Trading Review Up to December 5th 2006

Posted by Oskar Syahbana
12/5/2006

Still remember my previous post here? Well I haven’t done anything much about my virtual trading account in OPX since I’m very busy with new projects and stuffs (I’m also organizing an options basic 1day training due January or February) not to mention that I’m monitoring two market to keep up with things. This is my up-to-date report of the account, keep on reading and you will find my takes on this particular conditions:

AMZN both posting a loss from my previous statement as of November 20-something. Mainly due to the fact that the market’s fear that AMZN will fail to fulfill their earning estimates (due to a steep price cut near christmas season). It’s still posting a 115% and 116% consecutively. Lesson: ride your winner longer but always put a trailing stop to secure your profit.
Ford, the options, posting another 60% loss, a projection of a gloomy US auto-industry. For long-term investors, STAY AWAY from this industry.
ICON which last post posted a loss, now posted a 4.5% profit. Lesson: put a trailing stop, but don’t put it too close to your current position, there might be whipsaw (whether bullish or bearish).
NICE, the stock, posted 8.77% profit while the options posted around 20% loss. Lesson: directional doesn’t always “directional”. Logically, when you buy call and then the stock rise, the contract price should rise too, but that doesn’t happened here.
VLO, the options, posted 300% gain. Indeed this is a directional contract that I entered but does the hike in price really boost the options price that much? My initial conclusion is no. What boosted options price sky high is not the underlying price, but volatility. So directional is pretty much “dead” since there’s no such thing as directional. There’s only volatility (and other greeks).

What do you think? Does the lessons I took from each trade valid?

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Information: December 5th, 2006; 5 Responses

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Categories: Learning Material; Options; Tips; Trade Review

Related Posts: Lessons from 26 - 29 September Trading; Another Day Another Volatile Session; US Stock Market Trading October 12th 2006; Review 26 September 2006 US Trading; Trading Review Up to November 20th 2006

Reader Comments

Comment Number:: 1
Written by:: aDe
Posted on:: 12/6/2006 at 4:03 pm

hope so… :P

Comment Number:: 2
Written by:: aDe
Posted on:: 12/6/2006 at 4:04 pm

Type your comment here.

Comment Number:: 3
Written by:: tanya
Posted on:: 12/7/2006 at 2:47 am

I little bit of doubt. If I bought a call in-the-money, and near the expiration date the stock explodes to several percentages higher than the strike price, which one is more profitable (in general), exercising the options and selling it at the current price, or, offseting your position. What are the consideration (i.e. delta) ? I was thinking that the profit are the same for both methods since it is only the increase of intrinsic value playing the bigger role of the total profit.
Thanks

Comment Number:: 4
Written by:: Oskar Syahbana
Posted on:: 12/12/2006 at 4:45 pm

I have a long answer for this one but to keep it short, it depends all on the delta. In fact, during my short and rather shallow observation, delta played a bigger part than the underlying price.

So in my NICE case, it’s better to exercise the current options and then sell it at the market price. And as for how big delta played a part on options pricing, there’s a room for another post ;)

Comment Number:: 5
Written by:: frummaeffesty
Posted on:: 8/3/2008 at 1:18 pm

Very nice!!

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