Wednesday, August 24, 2016

Thursday's Prospects

Screening of the Wednesday, Aug. 24 markets identified nine prospective trades out of the two datasets and four strategies that I'm using.

This week, for options trading, I reviewed 474 symbols in my large-cap stocks and exchange-traded funds, and for share trading, I reviewed 953 symbols of stocks and funds of all capitalizations. For both I reviewed 1,412 companies publishing earnings.

I use four strategies in my trading, in response to trading signals (such as breakouts above the 20-day price channel), high implied options volatility, and persistently rising trends on a chart, and in anticipation of events ( such as earnings announcements).

 options  shares 
signalsN/A1
earnings01
volatility1N/A
momentumN/A6

I shall make final trading decisions on Thursday, Aug. 25.


The Black Swan
by Nassim Nicholas Taleb


Below are the candidates for analysis for each cell of the quadrant.

Wednesday's Outcomes

I exited an options earnings play on TGT for a profit.

I entered five small-lots shares positions using the Stochastic-RSI as an indicator.

symsharesentry dateexit dateentry price per shareexit price per shareresult $result %annual ratedays heldtactic
CIGI28/24/201643.41rsi
GALT508/24/20162.03rsi
MRLN68/24/201618.34rsi
SREV198/24/20165.20rsi
TBNK48/24/201628.01rsi

I exit six positions, ending the last entered based on moving-average trend signalling, leaving only positions entered using the Stochastic-RSI.

symsharesentry dateexit dateentry price per shareexit price per shareresult $result %annual ratedays heldtactic
ANW58/19/20168/24/201610.6110.47-0.14-1.34%-98%5trend
CC48/18/20168/24/201612.4612.38-0.08-0.65%-39%6trend
COHR18/19/20168/24/2016110.50109.81-0.69-0.63%-46%5trend
CRY78/23/20168/24/201615.6515.43-0.22-1.43%-520%1rsi
LNTH68/19/20168/24/20167.917.17-0.74-10.32%-753%5trend
TPX18/23/20168/24/201680.1279.06-1.06-1.34%-489%1rsi


By Tim Bovee, Portland, Oregon, Aug. 24, 2016



The Courage to Act
by Ben Bernanke

Wednesday's Small Lots

I entered five small-lots shares positions:

symsharesentry dateexit dateentry price per shareexit price per shareresult $result %annual ratedays heldtactic
CIGI28/24/201643.41rsi
GALT508/24/20162.03rsi
MRLN68/24/201618.34rsi
SREV198/24/20165.20rsi
TBNK48/24/201628.01rsi

I exited one position:

symsharesentry dateexit dateentry price per shareexit price per shareresult $result %annual ratedays heldtactic
LNTH68/19/20168/24/20167.917.17-0.74-10.32%-753%5trend

By Tim Bovee, Portland, Oregon, Aug. 24, 2016



Supply and Demand Investing
by Clair Edward Leedom III

Wednesday's Agenda

Updated by eliminating ADMN, which doesn't trade on my no-fee brokerage Robinhood Markets, substituting TBNK in its stead.

I have entered five small-lots positions drawn from the pool listed in Wednesday's Prospects. The trades will be in MRLN, CIGI, SREV, ADMN TBNK and GALT.

As expected, HPQ and SDRL failed to meet my standards for earnings plays using options.

By Tim Bovee, Portland, Oregon, Aug. 24, 2016



Risk-Return Analysis: The Theory and Practice of Rational Investing (Volume One)
by Harry R. Markowitzh et al.


Risk-Return Analysis: The Theory and Practice of Rational Investing (Volume Two)
by Harry R. Markowitzh et al.

Tuesday, August 23, 2016

Wednesday's Prospects

Screening of the Tuesday, Aug. 23 markets identified five prospective trades out of the two datasets and four strategies that I'm using.

This week, for options trading, I reviewed 474 symbols in my large-cap stocks and exchange-traded funds, and for share trading, I reviewed 953 symbols of stocks and funds of all capitalizations. For both I reviewed 1,412 companies publishing earnings.

I use four strategies in my trading, in response to trading signals (such as breakouts above the 20-day price channel), high implied options volatility, and persistently rising trends on a chart, and in anticipation of events ( such as earnings announcements).

 options  shares 
signalsN/A0
earnings00
volatility0N/A
stoch-rsiN/A5

I shall make final trading decisions on Wednesday, Aug. 24.


Elliott Wave Principle
by Robert Prechter


Below are the candidates for analysis for each strategy.


Tuesday's Outcomes

I entered small-lots shares positions on CLD, CRY, DTLK and TPX. I exited three small-lots positions: LOGI and MKSI. See Tuesday's Small Lots for details.

By Tim Bovee, Portland, Oregon, Aug. 23, 2016



he Business Blockchain: Promise, Practice, and Application of the Next Internet Technology
by William Mougayar

Small Lots Trading: Lessons so far

I began an experiment in late July in trading small lots of shares in companies, a strategy made possible by the business model used by Robinhood Markets,  a brokerage that charges no fees or commissions for each trade. It makes its money by interest on uninvested funds.

I wrote about my view of the opportunities the new trading model presented in Small Lot Trading: A new strategy.

At a typical online brokerage, a round-trip stock trade costs $20. At that price it's not feasible to make trades worth $50 or $100 apiece. A $50 stock position would need to earn a 40% profit just to break even.

That reduces the ability to form a diversified account. It also forces traders to be less sensitive to the movements of the market. At $20 a round trip, I can't skim a very small profit and move on when the short-term trend peaks; I have to trade at a less sensitive level, a longer-term strategy.

I think of it in terms of Elliott wave analysis: Market trends are fractal, uptrends and downtrends within larger level uptrends, and so forth from the tick chart to a monthly chart spanning decades, or even centuries.

Robinhood allows me to trade at a small level. I choose to use the daily chart as the basis of my trades, which for the most part have lasted five days or less.

After some experimenting, this is how I'm approaching the problem now.


Technical Analysis Explained
by Martin Pring

Tuesday's Small Lots

I entered four small-lots shares positions, using the stochastic relative strength index as an indicator:

symsharesentry dateexit dateentry price per shareexit price per shareresult $result %annual ratedays heldtactic
TPX18/23/201680.12stoch-rsi
DTLK108/23/201610.51stoch-rsi
CRY78/23/201615.65stoch-rsi
CLD288/23/20163.66stoch-rsi

I exited two positions based on the trend indicators I used upon entry:

symsharesentry dateexit dateentry price per shareexit price per shareresult $result %annual ratedays heldtactic
LOGI28/19/20168/23/201622.2621.75-0.51-2.34%-214%4trend
MKSI18/22/20168/23/201649.1248.77-0.35-0.72%-262%1trend

By Tim Bovee, Portland, Oregon, Aug. 23, 2016



Capital in the 21st Century
by Thomas Picketty

Tuesday's Agenda

I started the day with six small-lots plays on my desk. Two -- HNI and ORA -- no longer qualify for a trade. Four -- TPX, DTLK, CRY and CLD -- continue to qualify, and I shall trade them this morning.

By Tim Bovee, Portland, Oregon, Aug. 23, 2016



The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War
by Robert J. Gordon

Monday, August 22, 2016

Tuesday's Prospects

Screening of the Monday, Aug. 22 markets identified !# prospective trades out of the two datasets and four strategies that I'm using.

This week, for options trading, I reviewed 474 symbols in my large-cap stocks and exchange-traded funds, and for share trading, I reviewed 953 symbols of stocks and funds of all capitalizations. For both I reviewed 1,412 companies publishing earnings.

I use four strategies in my trading, in response to trading signals (such as breakouts above the 20-day price channel), high implied options volatility, and persistently rising trends on a chart, and in anticipation of events ( such as earnings announcements).

 options  shares 
signalsN/A0
earnings00
volatility0N/A
RSIN/A6

I shall make final trading decisions on Tuesday, Aug. 23.


Option Volatility and Pricing
by Sheldon Natenberg


Below are the candidates for analysis for each cell of the quadrant.

Monday's Outcomes

I entered a position on BBY timed to coincide with earnings.

I entered two small lots shares position, on AOSL and MKSI, and exited two positions in addition to those reported in Monday's Small Lots: AM, AMPH, AOL, DVN, MKTX, OCLR, PLCE and RTEC.

symsharesentry dateexit dateentry price per shareexit price per shareresult $result %annual ratedays heldtactic
AOSL38/17/20168/22/201619.5520.050.502.49%182%5momentum
PCH18/19/20168/22/201638.5938.680.090.23%28%3momentum

By Tim Bovee, Portland, Oregon, Aug. 22, 2016



Higher Probability Commodity Trading
by Carley Garner

BBY Analysis

The consumer electronics retailer Best Buy Co. Inc. (BBY), headquartered in Richfield, Minnesota, publishes earnings on Tuesday before the opening bell.

[BBY in Wikipedia]

BBY

I shall use the OCT series of options, which trades for the last time 60 days hence, on Oct. 21.

Ranges

Implied volatility stands at 39%, which is 3.2 times the VIX, a measure of volatility of the S&P 500 index. BBY’s volatility stands in the 44th percentile of its annual range. The price used for analysis was $32.64.

Ranges implied by options and earnings
WeekSD1 68.2%SD2 95%Earns
Upper37.8643.0834.25
Lower27.4222.2031.03
Gain/loss±$5.22±$10.44±$1.61
Implied volatility 1 and 2 standard deviations; central tendency earns move

The Trade

BBY has been moving in a sideways trend since March 12, ranging between about $29.35.

Brokers in aggregate give BBY a negative 43% enthusiasm rating, with 29% of 14 analysts issuing strong buy recommendations.

BBY has risen immediately after half of its last four earnings, stretching back a year.

I'll use a direction neutral strategy for my analysis.

Iron condor, short the $36 calls and long the $37 calls,
short the $29 puts and long the $28 puts,
sold for a credit and expiring Oct. 22.
Probability of expiring out-of-the-money

OCTStrikeOTM
Upper3681.5%
Lower2876.3%

The premium is $0.31, which is 31% of the width of the position’s wings.

The risk/reward ratio is 2.2.

The zone of profit in the proposed trade covers a $4 move either way. The biggest immediate move after each of the past four earnings announcements was $2.98, and the average was $1.72 After eliminating the maximum and minimum post-earnings movements, the central tendency is $1.61.

Decision for My Account

I have entered a position on BBY as described above.  The stock at the time of entry was priced at $32.79.
-- Tim Bovee, Portland, Oregon, Aug. 22, 2016

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.


Elliott wave analysis tracks patterns in price movements. StockCharts has a good explainer. The principal practioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading

Alerts


Two social media feeds provide notification whenever something new is posted.


Disclaimer
Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.
License

Creative Commons License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

Monday's Small Lots

I entered one small-lots shares position:
symsharesentry dateexit dateentry price per shareexit price per shareresult $result %annual ratedays heldtactic
MKSI18/22/201649.12momentum

I exited seven positions:
symsharesentry dateexit dateentry price per shareexit price per shareresult $result %annual ratedays heldtactic
AM28/19/20168/22/201627.0826.63-0.45-1.69%-206%3signal
AMPH38/17/20168/22/201618.9220.271.356.66%486%5momentum
DVN18/17/20168/22/201643.2244.301.082.44%178%5momentum
MKTX18/18/20168/22/2016166.28165.28-1.00-0.61%-55%4momentum
OCLR78/17/20168/22/20167.047.300.263.56%260%5momentum
PLCE18/16/20168/22/201686.0385.36-0.67-0.78%-48%6earns
RTEC38/16/20168/22/201617.1917.820.633.54%215%6momentum

By Tim Bovee, Portland, Oregon, Aug. 22, 2016



Rescue Your Money: How to Invest Your Money During these Tumultuous Times
by Ric Edelman