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.

At mid day today, I've noticed a lot of buying volume coming into REIT stocks. Still short REIT's.

OMG broke out on Friday and is up nicely so far today.

Water transportation was down most of last week so if you wanted to get in on a dip, now is a good time (DRYS, EXM, TK, etc..)


Can I be a victim on ARW?

Am I crazy or is the market maker crazy for selling the June 45 for 25c. the stock is trading at 42.5 43. should a $1 or $2 gain on the stock in the next month make that option move substantially?

Be kind, but I am ready to face the music, as I bought a few contracts with the hope being right but having no problem in losing the premium.

Mike, Volatility is very high (65%) on DRYS & EXM,.. Tk needs more of a confirmation imp. vol. is (29.5%) I'll wait & see. Thanks for the picks.

Mike, Volatility is very high (65%) on DRYS & EXM,.. Tk needs more of a confirmation imp. vol. is (29.5%) I'll wait & see. Thanks for the picks.

Hey Ladd. Yeah, with a Delta of .97 you are almost completely intrinsic value so there is hardly any time value melting away. I mean, I'm looking at the quotes right now on that option and the mid price is about 16.35. The stock is trading at 115.90, so there's 45 cents of time value in there. So, if the stock went flat from now until expiration you would only lose 45 cents.

I'm not saying you should necessarily hold all the way to expiration, but I'm saying I wouldn't let time be much of a factor in your decision making as the time decay is very minimal for you now and will continue to become less and less if the stock price continues up.

Jeff, what percentage of my account should I have as a hedge? I have 4 PUTs in my account and yes they are the ones others are talking about (PSA, ESS, PLCE, PFCB.) All of the virtual profits that my CALLs are making are eaten up by these few PUTs. Based on my current mix I seem to balance out in up and down markets not making headway either way. Over reacting to 2/27?

Thanks, Jeff, for the encouragement. I am not real experienced in puts, and almost all of my puts are up today.

Looks like energy (oil and gas) are on fire again.

What say you?

Randall and Michelle

Hey Jeff. Love the idea of the case studies. Thanks for that!

Case studies sounds like a great idea. Looking forward to getting a bit smarter by weeks end.


I like the idea of walking us through a trade and picking an option price. I look forward to it. Thanks.


PCAR could be breaking out of a new flag

Ugh! Looks like I caught a fake out rather then a breakout on ABT on Friday.

Now back in the asc. triangle. Going to give it more room and time though thought I had a nice entry...


KMX breakout

Is anyone on the LOW trade?

Bad earnings big volume lots of selling. I smell decline.

I am in the trade, but I would wait until it breaks support to get in if you are not already
HD is also winding in a symmetrical triangle

Guys, you know how much I loved CY.

Many of us rode straight up that flagpole.

Now we can ride up the next one.

AMG is breaking out today.

ATI is winding up for a break to the upside.

HNI (one of Jeff's picks) is winding up in its triangle, waiting to drop.

DECK has made a move, albeit on shallow volume.

GS looks to be 'maintaining' it's breakout from Friday.

SUN and TSO are rocket-powered

and SKS 'S**KS' today post earnings! I'll wait to see where it's going to close.

Check out UPL coming out of the flag

What's up with AMZN? The news looked negative, yet it's up $5.

With the big buy of Alltel, will that affect GS negatively?

Sometimes I have a hard time interpretting how the news affects stocks.



Thanks for the continuing education. Can't wait for the case studies.



This should be an Ah Ha! moment. Never ever leave it up to yourself to interpret news (unless you are a senior economist for some big name financial firm). Instead, let the market interpret it for you! Obviously the market liked the AMZN news regardless of how you interpreted it. In short, let the market do all that work for you.

Make sense? I remember that being a big "Duh" moment for myself a long time ago, thought I'd share.


New to the Blog, been watching from a distance and would like to jump in.
How about HNI for a Put? Also, Carmax has broken down on some good volume.

Yeah, HNI and KMX have been on Jeff's list for quite some time. Good to see them confirm!

Thanks Jeff,


Thanks for the encouragement and advice. I had been watching AMZN waiting for it to break, and it did, but I was a little confused and waited a while before I entered because of news. After reading How I Made $2,000,000 in the Stock Market, I decided to just go with what my interpretation of the charts said, and make a move. But I still doubt myself sometimes. I hope that gets easier as I am in this business longer and have more confidence in my decisions.

Thanks again,

Anybody riding the SLB escalator? I am fighting the emotion to let these winners run (don't want to try and pick the top). Group therapy please ~ ~ ~ I am an addict and I like to cut winners short and let losers run......feeling a bit better now ~ ~ ~ ~


Higher highs! The price looks great.

Way to, let the stock price work for you.

I am looking at CFC for bearish trade. What say you Option Addict ?

Kas sleep less in seattle

52 week and all time high
looks good


I don't see it. I see a short term uptrend. What are you looking at that makes you want to take a bearish trade?


Travis -
I'm in SLB - took 1/3 off the table today. Letting the rest run. I'm with you - I'm terrible about cutting winners short. I'm trying to hold on to this one.
:-) Pat

In the ST I see higher highs, higher lows...

Yeah my friend,

Bet the pass line on that one.


Sorry to have missed lots of great blogging today.

Jeff, just couldn't let the oportunity pass about the shorts.... I saw a trainwreck once and it looked JUST LIKE THAT!! If you were a smoker, people would have called 911.

MLM is back on track (speaking of trainwrecks.) An ideal entry would have been Thurs or Fri, but today it's confirmed. Climb aboard.

PS Hey Brett, I still don't have any attachment to DRYS, but it's bounced and it's next stop is $100... oh wait, that was AAPL.

anyone else like this. it is overextended, maybe some consilidation for a bit? Thoughts

Hey by the way Travis and Pat... have a look at DRYS and PCP. These are why we don't take little bits off the top and hope it might keep going up. We buy into the trend and don't buy out until the trend is broken. Those 500 and 600% gains are what keep your head above water while the 50% losses are piling up.

Take it from someone who has sold out 'way too early on 'way too many stocks.

Thanks, C&C -
I'm getting better. Really. Not long ago, I would have sold it all (while holding on to my losers with a death grip). I'm learning from your bag of hammers.
Blog therapy really helps.
Got into MLM today - good entry point. DRYS is a good support bounce, too. I'll try to get that one tomorrow.

Yeah, Thanks for the heads up on DRYS. I have been waiting for an entry point, too. Nice day today in the market.

Randall and Michelle

Make fun of the shorts? Make fun of the shorts??!! Heck no! Where can I get a pair?? Geez, been a busy day with my 'real' job. No time to trade and all my positions are pretty stagnant. Hopefully I'll have some time tomorrow.

Travis ... I'm on SLB and it has risen above my initial stock price goal.. I have stopped it out 3% below that for profits and riding it the rest of the way (and for the NO STOP folks for which I agree with.. that puts me at a STOP stock price of 3% below 75.... I too am being more patient not to 'cut and run' ... Jeff and Murphy and Lefevre' have helped me with that ... (Jeff you are in quite the good company there .. :))))

Great blogging today .... and Jeff look SO FORWARD to the Case studies this week .... It will help me fine tune my strategy ... always ready for that ....

AND one more thing ... Thanks for the earlier input today regarding the 3 DAY LIVE ... I'm going in July ... and agree with you guys .. I'll look at the rest after that .. I'm Masters now and not sure PHD will help me all that much because of the type trader I hopefully am becoming ... but will stay open to it ... GREAT help here today regarding all of that ... (Came from the Red and Blue Bowling ball entry ... and of course those AWESOME Jeff Kohler Pants ... :))))

Good evening everyone!

The MGM double top break out earlier in the month is going to be tested in a big way tomorrow morning! After hours news has it up over 16%!

I’m grateful for two things: 1) I am properly positioned to lose the entire premium and 2) I have September puts which “may” give it a chance to have value again.

I’m hopeful for a big increase in volatility that will give me some value to exit with in the morning.

Tracinda is entering negotiations with MGM. LVS and WYNN are also up big in after market.

To whomever asked about the 3-day, I am here in Utah right now, having completed day one of the 3-day and I heartily recommend it. I have rules issues in general which has been a big part of my lack of good (consistent)results and after this first day, I am already on the road to recovery.

That said, had I better rules in place a couple of weeks ago, I'd still be in the SLB trade which I entered too early, stopped myself out exactly THE DAY BEFORE it started to take off. Lesson learned.

Doji Girl

who just got wacked by MGM....MEEEE!

To anyone contemplating any of the live Investools seminars... I strongly recommend them. We went to Orlando and really, really want to go to Chicago in August. The people we met (including the 12 foot tall JK) more than made the price worthwhile. We're trying to figure out how to convince IT to give us free tickets to Chicago. I'm thinking a little advertising space on my (ample) forehead might do the trick.

Just being there live made the trip very very worthwhile.

Chris and Catherine.


Concerning the case study trades. Please consider entering the trade orders after the market closes. That is when several of us have to wait to enter our real orders.

Thanks, real case studies from begining to end is a great idea!

Thanks again,


This blog is fantastic. Thanks to you and all the option addicts.

I am looking forward to the case studies.

Hey, What's up with Market Cast? I am still getting Friday's.
Technical difficulties?

Randall and Michelle

Benton, like you it has surpassed my target and I would love to see it continue to climb. Current market conditions with regard to oil will probably help. Anyway, your stop point makes sense. Like C&C stated, these are the ones that keep us in the game and allow the little losses to remain insignificant. Thanks Pat and all for the encouragement. Jeff, this blog is the best. It really feels like everybody is pulling for each other and no one is condescending or too haughty to respond to even basic psych issues.

Here's to tommorrow!!!

PENN and DECK making a run for it this morning.

Danny DR

I've said it before and i'll say it again:

this VIP is the weirdest acting stock i've ever seen. It routinely defies common pattern analysis. then again, when you realize the trend is steadily up, you have to buy on a dip and ignore the gyrations.

I had to get out of it. It has burned me three times and I don't understand its moves, so I decided to play something I feel more comfortable with. I am glad it works for you. It has a nice trend.

Looks like kind of a slow day, but it is still early.

Randall and Michelle

Agreed on VIP. Well, congrats on those that exited ASEI and PLCE! I have to regroup and find trading rules that mesh with my schedule as my gains keep getting wiped out because of stops and not being at the computer. This week protective PUTs are the drain in the account. At the rate I am going I cannot rebuild from 2/27 because as soon as I get gains they are wiped out...sorry need community support I guess.


Can I offer a few suggestions?

1) don't look at the puts as 'protective'. As Jeff points out, it's a market of stocks, not a stock market. find strong put candidates and only take the best trades.

2) forget 2/27. Don't use that as a milestone or a target. Focus on finding trades and position sizing accordingly and you'll blow by 2/27 without even realizing it.

3) figure out why your gains are being wiped out. Are you not putting proper stops in place? Are you taking trades too late? Are you loading up on some and undercapitalizing other trades?

just some ideas. keep at it. you'll bust through if you constantly focus on improving every aspect of your game.

Post a Comment

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.
My profile

Prescriptions Here!

Other stuff

Blogarama - 
The Blog Directory
Directory of 
Finance/Business Blogs Finance 
blogs Top Blogs Finance Blogs - BlogCatalog Blog Directory