Stock Trading

[sweetandsour]

My small trading account is still all in cash, but the market is getting interesting. I may do some trading today.

[Del]

All eyes on are on the FED as new rates and guidance are scheduled for All Saints Day.

Mr. Market expects that there will not be another increase on Nov. 1.
http://primerate.fedprimerate.com/searc ... e_forecast

Powell is still hawkish.
https://www.cnbc.com/2023/10/20/5-thing ... er-20.html

Fed Chairman Jerome Powell said Thursday inflation is still — still! — too high but that the central bank sees its monetary policy working and that it would be “resolute” in its commitment to reaching 2%. The Fed’s strategy of aggressively hiking rates to cool decades-high inflation has seen the pace of monthly increases decelerate and the annual rate slow to 3.7%. “A few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal,” Powell said in a speech to the Economic Club of New York. “We cannot yet know how long these lower readings will persist, or where inflation will settle over coming quarters.” Powell said achieving the Fed’s 2% goal would likely require “a period of below-trend growth.”

Looks like we must endure more stagflation for a long while.
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My trading account is also stagnant. My condors have netted positive cash flow as my holding have dropped over recent months. My balance is still at the $75K that I was so excited to achieve last May. It's not so exciting in October.

I'm hoping for a bit of recover with Q3 earnings starting to be announced.

[sweetandsour]

I sold my first covered call this week, BP, with a strike of 40.5, and expiration of 10/20 (yesterday), for $34. My basis price was 38.75. I presume that it wasn't exercised, but the option details on Fidelity are difficult to read, at least without finding a legend somewhere, which I intend to do this weekend, and write a new call on Monday.
The stock climbed earlier in the week, almost to 41, so I would have thought that it would have been exercised. Maybe the call purchaser had their price target set at 41.5 or higher? Anyway, the price then dropped later in the week along with most of the market, and apparently I still own the stock, + $34.
I'll try to learn how to read Fidelity's option details in my account, and see what happens next week.

BTW, I've been reading about the "0DTE" options, which have become very popular. Looks much like day trading to me.

[Del]

I sold my first covered call this week, BP, with a strike of 40.5, and expiration of 10/20 (yesterday), for $34. My basis price was 38.75. I presume that it wasn't exercised, but the option details on Fidelity are difficult to read, at least without finding a legend somewhere, which I intend to do this weekend, and write a new call on Monday.
The stock climbed earlier in the week, almost to 41, so I would have thought that it would have been exercised. Maybe the call purchaser had their price target set at 41.5 or higher? Anyway, the price then dropped later in the week along with most of the market, and apparently I still own the stock, + $34.
I'll try to learn how to read Fidelity's option details in my account, and see what happens next week.

BTW, I've been reading about the "0DTE" options, which have become very popular. Looks much like day trading to me.

Never heard of ODTE options before....
https://www.nasdaq.com/articles/0dte-op ... trade-them

Yeah, it sounds like day trading. I would get myself into trouble, real fast. Happens every time I try to guess which way the market will go over any short term.

Same with market index futures. I have permission to trade them, but I don't.

[sweetandsour]

So far I'm negative ~ $200 with options. Still studying though, including a class on pricing this morning. I sold half of my BP, and bought some BKR, which saw an immediate increase in price but a subsequent price drop. I've got a limit covered call offered today for $25, exp 11/17. It probably will not fill, based on what the price is now doing.

I plan to study up on how to search for best stocks to use for selling calls.

[sweetandsour]

So far I'm negative ~ $200 with options. Still studying though, including a class on pricing this morning. I sold half of my BP, and bought some BKR, which saw an immediate increase in price but a subsequent price drop. I've got a limit covered call offered today for $25, exp 11/17. It probably will not fill, based on what the price is now doing.

I plan to study up on how to search for best stocks to use for selling calls.

Edit: Low and behold, it filled. So I got a $25 premium. I need to up my game a little.

[Del]

So far I'm negative ~ $200 with options. Still studying though, including a class on pricing this morning. I sold half of my BP, and bought some BKR, which saw an immediate increase in price but a subsequent price drop. I've got a limit covered call offered today for $25, exp 11/17. It probably will not fill, based on what the price is now doing.

I plan to study up on how to search for best stocks to use for selling calls.

August, September, and October were brutal months. SPX lost 10%. My holdings lost a lot of ground. And I made costly mistakes on my condors, taking more risk than I should to get a bit more premium... and then dealing with costly adjustments.

Truth is, my account balance isn't any higher than it was last May.

I have drawn $7500 over that time. Just under half of it was payments on the $20,000 loan that I funded into the account at the start of the year. That was planned, and has worked out well. The rest was to supplement our monthly budget for Bidenflation. (News reports say that the average family is spending $700 to $800 more per month for inflation. This has been my experience, as well.) I had to start drawing cash sooner than I wanted to.

I should count that $7500 as a great success and be happy. But I need my account balance to grow and compound to meet my future goals, so I'm not happy yet.

Anyhow, I keep my mind open and adjust my strategy to fit the conditions. Right now, I'm focusing on accepting less premium for less risk. I'll make faster progress by slowing down and being less greedy.
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On the bright side, the market dropped 10% and I didn't drop with it.

My account balance is up 27% YTD, even though it has been spinning wheels for 6 months. Still not bad performance. I just need to get some positive traction going again. A steady market recovery after the 3-month correction would help.

My actual return is 66%, after I account for the leverage loan and draws. This is what I'll pay taxes on.

In whole numbers, I'm up $15k in my balance and $23k in income. Starting balance (1/1/2023) was $55k.

[Del]

CAVA reported earnings yesterday evening. They are doing pretty well -- growing aggressively while operating at what is essentially break-even on profit (6 cents per share). They beat expectations, which was a loss of one penny per share. Either way, their strategy is to plow all of their earnings into opening new stores in new cities and states.

A key valuation metric scored well: Sales at existing stores increased by 14% over the last quarter. They are still bringing in new customers at old stores.

There was a big sell-off this morning, as all of the power-players made their after-earnings moves. I expect the stock price will recover in a few days.

I have 400 shares in my trading account.
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Crude oil and oil stocks got clobbered the last couple of days. I don't know what that's about.

[sweetandsour]

CAVA reported earnings yesterday evening. They are doing pretty well -- growing aggressively while operating at what is essentially break-even on profit (6 cents per share). They beat expectations, which was a loss of one penny per share. Either way, their strategy is to plow all of their earnings into opening new stores in new cities and states.

A key valuation metric scored well: Sales at existing stores increased by 14% over the last quarter. They are still bringing in new customers at old stores.

There was a big sell-off this morning, as all of the power-players made their after-earnings moves. I expect the stock price will recover in a few days.

I have 400 shares in my trading account.
===================================

Crude oil and oil stocks got clobbered the last couple of days. I don't know what that's about.

I see CAVA is near 30 this morning. I'd forgotten all about it.

Baker Hughes is still going sideways at ~34-35, at ~34.3 today. My strike price is 35, and expires next Friday. I made a $25 premium, and I hope it gets sold, so I can find something that gets a better premium. Either that or buy more shares.

[Del]

I see CAVA is near 30 this morning. I'd forgotten all about it.

Baker Hughes is still going sideways at ~34-35, at ~34.3 today. My strike price is 35, and expires next Friday. I made a $25 premium, and I hope it gets sold, so I can find something that gets a better premium. Either that or buy more shares.

I'd never heard of Baker Hughes before. They are an oil company. Their implied volatility is currently at 0.253.

Implied volatility for XLE is at 0.220. Basically all of the oil and energy companies have the same volatility, marching in lockstep.

For comparison, Volatility for SPX is 0.144. Russell 2000 is is 0.202.

If you want more premium, you need stocks that have higher implied volatility.

CAVA is a whopping 0.712!
Target is 0.458, although it should crush next week to about 0.35 after earnings are announced.
I have ULTA (Ulta Beauty, a retail cosmetic store) in my IRA. Implied volatility is 0.40.

NVDA is 0.534.
NVO (Novo Nordisk) is 0.361.

Most of these have share prices too high for our little trading accounts. But if you can spare $3100 for 100 shares of CAVA, which is trading at a swing low of 30.50 right now, then you can sell a two-week call at strike 33 for $35 premium (1.15%) -- plus $250 cap gain if it gets called out.

Also consider ARKK "innovative growth ETF", trading at $39.6 per share. Implied volatility is 0.39 today. It is pulling back from a recent surge, trading at new support level.