How far down the Rabbit Hole you want to go?

After having a great last week and an eyeopener on the weekend we are continuing to enhance our Game. My principles.

• Whatever you are doing, be best, Melania Trump. Be the best in your field.
• This requires a lot of work and learning. Thus, dont be lazy and dont be mentally sleepy.
• You cannot cut corners on education or experience. You have to pay your dues.
• You need to be a little bit technical and analytic. You must love Numbers and have a basic understanding of Excel. Be less human helps a lot.
• You must fanatically fall in love with the subject matter.
• You must change your life for without you will continue to do what you did so far. 

I was asked more than two times now if I can teach. I cannot because I am not ready yet. Will I teach? Probably not. Maybe in schools to light up financial illiteracy. Can I give guidance? Yes, one time. You do what I suggest to you. If you cannot follow through dont ask me any further question. Dont waste my time. You have to proof yourself to me, not me to you. I am fine. 

I am way ahead down the rabbit hole and I love it.

While it is true that all the information you need is out there at your fingertip it is also true that you only need about 3% of it and the rest is background noise and distraction. It is NOT a get rich quick scheme even some people want you to believe it. Most beginners, as I in the beginning 10 years ago, have the need for the feeling of getting out of the Rat Race, QUICKLY and they long for that feeling of: Finally I found it, Trading. You can be a genius in no time. Yes, of course. 

There is the HERO to ZERO Rule. 90/90/90 

90% of traders, lose 90% of their account in 90 days. I have done it too.

Those who long for that Hero feeling will feel attracted to all the charlatans that are out there on the Internet selling to you what makes you feel good. They are selling your dream back to you. 

Yes, you need a mentor or pay for the "right" courses. Those who think they can develop it all by themselves think like the burglar who thinks he is smarter than the police or surveillance cameras. The novice trader thinks he is smarter than the market and the professionals. The Finance Industry has history, you dont. You are no one, darling.

Then there are those who make thousands of Dollars for a while despite they have no fundamental analysis. Luck runs out one day. Some people are looking at lines and candle patterns all day long, like the Oracle telling the future after throwing in some bones. 
All of them have no clue what the difference is between gambling and trading. The dumb money. And of course there is the lucky dumb money too. Some people are lucky risking all their money to make a fortune. I have seen it, been there, done it. I lost a fortune. Not my style anymore. I learnt. 

I spent about 1,000 hours on education since beginning of January, 10 hours a day, every day. If you think I can show you a trick and you copy it, you are mistaken. If I knew I would make you pay a lot.

One sort of people I do not like at all: Gold Diggers. People who are looking for the quick buck and are too lazy to work for it. 

One thing you cannot do without is support. You must have a wife that supports you without hesitation and questioning. You need to clarify and discuss the issue what if you lose it all. Will there be fight if you cant do it or if you run out of luck? You have to be totally open to your spouse and even show her what you did and planning to do. Over time they will learn. My village girl will be able to explain to you what a Bear Call Credit Spread is and what Deviation you set it up best! She will also tell you at what distance we put the Hedge and what it looks like in various instances. She can explain the skewness to you and how important the mean of a dataset is. She is really smart! I am so proud of her. She cant program though but that is a minor.

I am so proud that I am married to my wife who is super supportive and loving. In the very sense of the sentence, yes, she promised to make this marriage unforgettable for me and the best time of my life. I can feel it! Without her this would not be possible! She is the foundation of it all. I love you honey!

Now I can say it, and I will show what it is all about later, I cracked the jackpot. Not the floodgate but a crack in the market, which pulls money away from it. Like a little pipe you put into the river to water your fields. You dont flood them.

Lets continue the journey. I am still looking for a name of this project.

By the way, can you imagine this 5'2" of 90 lbs tiny girl jumps onto a 200 lbs 6' black 20 year old criminal kid, beating him up as much as she could and then obtaining injuries of it? She is a fighter. She takes no prisoners if you attack our family. Guaranteed. She is good now. Thank you Lord.

Analysis of a few ETFs and what the Distribution Curve means

Who can tell what the market will do tomorrow?

Stay away from the believe that lines in charts run the underlaying assets or that they can predict the future. The future is unknown. I dont know what the market will do tomorrow. I actually do not care. If it goes up or down or nowhere. But we can put the odds in our favor and that is how you make consistently money in the market. You take little bites here and there. Thats why I love options. They have uncountable combinations and limited risk if you do it right. 

Remember, we want to own the Bank on the Roulette Table.

We dont want to put the chips up on Black or Red. 

What do Distribution Curves tell you? Is it just stupid math? 

Ones you figure it out and can insert the data it shows you very clearly what to expect and what stocks or ETF to buy, to short, to credit Spread Trade. Here are a few examples I generated today and last night.

I compiled 5 years of weekly data from Yahoo Finance. Deriving the standard deviations, statistics of the mean, max and min and skewness. Spread Trades I do on weekly data sets and daily charts as the lowest time frame. The weekly data are good for a month and dont even have to be updated every week since the market stays within its usual parameters. 

Each asset has its own characteristic and attitudes. Like little teenagers with attitudes and good and bad habits.
And you see it in the analysis. GM for example has many more days doing down and not up. IWM is all over the place and runs up with the same speed as down and it wont stop doing it. QQQ has huge tail ends to the upside and tend not to go back that often. 

And I dont care much what a stock does during the day. My earnings will be calculated on Happy Fridays. And then I have alarms set for each trade to give me a warning in order to look at it, and a You-Must-Act-ALERT. Other than that my trading is mostly Excel Spread Sheets.

I am bringing this trading down to a very boring mechanical level. Just numbers and numbers.

ETF Review

This one will not make your money grow fast since the SPY is THE MARKET. It is a little leaning positive and the tails are considerable. Credit Spreads working pretty well here since 95% of the time everything stays within the 1st and 2nd deviation, the tail ends.

This is the DIA, the DJI market index ETF. The PUT side is flatter and hence more appealing for PUT Credit Spreads. Also this one wont make you big money if you bought it.

This is the QQQ. Nice to buy if you want to be a little bit better than the market. Great leaning to the upside with huge tail ends

This one is the IWM ETF which is all over the place. Seems to go up greatly and then also collapses with the same speed. I wouldnt buy it nor doing any spread trades on it.

This is TLT. Nice confinement. 97% it stays WITHIN the 2nd Std Dev. Only 3% of the time in the past 5 years it moved outside. Then consider that the Deviations means both sides! Only 3% in general it went outside BUT this means about 1.67% it hit the upside and 1.33% the down side. If you put your spreads here you run the bank.

Thats one way you analyze an asset. You use data. With the data you can also predict the weekly movements and the expected return in any given week, hence months and so on. 

Update Consideration on the Iron Condor

Even we can see that at the 2nd Std Dev the Short Call has only a Trigger rate of 3.16% and the Short Put has a trigger rate of 2.18%, we will NOT take this trade due to the fact our trade MUST have a DELTA of 10% or less. This is considered roughly also the possibility to be ITM but it is the rate of change in reality. For every Dollar the underlying moves up or down the option moves by 10 cent. Since we selling a double spread for a collectable premium we dont want the option to move too much since time decay THETA works in our favor.

The DELTA for the 2nd Std Dev is 20% and too high. We close or roll at 30%.

Here we can see what DELTA means. It is always negative for the PUTs and positive for the CALLs. a -0.0947 means 9.47% and -0.02045 means 20.45%. We need the 10% Criteria filled and a 20% is a no, no!

Here are the Strike Levels in the Daily Charts

And there goes the order

Tomorrow is Iron Condor Day

What Is an Iron Condor?

An iron condor is an options strategy consisting of two puts (one long and one short) and two calls (one long and one short), and four strike prices, all with the same expiration date. The iron condor earns the maximum profit when the underlying asset closes between the middle strike prices at expiration. In other words, the goal is to profit from low volatility in the underlying asset.

https://www.investopedia.com/terms/i/ironcondor.asp

Before we do that, remember to determine the probability of the trade to go south. We also have to determine the Standard deviation of the underlying /Stock. Options are DERIVATIVES. Their value derives from an underlaying assets, the stock or something else. It is a contract with obligations and rights between buyers and sellers if exercised. This is what we trade for the most part.

Tomorrow

We determined our Entries for the Short legs of the wings. 3rd Standard Deviation or a DELTA of =<10%

We collected our data from 5 years back and run them in Excel to determine standard deviation and probability of the trade. 

Remember, we want to be the bank in the Casino. 

We want to make the money.

We dont play the slot machines and rely on luck.

We have our "visual" Distribution curve with the Deviation, the mean and skewness, our statistics of the data sample.

Yes, we do our data on a weekly background! Then Excel will tell you everything else. What Call to buy or sell and what Put to buy or sell. It calculates the Premium collected. Here a $1.62 per contract times 100 shares. So 5 contracts make you $810.00 on contracts. Since the price at expiration cannot be on both strikes at the same time one side will always win. The 3rd Standard deviation also guarantees you with an average moving market up or down or sideways to make your money. Here the Short Put Strike has a chance to get triggered of 0.78%!

Why is this significant?

It means that out of 100 trades only less than 1 trade will hit the strike in an average market. 99 trades will make the total amount. At the strike the trade is not lost yet since the other side is much in the profit. We can either close it for a small loss and move on or we roll it out into the next month and collect more credit or we roll only the untested side to stay in the profits. There should even less loser then. 

We can also generate predictions what the average price of the underlaying should be if the market goes bad for 2,3, or 4 weeks in a row. This is indicated by the Avg Worst case Up or Down trend. We see that an average moving market will never hit the strike even after 4 weeks. We plan to hold the position for a max of 3 weeks and then close it for whatever profit. Of if it hits 50% profit before we also close it and establish a NEW position with new Strikes! So we also always stay out of trouble and the bank turns in money on a weekly base.

With the Volatility Index VIX we see that the markets are going up quite well. VIX is down. It was that far down last February 2020 before the Black Swan event, the China Virus. It is sailing much below the monthly average, the orange line. Very good environment for Iron Condors.

Thats it! Simple. No guessing involved. Only numbers and probabilities to consider. Stack the odds in your favor.

SPY 14 May 375/350 BULL PUT SPREAD

The markets moved higher today and the price action is very bullish but CANNOT continue at this pace. Our position with the SPY Credit Spread is 42% in the profit. Still 8% to go and we might hit it tomorrow.

The Rule for Exit:

• Close it when it reaches 50% of Max Profit plus all fees.
• Close after 21 days if it has a profit.
• If it is a loser wait until DELTA => 30% 
• If it is a loser wait until it is a winner

The S&P 500 hit new market high above 4,000! The momentum seems to stall for now. What will be the outlook for tomorrow?

SPY 350 / 375 14 May, BULL PUT SPREAD

I assume the market to be bullish, hence the official name. I would call it a PUT Credit Spread because I sell puts and collect a premium, therefore credit and because it is hedged it is a  spread trade.

But also here the Short Put is far out of the money now and the hedge position even further. Will be a winner 95%.

Month of March

Great Trading. 

Even GM was a wrong entry the stock recovered as expected. The fundamentals are usually playing the melody in the longer song. This trade could have been much more profitable but we take what is offered.

Remember we made a worst case scenario entry! 

BTO $7.31

STC $9.70

Why did we close it? The price action was too big and my guess is it will retrace and then we might buy it back.

We made a 33% Profit on this trade! Excellent.

GM soaring along today. 

The Call option gained big time today. 

Calgary Option Project

 

The truth hurts and offends.

Most people haven't realized it yet but they have the most information and in excess of all information there ever has been accessible before at their finger tips. More information than the whole human race ever had in all its existence. Very few people use it. And most of those who use it think the pure existence of access to resources and access to markets will bring them instant wealth. Others think "Information" is a nostalgic movie on Netflix.

95% of people refuse to learn and refuse to put in effort to reach their goal for whatever reason. What is their goal in life, what is their purpose anyway? They think they deserve a life in instant luxury with the newest gadgets. They pretend and show off that they have it all. They compete over virtue signaling and flashing their "wealth" without showing you their debt level or pawnshop receipt.

Wealth

Real Wealth is a measurement of how many years / months you can live with the same level of expenses. How long can you live without working and do what you want? 

In this regard prisoners are not only the most cared for people but they also are the most safe and "wealthy". But they put this all into the hand of the state. They did not create any wealth but they reduced their expenses to zero. Therefore they lost their freedom. Thus, Freedom to do what you like is internally connected to Wealth. The Freedom to go where you want and the money to pay for it is WEALTH.

But what do most people do?

They tell you that they live in a nice neighborhood but forget to tell you that they are renting a small basement.

They claim to be Gold investors but forget to tell you that their clunkers are uncertified pawnshop necklaces. 

Then there are those who pretend to buy houses and need more space when you know they can hardly pay their rent.

Others seem busy all day long looking into the small screen of their iPhones and they think they have figured it all out. Life is good. 

Others win big and pretend to have a winning concept which makes them lots of money but wont share it with friends.

Then there are people who confuse their opinions with facts because they are too lazy to educate themselves.

All those people are fake and plastic. Sorry for not buying it. 

We will educate ourselves and others. This is the best time in human history beside the threat of the Reds and their socialist /communist agenda and their major three means to topple or kidnap the Free Western World.

• Pushing the Man Made Global Warming Hoax for control and green profits.
• Pushing the Race War for destroying capitalism from within and dividing us.
• Brain washing people with Wokeness, the liberal mental illness at hand to make us confused and weak.

But beside this garbage and the overload of information we probably only need 3% off all available information to succeed if you know what your purpose is. 3% and some hard work. Everything else is background noise.

In this respect, we truly believe in:

• Free Markets, Capitalism as the best to bring wealth and progress to billions of people.
• Small Government because we believe that the people don't need others to think for them. 
• Governments shall make sure that we stay free in all respects, and the playing fields are leveled and laws are the same for all people.
• We believe in free contracts and competition. Free Choice and Free Speech.
• Financial education and taking your investments into your own hands are key to wealth.
• We believe in regional independence and diverse autonomous countries, sovereignty.
• Some cultures are better than others.
• We believe in the God given right to defend yourself, your family and your property with all means necessary. Your home is your castle.
• In God we trust.

We founded the Calgary Option Project.

We scour our world for opportunities. We think we found it in Option trading. We know there are endless opportunities. One for everyone to find. 

• Educate yourself. It costs time and money, there is no short cut.
• Practice live, start small
• Grow slowly
• Become a fanatic in what you do. Be Best!
• Establish a plan, benchmarks and milestones
• Establish mechanics to follow
• Document
• Repeat

Setting up a Bull PUT Spread, AKA PUT Credit Spread, the Money Machine if done right

What Is a Put Credit Spread?

A Put Credit Spread is an options strategy that I use when I expect a moderate rise in the price of the underlying asset, here The S&P500 and its ETF the SPY. This strategy employs two put options to form a range, consisting of a high strike price and a low strike price.
When you sell a spread, you receive a credit for the trade because the Short PUT is closer to the money and hence creates a bigger premium and the HEDGE, the Long PUT is further OTM and hence is cheaper. The sum of the spread is your Premium earned upfront. Like selling car insurances but here we do it for stocks and ETFs. And I am using similar statistics to determine the Price of the underlaying and its deviation from the mean and hence we calculate the probability of losing a trade /winning a trade. 

It is good to have a 90% winning rate on Spreads.

That means I receive cash up front for the trade! Credit spreads are risk defined spreads so my max profit and max loss are both defined before I even place the trade.
Max profit is the credit I receive for selling the spread - you can't make any more money than the initial credit received. Max loss is the difference between the width of the spread and the credit received for selling the spread.

For further reading:
http://tastytradenetwork.squarespace.com/tt/blog/4-keys-to-placing-your-first-credit-spread
https://www.investopedia.com/articles/optioninvestor/02/041202.asp

What happened today

We sold a 370/350 vertical PUT Spread, Expiration May-14-2021 for a $1.68 premium.

This means $1.68 x 100 Shares for one contract. If you traded 5 contracts this would amount to $840.00 premium. These trades you establish on a weekly base and close them after 2 weeks. With a not fast moving market /S&P500 (which is the market) we can constantly turn in a profit on a weekly base.

This number amounts to about 4 time $840 = $3,360.00 a month. With a 3.44% Failure rate, you will see later why, the amount should be reduce to about 96% = $3,225.00. Deduct $6,600 losses, see below for details. It comes to about a 84% total Gain in average!

So now include these trades for not only SPY but also for other slow moving ETFs like QQQ and DJI. Here is your path to a good monthly income of $10,000.00.

With closing the trade we can either wait until expiration of the option on May 14th and they just disappear from our portfolio and we keep the money or we buy them back at a much reduced price due to the fact that the underlaying is moving up and time decay Theta eats away the option price. OR the underlaying doesnt move at all or slightly down and we just profit of Theta. We want to exit in about 2 weeks for a 50% of the max profit. A win/win either way.

Why would we do that instead of letting it run to expiration?

The reason is The success rate is statistically much higher if you close it after 14 days or between 50-75% of max profit than waiting to expiration to squeeze the last Dollar out of it. The daily P/L will go up and so does the Risk / Reward Ratio and the Kelly Criterion which is important to measure your performance as a trader.

How do I determine the Strike levels?

I run historical price data on SPY and all other assets!!! That is the fundamental analysis. We dont pick investments due to feelings or if we like them or due to lines on a graph. This is for amateurs. We pick what makes us money. 

If you like the Casino you better own the bank,

do not play the slot machines. 

When you statistically analyze historical data of the assets you will find out how much the distribution of the underlaying is diverging form a normalized distribution. You will also find out what the standard deviations are and how many times they get hit in the data set.

Statistics are great!! They put the odds in your favor. Since I enter at 3rd Deviation it means that actually my trade will be established at the END of the Deviation. Not the beginning. 

What are the chance to get hit and triggered?

In the data of the past 5 years we find that 3rd Standard Deviation for the SPY (Upside and downside), is only triggered less than 1%. Since the SPY is tending more up and has a positive gain on a yearly base the Deviation is skewed to the upside. 

The 3rd Standard deviation is triggered statistically less than 1% BOTH sides!

If you know a little bit EXCEL and can find your way through formulas this is an easy piesy.

Here we have the Short PUT Entry and the Long PUT Entry calculated. They are at 375 and 350. And since the numbers are a little overlapping the Trigger Rate is a little higher and sits at 3.44%. We can also see if the underlaying moves against our position at average rate it will just slightly hit us after 4 weeks with 377 to 375. Will the underlaying move 4 weeks against us? Very unlikely.

In a Black Swan Event it is likely, like COVID in 2020, Oil Crises in 2013, Housing Crises in the US in 2006, the DOT COM Bubble Burst in 2000, yes. Those events happen every so often. 

What is the Stop Loss Level?

Lets do some math here because if this strategy is all about numbers we totally exclude emotion.

SPY is $400 today and according to our statistics the underlaying can move up in average by $5.00 a week. This is the uptrending black arrow. Since we close within 14 days as a target we shall close at 16th of April, the yellow vertical line. Under average circumstances the price of the underlaying can be anywhere between $410 (Gain of $650) and $390 (Loss of $330) if executed. But then we wait longer if negative!

The green staggered green arrows indicate the 50% of Max Profit mark. We see that the longer we wait the Profit level gets lower and lower. This is Theta, the time decay in an option.

This means if nothing happens and we just wait we will still be profitable at an even lower stock price.

I love Options!!

Our Stop Loss will be at 20% of Max Loss. Here at $11,000.00 it would mean if the trade runs close to our STRIKE of the Short PUT, $375 we bail out with a loss of $2,200. That seems a lot but is not!!

Our success rate is under normal conditions about 97% or more. Only 3 out of 100 trades will generate a $2,200 loss. A total of $6,600. Compare this to 97 x $840 x 50% = $41,000

With all those 3 trades that hit the Strike Level you would end up with a 16% total loss over 100 trades. So whatever your allocated capital is every dollar you would turn into a profit of ONE Dollar and 84 cents! This is a money machine. 

One more important thing is to set up Alarms to get notified if your position runs through a certain level! Very important.

But you will only get it if you are abstract savvy. Think about it.

Max Loses sound gigantic but they just tell the story of  an unprotected position. As when you buy stocks and then you don't put a management or Stop Loss Order in place to limit your losses, your stock can go out of business over night and all your investments are zero. That is a max loss in stocks. Here its similar. 

http://opcalc.com/sJb

These data can be obtained publicly and dont cost anything. You should be familiar with programming Excel though. If not pick the OPTION with a DELTA of less than -0.10 which equates to less than 10%

Thats why in the beginning I deducted 3.44% since 3.44% of trades will be losers over time. Those trades will be closed when they fall through the Strike Level of the Short PUT.

Who is the bank?

I guess whoever understands this and there are not many since we all are so brainwashed and financially illiterate, can make a fortune over time. Most people feel intimidated because it hurts their feelings. I dont care.

If your winning strategy is 96.56% than you are the bank! This is the same reason and comparable to insurance companies. You buy car insurance but dont want to have an accident. But you pay monthly to the insurance company. It is the same here with PUT Spreads. You sell insurance to the asset owner! You earn premiums every time you sell. And the ocean is limitless.

Managing Trades Using Iron Condors and Strangles - Part 2

Managing Trades Using Iron Condors and Strangles

What Janet Yellen JUST Said About New $1,400 Stimulus Checks

So, the Beijing Biden Administration thinks that pouring billions of Dollars into the economy will NOT create any inflation risks. And then they think that raising corporate taxes will pay back the debt. What an economical nonsense proposed by Charlatans. 

The STRADDLE

What the Hell is a Straddle?, my wife asked. "Its not a Strangle", I said. And my wife looked kind of weirdly into my eyes. "What do you want to do??"

I said, a Strangle needs two hands or strikes. "WHAAAAT??"

A Straddle only needs to legs to stand on. Her eyes were questioning my integrity. WHAT?

Yes, a Strangle needs two hands /Strike Prices. A Straddle only ONE. Like you standing with your legs straddling a little creek.

The Straddle is an OPTION SPREAD TRADE. You make money on either side of the creek but not in the creek. So the underlaying has to move by a certain amount to either side. This is one way to make money in any market. You protect your underbelly and gain if the market moves up or down. But it has to move with a certain speed (against Theta, Time Decay), and the creek's width (Premium Costs of the other leg and Commissions) and before a certain date (the expiration date)!

The idea of the straddle is that as the stock moves up in price, the long call becomes more valuable. Although the long put will lose value at the same time, it won't lose value as quickly as the call gains value. In addition, there is a lower limit as to just how much value the put can lose -- it can only go to zero. Thus, as the stock rises in price, the net effect is that the straddle gains in value.

The major problem with a straddle is that it consists of two options: a put and a call. As we're purchasing both options at the money, the entire value of the two premiums is Time Value. As Time Value is not "real" in that it has no inherent value and it decreases to zero as the option approaches expiration, we have the crux of the problem: The stock must move, and move soon, to recover the money lost by the erosion of time in the trade.

There are two ways the trade will be profitable. First, obviously, the stock's significant move would increase the value of one option while simultaneously decreasing the value of the other option, albeit at a slower rate. Second, both options could increase in value. The only way that can happen is to have the volatility of the options increase. All other variables in the Black-Scholes Option Pricing Model will affect puts and calls in opposite directions.

If the volatility of the option increases, then the option premium will increase, and the possibility of the stock moving will also increase (the basic concept of what volatility is measuring). Thus, if you can find a stock with relatively low volatility, which is increasing, the value of the straddle will be increasing and the stock will be likely to move either up or down -- a double chance for profit.

To be successful in trading straddles, we need to find a stock whose volatility is low but is about to increase as the stock begins to move. This may sound like real guessing at first, but in reality, it is not too hard to discover. The primary, most reliable reason for an increase in volatility and for the stock price to move is news. News can be anything from court decisions to new product discoveries to accounting "irregularities" to earnings announcements.

Of the various news possibilities, earnings reports are the easiest to predict and the most common. Every quarter, each publicly traded company is required by the

Securities and Exchange Commission

to report earnings, meaning there are four chances for the stock to move unpredictably each year. Further, each announcement will tend to be made at about the same point in each quarter.

Read the basics at https://www.thestreet.com

The Straddle can be a longer term trade. You have to give it time to evolve. Here was the setup this morning.

I usually do not hold options until expiration or within 2 weeks thereof. If the Option does not move at all, which is very unlikely, then the trade will lose all the money. If the stock moves past commission fees and about 6% either direction we start making money. 

These trades are great if you dont know the direction of the market and if you dont want to star at the screen all day long and watching candles. This trade goes either way as long as the market MOVES!

Now at the end of the day, Markets closing in one hour. Day done.

Here 15-Minutes charts of MRNA

The GM Entry for the Calendar Spread was wrong. WHY.

After you do your fundamental Analysis you chose your ENTRY by Technicals. Technicals will NOT tell you what stock to buy or sell. Technical will not tell you expected earnings or what the daily True Range of the underlaying is. This will only do fundamental analysis. 

We take a look at the DAILY Charts or even the weekly.

It became apparent that the ENTRY was chosen when GM tried to break through the $57 Level. But instead of breaking through it created a Double Top and retraced from thereon forth.

I usually start with the Fibonacci Retracement at Ground ZERO, which I define as most recent LOW or the Opening Price, or a Resistance or Support Level.

We can see that GM made a YUGE move in January 2021 hit the $57 Level and fell back. It hit the 50% level and tried a second time to break the $57 Level without success. There is no guarantee in any of these moves. It is all psychology!

In the same way as young adults pushing the limits just to fail over and over again the more experienced dudes lean back and think: Yeah, try it. I will come in the next wave when we are sure we broke the level. So the more experienced traders wait while the younger ones get burnt.

We rushed in too. Too early. We bought the Calendar Spread on February 8th, 2021. The game is NOT about how much money you can make but to stay in the game and make another day, week, month or year! Staying in the game. There have been THREE options at the GREEN TRIANGLE on FEB 08. 

WAIT for break through and buy the DIP on the Retracement. Or

WAIT and wait for the failure to break, retracement and buy the DIP at the rebounce!

WAIT and if nothing of this happen then rethink and abandon the whole idea of BUYING. 

Outcome of the wrong decision.

At one point the position was down by 60%. Not good! You cannot afford many of those, ever.
The trade is also going on for 19 days now, which represent 4 trading weeks! 5 days = 1 week. 

Entering the position today with the same Strike and Expiration Date would have saved $900 on 4 contracts.
Buying the position when GM closed above Mid Bollinger at 53.50. The Option Price for the Call was about $5.00 a contract. Beside saving $900 for opening the position it also would have given us an additional P/L of about $330. 

All over all without being detailed on the exact numbers, choosing the correct ENTRY is important. When you go to the casino you want to be the bank and have ALL ODDS in your favor. When you trade well you put ALL ODDs in your favor. You are the Bank.

The Details in the CALL Option

We still have 102 days to go. Plenty of time. All that matters is if the position will recover until expiration date. And I am absolutely convinced that GM will pull this off. Here is their new video.

https://electrek.co/2021/03/08/gm-releases-hummer-ev-electric-pickup-testing-footage-suv-version-unveil/

GOOD NEWS TODAY?

The Biden Administration is spending more tax money on everything. Big companies will do well. All the new Green Agenda will bring billions of Dollars and subsidies to the automobile Industry.

Dow Jones hit the 32,000 Point level!!

Volatility is down.

The Germans are doing well.

S&P500 slightly up

Hello Pal, another Chino TikTok Spyware?

We remember this announcement?

VANCOUVER, BC, Feb. 24, 2021 /CNW/ -- Hello Pal International Inc. ("Hello Pal" or the "Company") (CSE:HP) ( Frankfurt: 27H) (OTC:HLLPF), a provider of rapidly growing international live-streaming, social messaging and language learning mobile apps, is pleased to announce the commencement of marketing operations for its livestreaming services in the Middle East market, with a focus on the United Arab Emirates, Saudi Arabia, Egypt and Bahrain.

Hello Pal International Inc. logo (PRNewsfoto/Hello Pal International Inc.)

After having consistently achieved monthly revenues of over CAD 2 million over the past several months, and following the arrival earlier last year of industry veteran Vincent Chai as Senior Vice President of Operations, the Company has started to focus on expanding its revenue sources to markets other than the China livestreaming market.

The Company has already begun to work with several key partners to begin this expansion, including those with an established network of livestreaming hosts in the Middle East countries such as the United Arab Emirates, Saudi Arabia, Egypt and Bahrain. Such partners will help bring in a diverse community of livestreaming hosts and provide livestream content on Hello Pal that caters to the Arabic-speaking world.

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Then I went in on February 25th at 0.78. This is what I posted then. Daily candles. The stock stayed flat through the rest of the week. Then Monday and Tuesday it went up big time and people came flying in and also jumped onto the flying train. I was in a good mood counting my monies. The stock was playing well. My position doubled now. Great I thought. So I bought more on Tuesday the 2nd of March and moved the SL up to make a profit even if it all collapses. You never know.

My Break Even Point, BE, moved from 0.78 to 0.92. HP run at 1.30!

Here the details in the 15 min charts.

On March the 4th I was paralyzed in front of the screen. HP went up from the beginning. It drew a huge candle in 15 minutes. I remember texting my wife with updates. You know "The Great Candle", the Candle Goddess is appearing to me. Every 5 seconds $100 in my wallet! When I was finished typing the price went up. I was glued to the screen and couldnt believe it!

This went on for 15 minutes until it topped out. I still made about 100% on this trade. You take what the market gives you and you try to put all odds into your favor.

Why was the third BUY a mistake?

All the Dumb Money was flying in and buying the stock. They were buying from traders that were selling. Then the once that were in longer also started selling. But the more people buying and the orders are lined up the price goes up. Now Yahoo News was read by a lot and the crowed was moving in but was late to the party. When the Sellers, Bears take over the stock loses on value since more people start selling than buying, hence the price is falling. This happened after 20 minutes into the trading day.

With a steep Candle like this one after quite some huge gain before days you know this cannot go on for ever. So you dont buy into the same scheme as the others. The third buy in was wrong for that reason and reduced the profit!

What could have been done differently?

If you get a candle like this and there is NO obvious NEWS for it or even just hype news you do not BUY you SELL, you short the stock when the momentum retracts. This is a pretty safe bet. Sell on the top at the 78.6% Fibonacci Level and buy back on the 50% Level or do a trailing Stop Loss and go further until you get stopped out. Mostly at the 23.6% Level and the Stock might consolidate and finds new support. This will be then the new price level traders willing to pay. Simple. Doing this instead of staring at the screen like a rabbit on the road could have made myself a profit of 120%. Well, next time guys.

Now it is time to re-evaluate the Stock for holding it for 3 months or so. Is it worth it? What are the numbers saying?

Week 01-05 March in Review

The reason I mentioned last Sunday for terminating some of our positions, has not gone away. The opposite happened. On Monday The VIX Index fell down to the monthly and three monthly average, which is a good sign.

Volatility is the enemy of Hedge Fund Managers and the best friend of traders.

While Fund Managers like the constant move upwards (LONG) or downwards (SHORT) to increase their earnings a trader only can make money when the market moves up and down in short term. This is called volatility, And the "JUMP TO ACTION" Threshold for me is 25% above the 3 Month Average, the yellow line, The green line is the monthly average, 20 day simple moving average. So if the green and the yellow line are entangled we are good! If the green line takes off the market becomes volatile and tends to go down since we are in a long time bullish market. It will not get steeper even though this could happen theoretically.

We saw the increased volatility last Thursday and then the holding pattern on Friday that made me think of deleting some of our positions. Bad positions will get worse and good positions might turn bad. Thus, you have to act. Whats the plan Dan?

I do not trade the first 30-45 minutes after the markets open due to the fact that Investment Banks and overnight orders flushing the markets and make it very volatile in ANY direction. By the time of 10 and 10:30 EST the markets cooled and we will see a direction and we can read the VIX.

The reason for closing our positions disappeared on Monday and Tuesday, and it came back into play on Wednesday and Thursday. I was waiting for the VIX to go through the Threshold and it didnt. But Volatility was up and our positions lost money! And then on Friday it collapsed. 

The SPX recovered slightly on Friday's last blue Candle. But still it runs below weekly on monthly average! 

The German DAX was down and so is Australian Dollar and Copper, signs of cooling off.

Best thing that could happen next week is the the SPX will hit 4,000 and the DJI 32,000 and GM $57.00 and TSM $142. Wishful thinking.

Hence we gained back some losses and I made a huge win on Chino's Hello Pal position. 

And what went wrong with entering the GM and TSM trades!

See next posts.

Start into Week March 01--05

The preparation from last weekend was good. Even though and that saved my neck, I do not trade the first 30 minutes of opening!

How and why? Usually the first momentum is wrong, most of the time. Banks and Funds have their orders all piled up and flush the market. Our "Traders" at Investment Banks were busy processing orders from clients. What ever it is process it and see whats coming out.

So after 20-30 minutes the market starts to settle and a direction starts to forming, which usually goes until lunch time in New York, 10-11 o'clock Mountain Time. After that the market starts to reverse again or stays flat for the most part.

If the initial direction in the opening was right that means all orders go one way. And if this is what it is we jump on it at 10 am EST. If the initial move was wrong the market starts to turn and we get a better price. Thats why I stay out for 30 minutes.

The initial direction on Monday was correct and hence I only closed United Guardian for a small win and left all other trades on!

They all recovered for the most part from last week and so on Tuesday!

The best pick I did was buying 1,000 Stocks of HELLO PAL, another Chinese gadget company competing with TIKTOK. They go big in the Arab world showing Burka dances if allowed. Great tool to spy on citizens, made in China! Another tool to dumb down western society. I bought in.

QUOTE PRNewswire, 24 FEB 2021:

"After having consistently achieved monthly revenues of over CAD 2 million over the past several months, and following the arrival earlier last year of industry veteran Vincent Chai as Senior Vice President of Operations, the Company has started to focus on expanding its revenue sources to markets other than the China livestreaming market. 

The Company has already begun to work with several key partners to begin this expansion, including those with an established network of livestreaming hosts in the Middle East countries such as the United Arab Emirates, Saudi Arabia, Egypt and Bahrain. Such partners will help bring in a diverse community of livestreaming hosts and provide livestream content on Hello Pal that caters to the Arabic-speaking world.

In tandem, the Company has also been working with other key partners with an established userbase in the Middle East to ensure quality generation of user traffic to Hello Pal to consume the livestream content. This expansion presents exciting growth prospects for the Company as the Middle Eastern market is a proven market for livestreaming content, yet is relatively still in its infancy.

The Company has already been testing the Middle East market over the past several months, and initial results have been more than encouraging. Notably, largely due to the Middle East efforts, non-China revenue now accounts for 10% of its total revenue, having increased from 6.5% the previous month, and 3% from November 2020. "

The thing is Chinese DO NOT BUY STOCKS! Thus, to make money on the Stock market they have to qualify for the NYSE, NASDAQ or TSX. And they are traded on the Canadian Stock Exchange. So I paid Canadian Dollars.

This great Chinese video spyware is up another 25% today. My position is all green and in the profit. Will ride all the camels along the way.

We can also see that one of our positions the GM Short Call 12MAR21 is up by 1,200% from yesterday. But this is only book value since the contract will expire in 10 days. I can keep the PREMIUM only, there are not additional gains, only losses if any.

But GM made it up over 50% now in the past 2 days and that makes us happy. I hope we will have a great week and an even better next week.

HP.CN