OPTIONS UPDATE
Alrighty folks, I’m back with some updates! Lots to cover in this post as we finally moved over from paper trading to live real money trading. I’ll be walking through my experiences in chronological order so bear with me and stick around to the end of the post to see how we’re green the past two weeks!
VULCAN MIND MELD INDICATOR
First up, let’s talk about how the ole Vulcan Mind Meld indicator has been working out. for those of you who have no idea what I’m talking about, in my previous post I included a link at the end of it for some free TradingView indicators I created.
This indicator essentially displays signals for the way I swing trade stocks, but this can also be useful for options as well, though it’s not perfect. Here are my findings:
- It works better the larger the time frame. So especially good for stock swings on the daily chart.
- For options I find the 10 minute to be a good balance of short term timing and less noisy signals.
- Also for options, the settings vary depending on the stock. I find it best to experiment with different settings (i.e. 5EMA and 20SMA, 9EMA and 21SMA, and 9EMA and 21EMA) and see which combos works best for which tickers and use them accordingly.
- These settings can even vary between the GREEN and RED X signals — meaning the 5/20 might signal better for Red Xs and the 9/21 might signal better for Green Xs. Again, test and take notes for each stock.
This is not an indicator to use alone (nor is any indicator as they all use lagging data). Be sure to draw Support and Resistance levels on your charts as well as comparing multiple time frames for confirmation.
TEST TRADE
Here is a great story of what NOT to do. For my test trades with real money, I took two options positions one in AAPL and one in MSFT:
- 12/16/24 — (1) MSFT 460c 1/3 @ $2.85 which cost $285.67 (with fees)
- 12/16/24 — (2) AAPL 260c 1/3 @ $1.21 which cost $243.34 (with fees)
Everything was rocking and rolling! On the 17th I was up 75% on MSFT and 11% on AAPL! They fluctuated throughout the day. Here’s a screenshot I sent to some buddies:
Now what I should’ve done was cashed out and taken the win, but as I said, this section is about what NOT to do.
Instead I held. And the next day was the FED announcement. Now and data coming out is always nerve wracking and I find most of the time you’re better off not playing it. But the word was that the FED was not going to be raising interest rates, so I rolled the dice — and it crapped out.
They did indeed announce that they were holding interest rates steady and not raising them BUT they also said they were in no rush to cut them — which the market did not react well to.
Stocks plummeted which meant so did the options...
I still could’ve exited with profit but instead I got greedy and held firm hoping I’d regain the same levelsI was at before. I was so stupidly confident that AAPL would hit the $260 level and get In The Money (ITM) that I added another APPL option to DCA down:
- 12/18/24 — (1) AAPL 260c 1/3 @ $0.98 which cost $98.67(with fees)
This actually proved to be a good move, but the only if I didn’t make the following errors which still baffle me.
On Dec 26th I sent this screenshot to my buddies:
Now the move I considered here, which would’ve been the right move, was to close out both positions and essentially break even with only about a $16 loss. But for some reason I thought I had more time since the calls were for January… but the 3rd was only a week away. So I did nothing.
Eventually APPL dropped too because the Theta burns away the premium the closer you get to the Expiration Date, not to mention the price getting farther away from the Strike Price.
Whelp. I eventually let them expire worthless, losing a total of $627.68.
An expensive lesson, but a stark reminder to never get greedy and most importantly — TRADE WITHOUT EMOTIONS.
Also, I came up with a new rule:
If I find myself sending screenshots to gains to my trading buddies — TAKE THE PROFITS!!!
THE REVERSAL
But don’t worry, this all turns around. Remember that free options profit chart I posted? Well, as of right now here’s what it looks like after I returned to trading with real money on Jan 24th:
That’s right. I’ve dug myself out of the hole and up $440 in just two weeks.
Every trading day so has been a GREEN one!
On top of that, each position (I only did one at a time) was only about $300. So from -$627.68 to +$440.02 I was able to make $1,068 using the same $300 for multiple trades.
So what changed? How did I do that? Let’s dive in to what you’re really here for.
THE SECRET SAUCE
In my last post, I mentioned that we joined a trading group and I’ve honestly found this to one of the most helpful additions to my options trading journey. Not only am I learning a ton, but it’s a fun community full of awesome people and well — insanely good options plays from people who have been doing this a lot longer than I have.
Now before I link you to the group — to which I am not a part of other than just being a member — I want to talk about etiquette when join a trading group. I feel this needs to be discussed because it’s something that I’ve noticed, and get annoyed by, when I see new members joining who don’t use common sense.
The DOs and DON’Ts of Joining a Trading Group
1. DON’T ASK PEOPLE WHAT THEIR POSITION SIZE IS
You’ll always get the same answer: Whatever makes sense for YOU!
They’re not being dicks or avoiding telling you how much money they have. They are 10% right. Every trader has different account sizes. Different risk tolerances. Different trading plans. Their position size is completely irrelevant to you. All that matters is the trade.
2. DON’T ASK PEOPLE NEWBIE Qs DURING TRADING HOURS
You’d think this would be obvious but it’s not. New members are constantly asking dumb questions in the middle of the trading day when everyone is actively trading their positions.
Think about it like this — If you saw a fireman in the middle of fighting a burning house, would you stop him, “Hey, how can I become a fireman? How much does the job pay? How do you know where to aim the hose? etc…” No you wouldn’t!
It would probably be better to ask these questions when they’re hanging out in front of the firehouse relaxing. Same goes for traders. If you don’t know what you’re doing, wait til after trading hours then ask all kinds of questions!
3. DON’T ASK PEOPLE NEWBIE Qs DURING TRADING HOURS
Do your homework! This goes hand-in-hand with the previous rule. Asking questions is fine if it’s to better understand a concept, but don’t ask questions with zero understanding of any trading concepts.
For example, I see a lot of people asking questions in the chat that are all covered in the mastermind classes that are also posted. These are 3+ hour long in-depth videos of trading basics. If you watch those and need clarification, totally fine. Bu if you were lazy and skipped the videos and are asking dumb questions, it really annoys the people who took the time to make a 3+ in-depth video covering all this stuff. So again, DO YOUR HOMEWORK!
4. DON’T RUSH INTO TRADING
I’ve seen so many new members enters the chat and burn through their entire trading account with 1 or 2 bad trades. DON’T BE THAT PERSON!
I cannot recommend Paper Trading enough. We’ve been doing it since November and it’s helped us learn a ton without wiping out our account. I know you want to rush into making money but you’re probably just rushing into losing money.
5. FIND THE TRADES THAT MATCH YOUR STYLE
There are a lot of people posting trades in these types of groups. You need to find the ones where you understand why they took the trade, when to take the trims, and when to get out if to goes the the wrong way.
This boils down to all the above tenets I mentioned. First, do your homework. Then start with paper trading.
The last thing you want is to get in a trade you don’t understand with real money, then it goes the wrong way and you don’t know when to get out and then you find the person who called out the trade got out a while ago — meanwhile you were losing money waiting for them to respond.
This is how we’ve been making our money the past few weeks. We found the traders who match our style and we follow their trades and it’s paid off magnificently!
ENOUGH ALREADY — HOW DO I JOIN THIS GROUP??!!
Again, this is not my Discord group — I’m just a member. Also, there are a lot of things they offer in addition to the Premium Discord and Mastermind classes — but honestly, save your money for now, you can always add these things later. First see if you like it before you dump more money into it.
The two items I found ESSENTIAL are:
*NOTE: The Premium Discord even has a FREE 7 Day Trial. Take advantage of that just to get a feel for the vibe.
I also recommend watching the Mastermind in its entirety! Yes it’s long, but damn is it full of useful information. And even if you know some of the basics already, it never hurts to have a refresher. He also posts new Masterminds which this also gives you access to.
Now if you are one of those people who want to go all in and get everything right away, there is a FULL ACCESS tier that gets you the TradingView indicators as well — it does save you money versus buying everything individually and has a 7 day FREE TRIAL.
*NOTE: This does not include the Mastermind Classes
For me, joining this group has been one of the best investments I’ve made while trading and I honestly wish I found this group earlier.
$5,000 Challenge
Now that I’m more confident with options, I’m planning to see how much I can grow a small account with just $5,000 as the base. I’m only planning to take positions of around $300–500.
NOTE: I moved this $5,000 from Fidelity to Charles Schwab so that I can trade on Think or Swim because Fidelity’s website sucks ass for options — I missed a lot of profitable trades because it doesn’t update in real time and requires multiple webpages to load before your trade goes through, it’s VERY clunky and slows down the process! Don’t that know that TIME IS MONEY?!
Now one thing you’ll notice is that my meager $5,000 account does not meet the $25,000 requirements for Day Trading, which limits me to 3 day trades per trading week. But that won’t be a problem.
I’ll mostly be following The Trading Bishop — who is by far my favorite analyst in the Discord — and luckily he pretty much just posts swing trades. His posts happen within the last 5 minutes of the market day and he usually sells them first thing the next morning. Because you’re holding the position overnight it does not count as a day trade. This still leaves me with 3 day trades to take throughout the week PLUS most of the other trades post a lot of swings as well, most for even longer than just overnight.
Now since I’m keeping my position size around $300 — maybe $500 max! — I had ChatGPT make me this handy dandy cheat sheet to easily calculate how many options based on the premium price that covers.
I also asked it what the optimal trades are to avoid getting killed with fees (since you have to buy more contracts for the lower premiums) but also allowing me to have enough contacts to scale out and take profits at different levels. The optimal range is the section highlighted in green, so premiums between $0.70 and $1.20.
I plan to do updates on how the $5K CHALLENGE is going although I don’t know how frequently I’ll be doing that. It really depends on how much time I have free to write these posts.
I hope you learned something today from my m̶i̶s̶t̶a̶k̶e̶s̶ happy accidents. If so, consider Buying Me a Coffee → https://buymeacoffee.com/spocktradez
Trade long and prosper!
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