late September.
The most recent one during mid October.
Every subsequence formed Dead Cat Bounce was followed by higher and higher volumn.
The first time when it happened in late June, rumors has it that RHAT will be facing a great competitor, as ORCL is secretly developing a team and are in plans of supporting LINUX, a service which has been provided by only RHAT all these while, and is the only source of income for RHAT.
2nd Dead Cat Bounce came in again when the rumors striked again.
The most recent Dead Cat Bounce happened when finally ORCL stepped out and announced that it is indeed a REALITY that they will be providing the same service of what currently RHAT is providing, at a cost of around 50% cheaper than what RHAT is charging its customers right now.
Price is currently below it's 50day / 200day MA.
What I had in mind is that, this line of duty of providing service to the open source market of LINUX is the main stream of income for RHAT all these while. Even if they were to compete with ORCL, they would have to slash their price to match with what ORCL will be providing, around a 50% reduction. Either that, or they will have to come up with another source of income to fight with the big giants in the software market (which I really don't think this is so possible, at this short of time). Either way, I see RHAT as heading towards a very difficult situation. It would be really a super duper gift to me if in the next coming few weeks, MSFT were to announce that they are joining in the stream in providing this service as well.
With all that in hand, I am heavily betting on the stock to make lower lows for the oncoming 3months or so.
------------------------------------------------------------------------------------------------------
==[ GAME PLAN ]==
The cost of the contracts will be the RISK. ($190)
Every subsequence formed Dead Cat Bounce was followed by higher and higher volumn.
The first time when it happened in late June, rumors has it that RHAT will be facing a great competitor, as ORCL is secretly developing a team and are in plans of supporting LINUX, a service which has been provided by only RHAT all these while, and is the only source of income for RHAT.
2nd Dead Cat Bounce came in again when the rumors striked again.
The most recent Dead Cat Bounce happened when finally ORCL stepped out and announced that it is indeed a REALITY that they will be providing the same service of what currently RHAT is providing, at a cost of around 50% cheaper than what RHAT is charging its customers right now.
Price is currently below it's 50day / 200day MA.
What I had in mind is that, this line of duty of providing service to the open source market of LINUX is the main stream of income for RHAT all these while. Even if they were to compete with ORCL, they would have to slash their price to match with what ORCL will be providing, around a 50% reduction. Either that, or they will have to come up with another source of income to fight with the big giants in the software market (which I really don't think this is so possible, at this short of time). Either way, I see RHAT as heading towards a very difficult situation. It would be really a super duper gift to me if in the next coming few weeks, MSFT were to announce that they are joining in the stream in providing this service as well.
With all that in hand, I am heavily betting on the stock to make lower lows for the oncoming 3months or so.
------------------------------------------------------------------------------------------------------
==[ GAME PLAN ]==
The cost of the contracts will be the RISK. ($190)
There is no obvious/set target right now for the REWARD.
We shall let time to develope what we are seeking for, and eventually put a trailling stop at every subsequent step.
------------------------------------------------------------------------------------------------------
==[ SELL ]==
... Still Holding 100% ...
------------------------------------------------------------------------------------------------------
==[ CONCLUSION ]==
... Still Holding 100% ...
We shall let time to develope what we are seeking for, and eventually put a trailling stop at every subsequent step.
------------------------------------------------------------------------------------------------------
==[ SELL ]==
... Still Holding 100% ...
------------------------------------------------------------------------------------------------------
==[ CONCLUSION ]==
... Still Holding 100% ...
Posted by lionel319 @ Thu 02 Nov, 06, 11:06AM under InPlay
==[ BUY ]==
Date: 01 Nov, 06
Price: $0.95 / contract (Underlying price: $35.90)
Units: 2 contracts ( May07 PUT @ $30)
Stop: N/A
Target: N / A
Risk/Reward: N / A
APOL shows a DEAD CAT BOUNCE.
I see 3 Dead Cat Bounce within this year.
1st happened during mid January.
2nd one occured late February.
The most recent one during mid October.
Every subsequence formed Dead Cat Bounce was followed by higher and higher volumn.
Neither of the Dead Cat Bounce has ever been breakched. (Price never went back and breakthru the gap formed)
Throughout the whole year, 50day MA has never been higher than it's 200day MA at any one time.
Price is currently below it's 50day / 200day MA.
With all that in hand, I am heavily betting on the stock to make lower lows for the oncoming 3months or so.
------------------------------------------------------------------------------------------------------
==[ GAME PLAN ]==
The cost of the contracts will be the RISK. ($190)
Every subsequence formed Dead Cat Bounce was followed by higher and higher volumn.
Neither of the Dead Cat Bounce has ever been breakched. (Price never went back and breakthru the gap formed)
Throughout the whole year, 50day MA has never been higher than it's 200day MA at any one time.
Price is currently below it's 50day / 200day MA.
With all that in hand, I am heavily betting on the stock to make lower lows for the oncoming 3months or so.
------------------------------------------------------------------------------------------------------
==[ GAME PLAN ]==
The cost of the contracts will be the RISK. ($190)
There is no obvious/set target right now for the REWARD.
We shall let time to develope what we are seeking for, and eventually put a trailling stop at every subsequent step.
------------------------------------------------------------------------------------------------------
==[ SELL ]==
... Still Holding 100% ...
------------------------------------------------------------------------------------------------------
==[ CONCLUSION ]==
... Still Holding 100% ...
We shall let time to develope what we are seeking for, and eventually put a trailling stop at every subsequent step.
------------------------------------------------------------------------------------------------------
==[ SELL ]==
... Still Holding 100% ...
------------------------------------------------------------------------------------------------------
==[ CONCLUSION ]==
... Still Holding 100% ...
Posted by lionel319 @ Thu 02 Nov, 06, 10:05AM under MyTrade
==[ BUY ]==
Date: 11 Oct, 06
Price: $13.82
Units: 200
Stop: $12.90
Target: $19.00
Risk/Reward: 4.93
ALGN shows a HIGH TIGHT FLAG.
I personally has a very good vibe towards this pattern.
No question asked. Further more, it has already created an INVERTED DEAD CAT BOUNCE, which further boost up my confidence in entering this trade.
Target is derived by the height of the flag ($12 - $6 = $6), add onto the breakthru point ($12), which is, $18.
Initail Stop lost was placed a few cents (9cents) below the previous minor open ($12.99), at $12.90.
With Everything in plan, we are set to go.
------------------------------------------------------------------------------------------------------
==[ GAME PLAN ]==
As you can see, this time around, i broke the rules a bit by allowing a little bit more of a risk than the usual $120. That's because of the juicy return that I am betting of, which if met, gives a whole bunch of 4.93 risk/reward ratio, or 36%, which I believe is worth the risk to take on.
------------------------------------------------------------------------------------------------------
==[ SELL ]==
Date: 1 Nov, 06
Price: $13.15 (Stop Limit)
Units: 200
Return: -$158.00
DJIA was down ....
NASDAQ was down ....
The entire market was in the RED region ....
ALGN took a sharp dip, and stopped me out from my position from my Stop Limit Order at $13.15 .
------------------------------------------------------------------------------------------------------
==[ CONCLUSION ]==
What a bad day. Get 2 of my positions stopped out.
*_*
Posted by lionel319 @ Thu 02 Nov, 06, 09:23AM under MyTrade
==[ BUY ]==
Date: 30 Oct, 06
Price: $23.15
Units: 150
Stop: $22.15
Target: $27.00
Risk/Reward: 3.22
CVNS is obviously trending on an uptrend lately.
This is somewhat not a true HIGH TIGHT FLAG, as the defination of a true HTF is that a stock rises 90% within 2 months.
Although this stock rises 90% within 3 months, I see this as rather a variation of a HTF.
As seen in the chart, other indicators are also showing signs of bullishness.
RSI has formed higher valleys, and so is Slow Stochastic.
Volumn is trending upwards too.
It has just gone thru a pullback to the test line 3 days ago.
Overall trend is moving upwards obviously.
All indicators are showing strength.
S&P is trending upwards, as well as DOW JONES.
It is pretty clear that everything is going UP UP UP !!!
S&P500
DOW JONES
Target is set to $27. How do we get that?
Date: 30 Oct, 06
Price: $23.15
Units: 150
Stop: $22.15
Target: $27.00
Risk/Reward: 3.22
CVNS is obviously trending on an uptrend lately.
This is somewhat not a true HIGH TIGHT FLAG, as the defination of a true HTF is that a stock rises 90% within 2 months.
Although this stock rises 90% within 3 months, I see this as rather a variation of a HTF.
As seen in the chart, other indicators are also showing signs of bullishness.
RSI has formed higher valleys, and so is Slow Stochastic.
Volumn is trending upwards too.
It has just gone thru a pullback to the test line 3 days ago.
Overall trend is moving upwards obviously.
All indicators are showing strength.
S&P is trending upwards, as well as DOW JONES.
It is pretty clear that everything is going UP UP UP !!!
S&P500
DOW JONES
Target is set to $27. How do we get that?
The height of the flag is $20 - $12 = $8.
The breakout point ($20) add towards the range ($8) gives us the estimated target price, which is around ~~$27.
Noticed that a PENNANT is slowly forming now, I entered a buy order of 150 units at a little above the previous all time high ($23.05) at $23.15, and got a filled order on a day later on the 30th of October, 2006.
Initail Stop lost was placed at $22.15. At first, i wanted to put a stop just right below the prior resistsance ($23.05), but then, it seems like it is too close, and thus, I opted for a dollar below my entry price, just to allow some fluctuation for the price to move around.
------------------------------------------------------------------------------------------------------
==[ GAME PLAN ]==
Risk, , is set to 3% at $170.
This risk is acceptable, as the Risk/Reward ratio is still meeting the 3 point limit.
------------------------------------------------------------------------------------------------------
==[ SELL ]==
Date: 1 Nov, 06
Price: $22.15
Units: 150
Result: -$174.00
Right after 2 days I entered the trade, everything went RED.
DJIA was down ....
NASDAQ was down ....
The entire market was in the RED region ....
CVNS took a sharp dip, and stopped me out from my position from my Stop Limit Order at $22.15 .
The breakout point ($20) add towards the range ($8) gives us the estimated target price, which is around ~~$27.
Noticed that a PENNANT is slowly forming now, I entered a buy order of 150 units at a little above the previous all time high ($23.05) at $23.15, and got a filled order on a day later on the 30th of October, 2006.
Initail Stop lost was placed at $22.15. At first, i wanted to put a stop just right below the prior resistsance ($23.05), but then, it seems like it is too close, and thus, I opted for a dollar below my entry price, just to allow some fluctuation for the price to move around.
------------------------------------------------------------------------------------------------------
==[ GAME PLAN ]==
Risk, , is set to 3% at $170.
This risk is acceptable, as the Risk/Reward ratio is still meeting the 3 point limit.
------------------------------------------------------------------------------------------------------
==[ SELL ]==
Date: 1 Nov, 06
Price: $22.15
Units: 150
Result: -$174.00
Right after 2 days I entered the trade, everything went RED.
DJIA was down ....
NASDAQ was down ....
The entire market was in the RED region ....
CVNS took a sharp dip, and stopped me out from my position from my Stop Limit Order at $22.15 .
------------------------------------------------------------------------------------------------------
==[ CONCLUSION ]==
I find nothing wrong with my plan, just that maybe the timing isn't right.
Better luck next time ;)
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- ChartPattern (7)
- InPlay (5)
- Misc (1)
- MyTrade (12)
- TradeTips (11)
Latest Posts
- Nasdaq's direction ( 13 Jan, 2007)
- How To Decipher Options Symbol
- Calculation of Fair Market Value for Options
- LOW - 11 Nov 06
- JBLU - 02Nov06 (Doji Top)
- T - 02Nov06 ( 3 Rising Valley )
- RHAT - 01Nov06 (Dead Cat Bounce)
- APOL - 01Nov06 (Dead Cat Bounce)
- ALGN - 11Oct06 (High Tight Flag)
- CVNS - 30Oct06 ( High Tight Flag / Pennant )
- Guest: Dear lionel319, Would appreciate it very much if U could please provide me with the Excel Spreadsheet. Thx. cg.kien@gmail.com in Calculation of Fair Market Value for Options
- Ling Shao: Nice sharing! Now I understand about the symbols of the options that I bought! Tks bro! in How To Decipher Options Symbol
- CL Lim: I use Bulkowski's techniques quite often (a refined version)....so I can 'smell' that we are speaking same languege :) in LOW - 11 Nov 06
- Ling Shao: You need to wait for the break even first right? meaning the first $1.60 that you earn will only break even your investment. The next $0.80 only is the profit.. in LOW - 11 Nov 06
- lionel: yupe. but i bought the contract at $1.60 when the underlying price is $29.10. If i were to earn $0.80, i would have to wait till the contract reaches $2.40. Same goes for the stock. The stock needs to drop by around 80cents or $1 in order for the contract to rise $0.80, thus, this is where i get ($29.10 - $1) == $28.00 Get it ? ;) in LOW - 11 Nov 06
- Ling Shao: Oh, tks for the reply! I've got $26.70 by ($29.10-$2.40). Because you are buying a 'Put'. So the price has to go down in order to profit right? in LOW - 11 Nov 06
- achew: yes, my first target is to earn 80cents / contract, but how did u get the $26.70 ? in LOW - 11 Nov 06
- achew: sure. The bolded text are the comments. The yellow boxes are the calculated values. The rest, are the ones that i should key in. Now, the first thing that i key in should be the value beside the Buy $ box. That's the buying price of my contract. Stop $ represents the stop lost of my trade. Once the contract reaches $1.4, i will definitely sell it of, thus, incuring a 20cents risk per contract. # of stocks is how many stocks which i plan to buy, which in this case, is 1000 stocks (as i plan to buy 10 contracts, thus, 10x100=1000 stocks) the 35% and 65% represents the percentage on holdings i'm willing to sell when the price reaches the column shown on the right side. Now let's go to the Risk/Reward section. See that my risk for this trade is $235. My reward for this trade is $877.5. The Risk/Reward ratio came up to 3.73. I'm thinking that, maybe from now on, i wlil only trade on any gameplan which only gives me a Risk/Reward ratio of 4 or better. Anything below 4 ain't worth my time in trading it. Well, this should give u a clearer picture. Wakata ? ;) in LOW - 11 Nov 06
- Ling Shao: hi lionel, mind to explain how to interpret ur Gameplan? btw, ur 1st target of $0.80, after taking into account of the buying price ($1.60) is total $2.40. So you stock price that you target is $26.70 right? in LOW - 11 Nov 06
- lionel319: CLLIM: Yes i am :) How did u know that ? ;) in RHAT - 01Nov06 (Dead Cat Bounce)
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