Updated: Dec 9, 2020
Famous Warren Buffet once told us “fearful when others are greedy, and greedy when others are fearful.” It is the fundamental truth in the stock market.
As the stock market is the aggregation of the people's mind game. As many people play this game, some bets on going higher some bets on going down on a stock, the stock market move very volatility.
Because of that volatility, many times people act very irrationally. When there is news comes out, if it is positive news, people tend to overbuy it. That is the classic example of Tesla at the moment. The story is the truth when the negative news comes out, the stock market generally goes down.
However, sometimes, there is no news and it goes up or down very rapidly.
As the option is a highly leveraged product, I tend to buy and sell the option within that day's trade period. I had a good experience with just buying the deep in the Investco QQQ Trust. The reason I play QQQ is it is a highly liquid options market as well as it actually moves about 1% easily for the duration of the period. Today I made an order "Buy at here."
10 Dec-11 $306 Calls @ $2 is the one I purchased. It was 0.7% down on QQQ at that time. It is the setup I like to purchase since the market went down rapidly in a single candlestick and it is around negative 0.6 ~ 0.7% on the market. I do not know why but the market has a tendency to goes up when it hits that level.
These days I don't do deep buy much since it takes too much time. Today, I just woke up and look at the chart it was a good setup or the setup I like, so I actually went in for a small portion of it.
As of writing this blog, I am already out of the trade. I sold the
10 Dec-11 $306 Calls @ $2 sold @ $2.3. Profit of $300.
Purchased @ $2 and sold @ $2.3. It is a small profit, but for about 30 minutes, I made 15% of my money. If I am in the money for this, I would watch the stock market for the rest of the day. For that reason, I like to close out early and move on with my life.
For a trade like this, it has to be small and amount that you are willing to lose in a couple of hours since if it goes negative on you, you will lose most of it.
If I had kept the trade, there is a high probability I would make more money today, but I don't want that profit for now.
Today the market is mixed. But Etsy has outperformed today. It is a profit of 77.27% as of right now. If I get a profit of more than 80% of Etsy trade, I would close out the trade and sell another one to get a little more money for the week.
I am not a financial advisor. Any trades listed are my own personal trades and meant for educational purposes only. Option trading bears high risk and high return strategy for trader.