Time to make money with PBR: OIL BITCHES
- Thread starter mGrunin
- Start date
Lol Instead of purchasing options I purchased shares. Is that bad? I have no idea what I'm doing.
There wasn't much action today. PBR fall 1c (0.07) from Friday's closing price so just a sideways day. We did see a high of $13.84 today, but we finished at $13.66. Unfortunately when I first executed the position, the stock was around low $13.70s.
I would like to reiterate that my risk on this position is $20,000. My maximum gain is exactly $20,000 after commissions. I need >$14.00 for maximum gain. My breakeven level sits at $13.75.
As of right now, I am down $2,000 on the position. The shitty thing was that when I was sending out the order, I got a fill at a shitty price. I became a bit impatient when I wasn't getting an auto-fill and ended up getting in at a 25c debit, while the market was at 23c at that moment. So I was down $1,600 right off the bat.
Anyhow, plenty of days left. I feel optimistic.
I would like to reiterate that my risk on this position is $20,000. My maximum gain is exactly $20,000 after commissions. I need >$14.00 for maximum gain. My breakeven level sits at $13.75.
As of right now, I am down $2,000 on the position. The shitty thing was that when I was sending out the order, I got a fill at a shitty price. I became a bit impatient when I wasn't getting an auto-fill and ended up getting in at a 25c debit, while the market was at 23c at that moment. So I was down $1,600 right off the bat.
Anyhow, plenty of days left. I feel optimistic.
Gold on the otherhand was stomped down today! GLD right now is trading at $115.39 which is even lower than the entry level I got in last week!
In other words, running a similar play here as I did last week looks attractive. That $115 support should still stay true. The largest concern though is how fucking weak it is on the buying side. Imagine a support level as the following:
You hold a handball in your hand and drop it to the ground. The ground is the support level. After every single bounce, the bounce will be weaker and weaker until the ball is flat on the floor. We are seeing this taking place with GLD. The bounces off the support line are becoming smaller and smaller, which can finally lead to a break of the support line since there isn't enough buying at the ground level to bounce it back up again. This alone is enough for me to look past this GLD trade for now, and look for a better opportunity.
In other words, running a similar play here as I did last week looks attractive. That $115 support should still stay true. The largest concern though is how fucking weak it is on the buying side. Imagine a support level as the following:
You hold a handball in your hand and drop it to the ground. The ground is the support level. After every single bounce, the bounce will be weaker and weaker until the ball is flat on the floor. We are seeing this taking place with GLD. The bounces off the support line are becoming smaller and smaller, which can finally lead to a break of the support line since there isn't enough buying at the ground level to bounce it back up again. This alone is enough for me to look past this GLD trade for now, and look for a better opportunity.
In this specific position, a sideways market would lead to a loss in the position. If I decided to take a more conservative approach and buy the $13C strike as opposed to the $13.5C strike, then a sideways market would still yield a maximum gain for me. The big difference is that my ROI would only be 25%, and I generally do not want to deal with such odds.
I also took your concern into mind when looking at this trade, which is why I gave myself an extra week than usual to see further development in price action. It has now sat about 15 days or so along this support level, and I would be highly surprised to see it still sitting here for another two weeks.
One thing I would like to point out is that implied volatility is extremely low right now. So any movement for this stock right now will yield in large % swings with my position. I might even close this position the instant it goes above $14 because I should be seeing a 50%+ return at that point either way. The worse scenarios are when it bounces higher, but since your expiration is a bit further out and you keep holding, and it comes right back down to your entry level. Considering how much it loves that support level right now, I would be keen towards closing the position the instance it begins building higher.
Nothing wrong with that. If I were buying shares, I would be fucking a fuckload in PBR right now because I do believe that $13.32 support will hold, the only uncertainty lies in when it will finally begin legging higher.
Nope.
First time I went to Vegas, my buddies wanted to meet up the first night at PBR on the strip and I said "Pabst has a bar in Vegas?"
Awesome. TY for taking the time to respond man.
I hadn't considered what you said about any slight move bumping the implied volatility up!
Do you ever just buy calls? Naked calls I guess.
True dat. OP, I doubt you need my help, but here's what I use after each post on my equity trading blog.
'Disclaimer: I am long AAPL. I wrote this article myself, and it expresses my own opinions.' I pretty much went with what Seeking Alpha uses for their writers
It'll break support because everyone is washing out before years end take take advantage of the GLD "bloodbath" in 2013 for some nice tax harvests.
I agree though should be a nice entry in the next few days.
What is your opinion on this chart?
I don't believe we would see such downside in 2014.
A few months ago I would have agreed that at the very least the market would post a negative 2014, but after seeing the schedule the Fed put out for tapering QE...it is quite clear that the markets will look to continue making new highs.
Right now $85b is being pumped into Treasuries. Starting, January, the Fed will be reducing that amount by $5b every single month. This is very gradual tapering. The markets would begin to get rocky Q3/Q4 but Q1/Q2 look to be all green. Hell..by December 2014, there would still be $15b pumped back into the market. Hell of a lot lower than $85b that is for sure though.
Are you sure this information is accurate?
If I'm not mistaken, the only thing that's certain at this point is that they'll reduce the monthly amount by $10b in January but I don't recall reading anything about a commitment to reduce it by $5b each month after that.