<p>I thought the stock would bounce the next day after a more than 4% drop. I’m certainly not comfortable going out months as I said just above.</p>
<p>Wow - third in a row. There is also a 43% probability that that spread will lose money - not the odds I like.</p>
<p>Yeah…it is fine to think the stock is going to bounce and come up with a strategy that takes advantage of that.</p>
<p>If I think the stock is going to go up, I dont come up with a bearish strategy.</p>
<p>You bought the apple leap spread pre split?</p>
<p>Third in a row? Posts?</p>
<p>yes, it was a 500 - 530 call spread when the stock was 594 back in April. The breakeven was 522.83 with a potential gain of 31% if it closes above 530/7 in January.</p>
<p>Nice…really smart…</p>
<p>I am getting dumber.</p>
<p>That long aapl 98-99 call spread…short 100-101 call spread…with the stock at 99 with 2 days to go… What were the odds that trade would work? </p>
<p>Or is it too much of a pain in the tush to figure that out. If it is, nevermind. </p>
<p>Are you still using ivolatility?</p>
<p>Calmom, if your head spin we all probably going nuts. Maybe that’s why the IRS won’t get to us. Crazy taxpayers.</p>
<p>BTW, I did my own taxes for close to 40 years and I have never been audited. My husband and I jokingly said it’s because they know they have to pay us back money.
But I do get paper generated stuff like transfer from one IRA to another but in my mind it was nothing but for the IRS it was a potential source of money, so I had to make photo copy of where it was from to where it’s going. But it’s still a hassle for me. Luckily I have a have of having store paper works for 10 years.
I also avoid trading in IRA account, they all have mutual funds. I think when it comes to my retirement I don’t want to mess with it.</p>
<p>You said that it cost .30, so I guess the breakeven points are 98.3 and 100.7 with max profit between 99 - 100. I may have done this wrong but it looks like the probability of ending up making something is around 46% and making the maximum profit is something like 31% with 1 day left. The probabilities seem to be right in that the calculators usually come up with 50% probability of going up or down from its current price.</p>
<p>I still use ivolatility.</p>
<p>You are right in your assumptions. Hmmm…with the stock at 99 this morning? </p>
<p>I dont undertand the maximum profit… if I pay .30 and I can make .70, The maximum should be over 200 percent. The spread can trade $1.00. </p>
<p>It is possible the probability of success is under 50 percent because you can lose both on the upside and downside. </p>
<p>Anyway, thanks. </p>
<p>I think appl is a very good option stock.</p>
<p>I didn’t like the price action today. The S&P opens, goes up nicely and then closes near the open. </p>
<p>So razorsharp, what are you short?</p>
<p>No with the stock at 98.12 at the close. There’s a difference between the probability and the percentage gain. You can have a high return but the probability of getting it is low. If it was at 99 at the open, your probability of making money is greater than 50 percent. It is exactly 50 to make the max profit of .7 between 99 and 100.</p>
<p>Ok…I misread what you wrote. I thought you wrote the max gain is .31. You wrote 31 percent. My bad. </p>
<p>Ok…Your last post explains it well. The trade is good. :)</p>
<p>You can make a career out of that trade. :)</p>
<p>You can make 2 to 1 fifty percent of time and lets say for argument sake, you lose 100 percent 50 percent of the time…</p>
<p>It is like flipping a coin but instead of doubling your money when you win, you triple your money. </p>
<p>Big win…</p>
<p>Thanks.</p>
<p>I wonder how often that trade sets up and with that pricing…</p>
<p>I was slightly exaggerating about the career remark. :)</p>
<p>LOL. The problem with “probability” is that they are statistics base on recent past trading history which has absolutely nothing to do with what happens next. Improbable things happen all the time.</p>
<p>I’m not arguing with the idea of using that as part of the information that goes into making a trade. I definitely pay attention to delta and other numbers. </p>
<p>But I also think of other factors that I don’t think are reflected in the option greeks – like feeling the market is simply due for a correction (I always start to get nervous after a bullish run that continues for more than 5 consecutive days) – or outside news events or potential events that can’t be accounted for. </p>
<p>So you can do a lot high-probability trades and still come up short because events don’t occur as expected.</p>
<p>The problem is that bad news (or good news) for one stock tends to impact others. So it’s not like calculating the probability of rolling snake eyes in a game of craps. The stock moves aren’t independent of one another.</p>
<p>So you might think - I’ll only trade where there is a 70% of winning. Even if one or two of those trades go bad, it’s highly unlikely that they will all go bad at once.</p>
<p>But then something comes along to disrupt things – an outside event triggers a market run – and the tables get turned on all of your trades. </p>
<p>You make good points. </p>
<p>Yes… There are issues…</p>
<p>Otherwise, we could all just put the trades on and lie on beaches or go shopping or vacation 24/7 or have sex 5 times a day or whatever…</p>
<p>Calmom, how long have you been trading?</p>
<p>Have you ever got caught in a massive move against you?</p>
<p>-------------- dupe</p>
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<p>Yeah, I had my retirement money all in very safe stable investments in 2008. Good, safe mutual funds, respectable stocks. </p>
<p>Remember 2008? </p>
<p>Also, I wasn’t very heavily invested, but in the late 1990’s my step-mother, who was a financial investment counselor, gave my son a gift of $2000 invested in a tech-fund with ING I told her that wasn’t a good idea because the tech bubble was about to burst. I might not have used those words, but I was already working in the tech field and I knew that a lot of businesses were on very shaky ground. My step-mom (RIP) was insistent that she knew best. A month after she gave my son the fund, it was down to $1600. I told her I wanted to sell it. She insisted that we hold onto it. I said that was a very bad idea. I said my son would need money for college and because I was the trustee on that account, I had a fiduciary duty to move the money to something better. Finally, in order to win me over, she made an offer I couldn’t refuse - if I would hang onto the fund until my son graduated from high school, if the fund hadn’t increased in value above its original investment by that time, she’d make up the difference. I think when my son graduated the fund was worth about $300. </p>
<p>Of course…that’s it?</p>
<p>You rode it out?</p>
<p>Edit: Didnt see your edit.</p>