Now That's A Sweet Set-Up!

Are you serious about trading? Susan from Manhattan is. She furnished her new apartment in some serious technology. Quad monitors, laptops, and a partner to route orders with. C'mon, trading can be a lonely profession. Susan, the Addict abides. Great set-up!

I love photos in case you haven't noticed. Want to get on the blog, please send me a photo. In my eyes this is the equivalent of a handshake. I feel like I know you all personally!

Recommendation: This kind of stuff makes my day.

Long: photos

Short: JEF...ouch


The new homepage came out today, and a few of our new technology additions went live this morning. There are a few bugs here and there and that has chewed up some of my available time this morning. However, Thursday is when I normally get a lot of posts done, so at least we have that going for us.

I'll be back in a few, here is the stocks I discussed over Mastertalk. which by the way didn't record again.

Recommendation: Short Mastertalk.

Long: TK (or any water transport stock) SCHN (or any steel stock, if you missed X)

Short: PAY, AHM (when it breaks)



The schedule on the website shows that I ain't teaching. Cool. Apparently the little helper that updates the schedule called in sick. I will be teaching session 2 tonight. We'll be discussing the option selection process part 2...


Recommendation: Be there.

Long: I'll tell you tonight

Short: ditto

Don't Mind Me

I don't want to break up the fabulous dialogue going on here with a new post, so please... nevermind me. Great trades are among us, so I hope you are all taking advantage.

I guess I don't have much to say today. There have been a lot of issues weighing on me, but I am pleased to inform all of you on some significant progress being made to enhance this community. My projected timeline has just been cut in half.

I have been pretty absorbed in this all morning and it is nice to see things coming along. I'll be lurking for the remainder of the day, trying to gather some thoughts for the Marketcast and Mastertalk. I'll be watching the comments to answer questions if needed.


Unsolved Mysteries

If you are unable to see the videos, I decided to switch hosts this week since Revver has about a dozen videos from the last few months that were never approved and are still sitting in cyberspace. Anyway, I am now using Brightcove and if you are unable to see the videos, you will want to download Flash player 9. Here is a link to do so...


It's worth the download.


Memorial Day Weekend

Friday's are usually the days that I start to slowly check out of the market and plan my weekend getaway's, or events that will help me get away from trading and try to find activities to focus on the finer things in life.

I don't have much trading acumen since I think we have accomplished enough this week. Even if I were the great and powerful Oz and were responsible for pulling all the levers and pushing all the buttons that moved the market, I would have treated this week the exact same way. Especially the finish here. Ending on a good note and proving that "One day does not a trend make."

Finally I hope you all have a safe weekend over the next few days. Make it a point to release from the pressures of the market and money and relax and be with those that are important to you. Also, please observe the meaning of this holiday and do your part to pay tribute for those who have sacrificed so much to give us the freedoms we enjoy. I hope I will see you all back here on Tuesday, and thank you to everyone for all your support with this blog.
Recommendation: Have a great weekend.

Long: X

Short: e-mails


How To Print

I get the question fairly frequently about how to print something from my trading blog. I also get complaints about my color scheme. Black background on white writing isn't easy on the eyes, but I think it fits with my trading style. It works well with the whole "addict" theme in my opinion.

Anyway, I have a cool diagram that should answer the question of how to print. Take a look...

Just kidding. Yes, I know that if you print on my blog it prints the background and all. So here is what you'll want to do. Over on my right hand column, find the logo that looks like this...

Click on the link, and you will be taken to a printable version.

Recommendation: Don't print anything I write. It can probably be used against me as evidence.

Long: An ass-kicking today

Short: Hope (not in reference to trading)

P.S- I mentioned I got a chance to meet with Karen a.k.a Doji Girl. She sent me a photo that I thought I would post. Thanks Karen!!!


Case Study: US Steel (X)

Last time we looked at this chart it was in my January archives. In fact if you click on Jan 2007, it is the first one to pop up. This was a trade I took back at $80 and been playing it ever since.

Anyhow, I want to use this as a case study. If you decide to take this trade repeat after me...

"I am a lunatic for taking anything Jeff says seriously. US Steel is my trade, and I assume the responsibility of adopting my analysis and my trading rules to this idea. "

Oh yeah, don't forget..."I am an option addict."

The art of taking a trade...

Step 1: Identify the prospect.
This should be part of your daily task is to check your watchlist and or run searches to find stocks to trade. The selection process should look for the cream of the crop, and never settle for things that look "ok." Never settle.

I love the trend, I love the stock. I am moving to the next step.

Step 2: Timing
Timing will be a little different from one trader to the next. In an uptrending stock I like to identify that a strong trend is still in motion, and that I am as close to support (low risk entry) as I can get. I don't take a trade after a stock price has been crippled, I let the stock retrace and wait for it to stop going down (hopefully at support).


Step 3: Choose your weapon

Each trade will call for a different weapon. That is because there is a different expectation for every stock out there. To chose an option I try to answer the following...

"Where is the stock going?"

"How long will it take to get there?"

For an uptrending stock like this, I don't necessarily want to pick a target price. I want to ride the trend. *Now this is different for how I treat a price pattern trade. That will be case study two.

Since this is more of a trend trade, I want to make sure I am giving myself enough time to enjoy the trend. I would look to buy no less than July...and if you are thinking July I would try to upsell you to the Sept to be safe. After you bought I would then tell you that I own the July's.

Strike price is determined by my expectation of the stock. I trade OTM options on breakouts for the most part, or for any big expected movement in the underlying. Since I can't say I am expecting anything out of the ordinary here, I would take down the 110's. Sure it is an expensive option, but it is because it is an expensive stock. If you don't want to be so conservative, 105's are nice also. Technically they are in the money, but many would call this the at the money option. Problem with these...lots of time value, little intrinsic.

JULY 100's.

Step 4: Plan My Exit

This scenario looks simple. I will hold this until it violates my trendline. If it closes below my line tomorrow, next week, next month, etc. This is where I will exit this trade. Complicated?


Step 5: Submit my order

The work is done. Now I just keep my emotions out of my decision making process and check this stock about an hour before the close each day to see if I should exit. This trade might make money, and it might not. The point is, it is a small amount of risk to back my analysis.

Again, US Steel looks like a low risk add point. I have been with this for a while and I added at the close today. This is not a new entry, but the purchase of these contracts is under the same analysis as if it were a totally new position.

Recommendation: If you choose, adopt this as your own idea.

Long: X

Short: Questions. Just kidding...I think I covered all my bases.

I'm Nervous

I am spread pretty thin today, more than usual. However, I couldn't resist.

I see the comments as they come across my inbox and something occurred to me that I want to share with you...

But let me digress.

Here are the biggest things I try to teach on this blog that I feel are not always heard...

Patience ( you cannot be a successful trader without letting things happen)

Position Size (you wont be emotional with smaller amounts on the table. You wont lose much either!)

Diversify (don't take correlated trades, trade bullish & bearish, different investment types, etc)

Manage Risk ( lose small)

Take good Risk/Reward trades (low risk, high reward)

Have a plan for you trade (What are you expecting? Why? This includes exits...plan for anything!)

Don't focus on the numbers (gain/loss and account balance...they are just numbers...focus on the chart & your analysis...you are always innocent until proven guilty!)

and most importantly...

Don't focus on the day to day price action.

Stocks fluctuate. The Fluct down and Fluct up. Quit worrying about if you should exit, cover, leg up, down, in or out...sit still! Recognize when you are being emotional, and avoid making decisions at that time. Go have a smoke, drink, massage, burrito or whatever will calm you down.

I noticed that 90% of my e-mails today contained questions like "what should I do?" (These are not questions from Addicts, mostly Marketcast traffic) This makes me think that a lot of traders are neglecting to follow rules and are so emotionally wrapped up in a trade that they have given up on their rules and or better judgement. Trade size, lack of rules, etc are what take us to this state of emotion...so find what is causing your emotion and avoid it.

The stocks talked about in the comments today don't look like exits to me, but I am not in all the same trades, or under the same entry or exit scenarios that the other traders are. I want to emphasize that one day does not make a trend, use an objective analysis, and try not to rely on the opinion of others to make your trading decisions. I know most of the comments are looking for the perspectives of others (and this is great!), but make sure in the long run that the decision is ultimately made by you.

I am not trying to criticize or lecture here. Just trying to reiterate the secret ingredients that not everyone might hear, but will eventually learn one way or the other. I just try and shorten the learning curve and prevent large capital misplacement's in the market.

Anyway, want to hear my thought now?

What will the comments be like when we are not in a bull market?

Recommendation: I am here for you. All of you. Through patience you will be successful at this. I have been doing it for almost a decade. It is possible, so be determined to make it to the top.

Long: Positive thinking

Short: Negative actions


Missed the Mark

Thank you for all the nice comments that were left on the last post. It was nice to hear your thoughts. I wanted to comment that I had the best intentions to document a trade today, but time wasn't on my side today. My promise was to do it this week and we still have plenty of time. Hope the videos will hold you over until I find a free moment.

Thanks for your understanding. See you all tomorrow.

Recommendation: Remember that patience thingy...I will deliver!

Long: Tell you tomorrow :)

Short: Tell you tomorrow :(


I normally teach my price patterns class this morning, but have the morning off today. If you sent an e-mail to me yesterday and haven't gotten a response, it will be coming today. Yesterday I had some deadlines to meet and couldn't get to e-mails. I have my watchlist ready, but the bulls to bears is like 30:1. Pathetic. Any help in this department is appreciated.

I haven't made it into the office yet, but when I do I will record my videos. Since YouTube is the fastest way to get them up, I will sacrifice quality to adhere to time. Today I will also conduct a case study of selecting an option. I want to get this done before I record the Marketcast, so if you have a trade you are really fond of, feel free to leave it as a suggestion. I'll find a good looking set-up and get moving on it this afternoon.

Before I go back to sleep I want to thank Karen (Doji Girl) who not only came out to Utah to say hello, but took me and my wife out to dinner last night. Thank you! We had a great time! I wanted to take a photo and post it, but totally forgot.

Recommendation: Start fishing for something good to trade...

Long: Exchanges??? Casinos??? Holy cow!

Short: Still looking...


Monday Mania

Hello Option Addicts. Hope the weekend treated you well.

I appreciate the recent user comments about patience lately. I have brought up this topic in my presentations and also on the blog here, but until you can relate it to real life examples and see that just because a trade is taking a little while to move, doesn't mean you are wrong. So in essence, thanks for your takes on the topic.

Monday is that special day I set aside to find my lottery tickets for the upcoming week. Don't take that literally, I mean I need to put together my watchlist. This week we are going to select two trades from this list, or from your lists to walk through a trade with. From analysis, to option selection, to execution. I want it to be educational, and to be consistent with my presentation on how to select the proper option, but I don't want you to just jump out and trade it without your own research.

Anyhow, tomorrow is when I want to start the first case study. Until then, stop making fun of my bowling shorts.

Recommendation: Get out and start trading.

Long: Water transportation

Short: Realty stocks. One day does not make a reversal.


In Search of the Perfect Game

So much for the quest of the perfect game. The Marketcast, yet again, fell short of beating the ladies on our bowling outing. Here were a few of the many great photos we took. Make sure you watch the video of Eric. Don't you wish you could roll like that?

Recommendation: No, I didn't get a free bowl of soup with those shorts.

Long: Bowling lessons.

Short: Make up & wardrobe.


Friday's Festivities

Happy Friday. Another week come and gone, and I hope we finish the week off on new highs. I have been on the phone with revver about my price patterns video that I recorded Tuesday that still hasn't posted. They didn't have a good answer as to why it is still awaiting approval. If you caught it on YouTube then you had a couple great trades this week. If you missed it, you can watch it below.

It's been a good week. I see some new traders posting for the first time, and I have had conversations with a few of you this week outside the blog. I like to get to know all of my readers, even if you lurk in the darkness.

I will be here trying to catch up on my 133 unread e-mails and making a few phone calls.


PS- A Great Trade

Why is nobody talking about this trade? It was all that was talked about a few weeks ago before support broke, and I don't hear any cheers about it at all recently.
Let's hear it once more for patience.
Here was the post I gave on PSA a few weeks ago. That was 10% in the underlying, and triple digit gains on the options.

I Overslept

What should we talk about today? No comments about Mastertalk last night, which means I probably misfired. Any feedback? Was the material good enough to try and follow up with a post about the topic?

I am a little behind, forgive me. Here were last night's honorable mentions...

Long: EWW, FMX, CVH APA, OMG (waiting for a breakout)

Short: ESS


Addicted To Options

There were a lot of good questions that came through the chat last night about options and the selection process of an option. This has stirred some great ideas in my mind, and I want to make sure that everyone has a fairly good understanding of options before they really start to trade them.

The truth is, you can't get by just buying in the money calls or puts on every trade and expect to get by or even make money in the long run. Since options are built to defeat you, you need to have a good understanding of how they work before you risk anything. I relate this to my first experience at a craps table. I hate to use the gambling reference, but it applies. Have you ever seen a craps table? How can you make sense of every little detail that is on that stretch of felt? Better yet, how can you place your chips on there with any confidence knowing that there are so many choices for better or for worse. What does it boil down to? In my eyes, it boiled down to the probability of the next roll of the dice.

If you have in your mind a one-size fits all to option trading, you need to lose that mentaility. The truth is, every trade is different. It is just another roll of the dice. Each option will be priced differently, each underlying stock will move differently, each option will have different sensitivities, etc. Options are the only sport where you can be right and still lose money, or be wrong and still make money.

I created a trading room last year that was dedicated to options pricing & volatility. Here I wanted to discuss various pricing models, greeks, theoreticals, etc. After the company wouldn't advertise it and I was fed up with the comments about people wanting more "free trades" I washed my hands with it. Truth is, I think this should be a prerequisite and a final exam should be passed on it before putting a nickel in the options market.

For those that attend Mastertalk, I will be teaching this subject tonight. If you can attend, try. I have had problems with my recordings forever and I imagine that they haven't fixed any of my problems yet.

I'll be around. Jodi, give me a call if you want to continue the discussion.

Recommendation: Become addicted to options. Seriously.

Long: JBX. The company that keeps on giving.

Short: CME....One day does not make a trend!


EXITS! Thought I Forgot???

I never forget, I just procrastinate. None of my thoughts on this post can be conceived as factual, coherent, or relevant. They are just my thoughts. If you disagree, you are wrong.

Case Study#1 PLCE

I didn't catch the entry point, but here is my take on the exit.

My take: PLCE: As I look at this chart I didn't see any reason to exit this trade. Sure, the big rally up to $35 was uncomfortable, but if you look at a longer dated chart you'll notice the symmetrical triangle I tried to point out several weeks ago. Since your support line is ascending in this pattern, I teach that it is imperative to use the apex of the triangle as the breakpoint. If the stock remains below the apex, it is a good trade. $36 was my stop point based on this rule.

Since the rule was to wait for a break of $53, you were well within your rules, but this rule didn't give the stock much of a chance to move.

Case Study #2 BBY

Entered trade on the intra-day dip below support. Stopped out on 2% rule.

My take: This is why I use closing prices.

Case Study #3 BGC

4/26- Entered trade

Target- $67

Stop- $55.85

My take: See case study #2.

Case Study #4 ISIL

4/26- Traded a bull flag breakout

Target: $34.50

Stop: Close below flag break

My take: I am not sure how much this one can be argued. Use a weekly chart to see this breakout and you'll get a sense of where I want to go with it. Yes, a rule is a rule. However, I looked at this as $30 being the magic number, which held well. I thought the longer term break out had more merit than the little flag as of late, so make sure when you are planning your exits to see them from the long term perspective as well.

Case Study #5 BIDU

Rules: 4/13 enter on resistance bounce

Target: $92

Stop: Close above resistance

4/24 Exit at mechanical stop

My take: Follow your rules!

Case Study #6 BUCY

Here is what I clipped from the original e-mail...

Here is a great example of not sticking to the plan. I saw a move to around 62.50 for an exit and re-adjusted the stop loss way too tight at 57 to lock in profits. It was a winner but I cut it short. At 64 I could have sold half or more and let a couple, or even just one contract, continue to run. Stick to the plan and don't get tight on stops just when things are going your way for fear of losing what gain you have. Plan the trade, trade the plan, fear will destroy you just like in any other part of life. DUH!!!

My take: That particular day was a healthy re-test of a prior high. I hate to see one down day in the middle of ten up days to be a reason to exit a winning trade.

A recurring theme I want to keep discussing is patience. Whether it is riding though a day where price doesn't exactly move in your favor, waiting until the end of a day to exit a trade or confirm a new breakout, or just taking a breath and focusing on what the trade will look like weeks from today, you must develop a level of patience. Profits are not made in just a few days worth of work (unless you're into that whole brevity thing). I'll look under the mattress for a few good articles on the topic.

Early Morning

It is pretty early this morning...I wanted to beat the crowds this morning to get a new thread all lined up for todays ramblings (not yours, mine).

The good news is, my video software is up and running and I will be delivering 2 more videos after I finish my presentation on price patterns this morning.

The bad news is, I host through revver and sometimes this means that they will take forever for approval.

The bottom line is, we'll be trading in the meantime. If you didn't catch my Marketcast watchlist last night... tsk, tsk. ( They are listed at the bottom)

Recommendation: Set a goal today & be patient with your trades.




Getting Started

I am just rolling into the office, and getting settled for the day. Looks like the market is holding onto a few early gains, but nothing prolific. I see a lot of good looking set-ups, so this normally means it is going to be a great week for a short term trader. Sweet.

Feel free to leave a few ideas behind, hope everyone had a great weekend.


Highlight Reel

Just in case you missed the game, aside from the 20 point embarassment, what an exclamation point on one of the leagues top shot blockers.



Also, if you are going to set a stop on a wildly uptrending stock that is going to issue a dividend, at least subtract the dividend amount from where you are going to place your stop. Easy example. $100 share price and a $2 dividend is paid, you need to factor in the adjustment to the stock price ($98).

I don't see any violation of trends on yesterdays movement, but perhaps not everyone was aware that the company cut loose a dividend.

I am getting ill hearing that traders are hoping in and out of trades that they don't need to. If you get out at bottoms, and in at tops, it is hard to find stable gains within.

Recommendation: "All we need is just a little patience." Guns and Roses

Long: VIP

Short: IIG post earnings. If you can't beat em' ... join em'.

One Day Never Makes a Trend

A beautiful recovery to finish off the week. Afterall, it is a bull market.

I conversed with a few traders yesterday about what was going on in the market. I tried to put an emphasis on patience and confidence in their analysis. Emotional exits are the hardest part on the account. I am sure plenty of traders are watching trades they exited yesterday up huge today. Then when you start to second guess your decisions, all hell starts to break loose.

It was an interesting week this week. Many of you have noticed that I took a step back this week, but only for personal reasons. It won't last forever, but will get better as I get my act together.

I still have a lot of posts I have started on, but never finished. Maybe today will be a better day?

Recommendation: Cross your fingers

Long: Everything.

Short: CME huh? You play with fire and occasionally you get burned, right? Everyone knew this was part of the gamble.


Counter Fed Day

One of the worst counter fed days in quite a long time! Ouch.

There have been some crushing retracements in a lot of my long positions, but thankfully offset by a couple strong shorts. What's important is to not get emotional at times like these, but to plan for them and react in an unemotional manner. Easier said than done, right?

Well, I wanted to organize the rest of the days comments here. I will be back later this afternoon with some things to talk about.

Catch me in a few...



So I happened to read a few of the comments that came in this morning, and I stumbled across "the one" that created a little controversy here this morning. I figured I would spell a few things out here this morning and clear the air, so to speak.

I hate negativity. Especially in trading. There is no room for it, and once you let it in, it effects your results. It effects those around you and it never leaves you. Each time we have a situation like this, I try to dismiss it immediately. There is no room for it here.

For all of those who contribute, lurk, stop by, stalk, or camp out here on the blog, thank you. You all know that this is "Jeff's trading blog." This is my personal space to talk about whatever I want. This page has no outside affiliation with any organization, company, broker dealer, etc. Simply put, this is me.

My motivation in keeping up this site was to talk about trading. It was helpful to me to write about various topics, document trades, review strategies etc so that I could stay on top of my game, and try to help others. The formula here is such that the number of daily hits here rivals many prestigious blogs. Why?

I do not give trade specifics. There is a calculated reason behind why I do this. I don't want to trade for anyone else. If I did, I would be employed by a hedge fund, not an Investor Education company. If I sat here and ranted all day long about how much money I make, or how well I do in the market, who would want to read that? I have never advised anyone to take or not take a trade here, but I share the stocks on my radar, I am somewhat vocal about what I am trading, and I leave everything else out there for you to decide. I try to help people see what I see, and learn how I trade, rather than just leave my receipts and have everyone follow my lead.

I cannot comment on the motivation of people visiting this site daily, because I know that there is quite a mix. Even the traders that are here for a free meal, still need to figure out what to do with the stock being discussed. There is still a lot that the trader needs to determine to take that trade, to know when to exit, and how to manage risk. My archives have been the answer since all of my recipes are documented here in this blog. Again, that is my motivation...to leave clues of my trading successes & failures.

I get visits from all types of traders and the last thing we need here is negativity. I welcome any trader no matter their experience or background. I like the fact that we all have this element in common. There are traders that have made money and lost money. Those that are nervous and those that are confident. Do not make any attacks on these people. The last thing we need here is to point any fingers at anyone except me. I know the natural defense mechanism when you are getting clobbered in the market is to point fingers, but don't do it here. This is my blog, and I harvest a community, not hostile environment.

If you want to point a finger, click here. I mean it with the utmost respect.

Recommendation: Can we get back to work please?

Long: Positive attitudes

Short: Negativity



No videos today. Here are my victims for the week. Play around with them and see what you think. Feel free to add to this list as well. I will be fairly inactive today, so if you need anything, I will be checking my e-mail occasionally. Have a good one.

APD- Cup & Handle
ITW- Ascending Triangle
KMX- Descending Triangle
MOD- Descending Triangle
UPL- Flag
USNA- Bear Flag
FTO- Flag
KFRC- Symmetrical Triangle (5 yr)
OXM- Descending Triangle
QSII- Ascending Triangle
RESP- Ascending Triangle
PTRY- Ascending Triangle
BRY- Flag
AEM- Descending Triangle
FTI- Ascending Triangle
AMG- Flag
COGO- Head & Shoulders
RDC- Double Bottom (5 yr)
ACI- Ascending Triangle
BRL- Inv. Head & Shoulders

Waiting for support to fail

Support Bounces

Resistance Bounces


What's On Tap This Week?

Honestly, I hardly know where I am this morning. I'm feeling a little groggy, but trying to cope.

It seems a little weird, but it looks like we picked up where we left off last week. Same stocks that were moving up last week are continuing upward and vice versa.

As I collect my thoughts and a few profits this morning, I am also trying to collect my watchlist. If anyone knows where I am supposed to be this morning, send me an e-mail.

Recommendation: Make some predictions!

Long: AH

Short: Casinos


Settle the Score

Here is how I traded PSA. Neckline at 93ish, broke it with volume on Monday. Burn baby burn.


Long: SKS...know about it.

Short: PSA

Never Mind the Decorating I Did...

What a glorious day. Since I didn't get a chance to do my post on exits yesterday, it will have my full attention today.

What's everyone trading? Any good bearish patterns out there?


Long:AH, Holy $#!+

Short: Hopefully something good soon...



They are the first no. 8 seed to beat a no. 1 seed in a 7 game series.
Now that's the "Trade of the Year."
Missed my prediction, click here for a refresher...
Now, I am going back to bed.

Recommendation: Celebrate greatness

Long: Don Nelson and the Warriors in the Western Conference Finals

Short: Mark Cuban and the plane ride back to Dallas

Marketcast Archives

You'll notice on the right hand column, if you scroll down far enough, is a cute little photo that says "The Marketcast." In fact, it looks a little something like this...

If you click on this logo, it will take you to a page where I am hosting all the previous Marketcast episodes organized by date, going back to Dec 06. In case you ever miss a "Cast" go to the archives, where you can download them and take them with you.

Recommendation: Get long some Marketcast!

Another Day Another Dollar

Happy Thursday...I think.

Thanks for your participation in the activity on exits, and for creating a profile on mybloglog. I will have a post later this afternoon with four different charts to discuss exit strategies. For those who sent them, you efforst are appreciated.

I also want to give a shout out to Sarah. I know the IPS trade really sucked, but in a takeover or acquisition, the outstanding options are settled for nearly parity. Since any expectation of this stock increasing or decreasing beyond the takpeover price is crushed, the options lose all implied volatility(expectation). If you are like me and trade out the money options, you actually lose big, even though the price moved big. What a trade off for being right, huh?

Sarah, try not to let it get you down. We'll hunt for the next big winner. You'll recover from this and become a better trader now that you've gone through the experience.

Recommendation: Leave a comment for Sarah, give her a reason not to quit.

Long: MLM, AH...whoa!

Short: Casinos???



If you have not noticed yet, on the right hand column of the blog, under my "desperate for an update mugshot" you will see a window that looks like the image to the right. This is a way to create a username, add a photo, and join the ranks of www.mybloglog.com There are a lot of blogs that use this service, so you can see what else is out there and how we blow away the competition.

It's a free community, and it basically creates an organized community outside the blog. Underneath the photos of "My Option Addicts" there is a link below that says "View reader community." Click it. Then at the upper right of the community page, click "Join Community." Get a photo, and get in the club!

Thanks for your participation and support!

New Activity Idea

For this activity I am going to need a few volunteers. After talking with Tim, he suggested that we have an interactive activity to discuss exits. Here is what I want to do...

Had a bad exit in the past? (for this I only want historical examples, not 500 e-mails asking when is the best time to exit a trade that someone happens to be in) If you want to participate, e-mail me a chart showing a trade you took. While you are in Prophetcharts, mark where you entered and where you exited this trade. After you have provided the details, go to "chart setting" and click on "mail chart." Make sure it is addressed to me, and I will create a post with several of these charts. I would prefer the deadline to be about noon (my time) tomorrow. This will give me time to get a good post wrapped around it. I will provide my opinions, and you can feel free to add yours.

With all the comments about entry and exits recently, I think this might be a great way to fine tune your skills.

Recommendation: Get er done!


Short: AHM, STX

Stage 1: Denial
This is when you have the first sign of a loss. However, you justify this loss. You deny it's true form and decide that it could be a winner...but you just have to "wait it out." "Afterall, I bought a lot of time on my option."

Stage 2: Anger
The loss judt got worse. Now you look to place blame. Freakin' blog! I hate the marketcast anyway!!! Why didn't I do my own analysis???? I HATE JEFF KOHLER!!!!

Stage 3: Bargaining
If somehow this stock can move in your favor, you promise you won't do it again. Or even worse, you start to think of ways to salvage. Desperation sets in.

Stage 4: Depression
It couldn't get worse huh? WRONG! Now this makes a huge mark on your account, your spouse is going to kill you, it is going to take forever to make it back, and you start to panic.

Stage 5: Acceptance
Alright, I will take the loss.

Recommendation: Admit you've been here. It's therapeutic.

Long: ISIL...Chuck, see what patience delivers! Way to hang in there!

Blogging From My Handheld

Yesterdays video was just approved. Wow!

Trade, Trade, Trade

I am headed out the door to go golfing this morning. I need to relax after that game last night.

I wanted to create a new post to try and organize all of todays comments. Feel free to leave them here.

I plan to make a little more progress today with Tim's situation. If you not left a comment to him yet, offering your opinion...do it quick.

See you all in a few hours!


Let The Therapy Begin

Here is the response I captured from Tim...let's give him a helping hand.

i'm fairly new (4 months trading so far), attempting to establish some trading rules that I can follow, and every time i feel like i've gotten somewhere, and things start churning along and i start adding a little money to the account slowly, a short term reversal happens and wipes out all gains plus adds in some losses, and most of my trades go below my exits and so i exit them and then i'm left holding a loss and i start again. slow and steady gains. big, fast losses. result = gradual erosion of capital, which I don't think is the desired result so I want to change.

emotionally, i question how this can actually be a profitable activity. i can understand in theory the idea that some big home runs will one day help to offset some smaller losses. However, I have never experienced a big home run, so i'm having to have a lot of faith that one day that will happen and offset the losses I am incurring.

in the last few weeks, through my participation on this blog, i decided that one of my problems was exiting trades too early or being too tight with stops. so, i decided to change that, to have more patience. and it worked once, with PCAR. i didn't hold PCAR over earnings, but got a decent gain out the day before. and so i've continued with that mindset.

also, i decided to most always wait to the end of the day to exit trades instead of reacting emotionally midday.

one thing that i've done since after 2/27 is i sort of started over and reduced my position sizing and risk. i am literally trading purely to learn right now. i am most often trading one contract and if that's too big, like on a higher priced stock, i trade the stock instead and fewer shares. i'm not in it right now to make huge amounts of money but to learn to trade. however, the same principles still apply and gains still need to be bigger than losses to make money. the smaller positions have helped me react less emotionally while I still feel the emotion because it is real money and because i want to succeed.

maybe the best way to show you what i'm doing is just to give you some of my recent trades:


CG 3/28 to 4/3, Call, +41.58%
FDS 3/29 to 4/11, 50 shares, -3.22%
PSA 4/4 to 4/17 PUT, +9.17%
PKX 4/16 to 4/18 35 shares, -1.72%
KLAC 4/17 to 4/19 Call, -16.06%
PCAR 3/29 to 4/23 Call, +34.72%
CTAS 4/19 to 4/25 Put, -30%
KBH 4/23 to 4/26 PUT, -26.55%
WCG 4/2 to 4/27 20 shares -.92%
CG 4/18 to 4/27 Call - 7.42%
DKS 4/24 to 4/30 50 shares, -2.11%
HWCC 4/20 to 4/30 Call +26.22%
XING 4/24 to 4/30 Call, -22.81%


PAA 4/10, 40 shares (small gain currently, looking like a possible exit today due to broken trendline)
PCP 4/16 25 shares (just about breakeven. looking like a possible exit today due to broken trendline)
SCHL 4/18 PUT (this is one of my puts that went up yesterday and today. still within my threshold to hold on today. small gain on this so far.)
WBD 4/20 30 shares (about breakeven right now but holding in there. patiently waiting for the bounce)
GLD (longer term position -- doing well. pulling back right now but ok)
ABT 4/25 CALL (dropped heavily after entry but decided to stay with it patiently. still in this.)
CCJ 4/25 CALL (took a small, otm position to experiment with earnings strategies. )
CMG 4/25 CALL (also a small position to hold over earnings today -- Brett, please eat that burrito!)
PLCE 4/27 PUT (another put that is up today. was up yesterday. still within the threshhold though)
BNI 4/27 CALL (see below)
NKE 4/27 CALL (BNI and NKE are two good examples of my struggle. When i entered the trade, i treated the recent low as support, but now they have fallen through that but i guess you could make a case that they are still at support. so my loss has exceeded where i wanted to be with risk, but perhaps i should have allowed for more risk?)
ENR 4/30 CALL (this is the closest thing to a breakout i ever traded, but it is sort of a bounce as well and it made sense to me yesterday so i took a small OTM position on the flag pattern)
HWCC 5/1 CALL (my exit from HWCC yesterday was a bit of an accident (had an order in there that i forgot to delete, so today, when it held support in the morning, i got back in with an OTM position to hold over earnings. this is the only thing i have bought in the morning).

Out of all of the short term trades i'm currently holding, nearly all of them are losing right now. some have a slight gain, but certainly no home runs.

i guess one big concern is that i feel that i'm always behind the market. in other words, things are trending up, i get loaded to the bullish side and then thing turn down a bit, so i want to try and take on some bearish trades, i do and then things turn bullish.

another big concern is just to know -- is this normal? maybe it's something i just need to get used to. but i need people with more experience to tell me that.

i don't know if this can give you an adequate representation of what i am struggling with but maybe so. it's at least been therapeutic to put all of this out there. thanks everyone.

please feel free to ask any questions for clarification.

Recommendation: Ladies and Gentlemen...interact.

Trade Salvaging, Flipping, Marinated, Glazed & Served

There was a great post from someone the other day about how they had taken a losing trade, sold more contracts against this losing position and happened to make a few bucks in the end. I am very pleased that this experience was shared with the group. While I am amazed this one worked, I am glad people were able to hear a success story of how this strategy could work.

In case you did not know, I am against this strategy 100%. In my experience and in my mind it does not work. However, there will be times when it can be used, it can work, and it can save a bad trade. But what is wrong with a bad trade?

I question the longevity of this strategy and the psychology behind it. There is no consistent method to always being right. Better yet, there is a serious flaw in the mind of an individual who cannot accept being wrong. Not only in trading, but in life in general. If you have studied the greats in our profession, you won't stumble across the trader who made it to where they were because they were always right. Most of these honest individuals will tell you that they are wrong a whole lot more than they are right, and that they are damn good at taking a loss.

Anyway: back to the topic. The problem is deciding when you are wrong, and then making the call that you can actually make a profit with the rest of the trade now at risk. Worse than that...what if you were actually right (which is the majority of the time, but your emotion doesn't let you see out the rest of your plan) the new additions you made to this trade wind up with a worse loss than what you would have had if you just got out of the trade.

Confused? Sweet!

Bottom line... I gave my opinion. I do not endorse this strategy. I do not wish to discourage those who use it. I express my concern that you use caution, and only use it when it is appropriate.

"Hey Jeff, when is this strategy appropriate?"

Aside from never... I would say when something dramatic changes. When you can see a stock is no longer moving in the direction you wanted it to go, and now you have evidence it will start gaining momentum in the opposite direction (earnings, news, broken support/resistance, etc). However, rather than salvage in this circumstance, I take the loss and enter a new position rather than trying to resuscitate the old one. I lay it to rest....

It is all part of the plan. Take your losses small, don't gamble with them very often. Gamble with your winners instead. Having a higher tolerance for making money and a low tolerance for losing it is where you'll find success.

Recommendation: Videos should be coming up shortly.


Sorry about my unexcused absence yesterday. Looks like the comments were flowing, thanks for keeping things rolling!

I wanted to start this new thread before I go record a few videos. Hope that I don't run into any problems with revver, but I will cross that bridge when I come to it.

The market has let go of some early gains, so play safe. I'll be back in a few.


About me

  • I'm Option Addict
  • From Saratoga Springs, Utah, United States
  • I am a professional trader and an instructor for Investools. I've had relations with the markets for 9 years. Born in Concord, CA, but reside in Saratoga Springs, Utah. Father of THREE, Husband of one.
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