All posts by Daniel Darrow
Options In Play – Earnings On The Radar Week Of 11/8
The Tech titans may have already reported but we still have a big lineup of volatile names. Expect a busy stretch for Energy, Biotech and Software this week.
Continue Reading -->Options In Play – Earnings On The Radar Week Of 11/1
It’s the earnings bonanza round 2. This coming week will be as busy, if not potentially more, than this past week, with huge reports in tech.
Continue Reading -->Options in Play – How to Calculate the Priced-in Move
It’s earnings season and everyone wants to know what stocks are pricing in. There is a simple way to figure it out that doesn’t require a ton of math.
Continue Reading -->Options in Play – Try to Plan Ahead
One of the great things about earnings season is that there is a lineup of news on the calendar for you to see. Having companies confirm the date of their earnings release gives you the opportunity to build a plan, and it is one of my favorite ways to design trades.
Continue Reading -->How to Roll Options Forward Like a Pro
Rolling options contracts forward is a key risk management tactic in options trading. Rolling can help you lock in profits on a successful trade, while reducing downside risk and keeping some further upside potential.To roll options forward, you must have a plan for handling positions before you enter them, and today, I’m going to give you my process in this video:What Does Rolling an Options Contract Forward Mean? Rolling an option means closing a current contract and buying another contract with a higher (for call options) or lower (for put options) strike price on the same stock. The new contract will cost less than the previous one, lowering total money at risk in the trade This is done when the stock (or the options contract) has moved in your favor, and you want to lock in a profit. So essentially, you are swapping for a new, less expensive option. Rolling Options Works Best With Swing Trading Options Swing trades tend to have a longer-term profile, develop more slowly, and usually allow you to work into/out of a bigger position. This is why rolling works best with swing trades. Day trades are very short-term, so the goal is to have close targets, tight stops, and be more aggressive in taking risk off. So it’s more of an “in or out” mentality. Event trading is typically more boom or bust — stocks tend to have huge swings around events, and there is not always a chance to scale back risk post-event You can roll contracts with day and event-based trading — it’s just not easy, and you have to be fast. First Order Of Business – Setting Targets Before entering a trade, I like to have at least 2 targets and a stop range. The first target is relatively achievable. The second target can be more aggressive. I set targets/stops using technical levels or profit percentage levels. Technical levels include: moving averages, key support/resistance, or extension levels from current prices (5%/10%/20% etc.). Profit percentage levels are net gains on the position. For examlpe, if you bought a call for $1 and you were targeting a 50% gain, you would look to sell the call around $1.50 This Is How I Roll Once a stock hits my first target, my main goal is to lock in money and cut risk. This is what I generally do: Close the current contract and buy a higher (if calls) strike contract that is less than the debit I paid for the original position Buy a contract that has another week/month of time to expiration vs. the original. A Rolling Options Case Study With KHC With KHC, my trade went like this: Step 1: Bought Oct $27.50 call for $0.50Step 2: Sold the Oct 27.50 call for $1.75 (locking in $1.25 of profit)Step 3: Bought the October $30 call for 40 cents So even if the roll expired worthless, I would still expire with a profit. And if the roll happened to take off, I’d still have more upside potential. Makes sure you watch the video for the full breakdown! Click to see Dan’s positions as 10/14/2019 at 4:00 p.m. ET
Continue Reading -->Options In Play – How to Set Daily Goals And Stop Losses
Daily profit goals and stop losses – 2 very important topics every trader needs to be familiar with. In this video, I’m going to talk about the simple method I use to set those goals and how it helps with my day to day money management.
Continue Reading -->Options In Play – Breaking Down NKE Ahead Of Earnings
NKE is one of the biggest names reporting this week and it is one of the more interesting set ups as well. Retail has been volatile recently and expectations are that NKE will continue that trend.
Continue Reading -->Options In Play – Taking the Long Road on GLD and SLV
It’s been a great couple months for the metals and they are now having a much needed rest. Positive signs are still indicating there should be more upside so we are sticking with the longer term swing ideas. If you like what you see, be sure to follow up for more daily options strategies with the Options In Play newsletter and the active trader education course for those looking to get started trading==>
Continue Reading -->Options In Play – Expectations And Option Pricing Ahead of the Fed Meeting
Expectations for rate movement are changing quickly and that could mean volatility at tomorrow’s FOMC meeting. I’ll talk about the shifting expectations and what the option market is pricing in on key stocks/ETF’s.
Continue Reading -->Options in Play – Revisiting the Term Cumulative
I talk about “speculative” trade ideas in the nightly letters and it’s been a while since we went over what that means. RH is a recent trade idea that fell into this category, and presents a good opportunity to revisit the topic.
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