I'm sure not right on every trade, but with stock options you don't have to be. Today was a great example of what I mean. Intuitive Surgical (ISRG) is one of my top 5 favorite stocks heading into 2014 and saw an opportunity to try and get some positions.
With the spread so wide on the options, i usually try to put an order in the middle or near the bid and work my way up. I did that with the $ISRG $390 weekly calls when the stock was at $375 and the calls were .15 x 35. I put it in @ .25 and no fill, then .30 and no fill so I finally cancelled the order figuring that was not worth the risk for an option that expired in 2 days and the stock needing to move $20+. It took me a few minutes to realize I was filled on the $390s at .20.
|01/08/2014 12:51:47||Bought 5 ISRG Jan 10 2014 390.0 Call @ 0.2|
Intuitive Surgical (ISRG) moved up the rest of the day, and closed above $380.
ISRG is one of my top 5 stocks heading into 2014 and I continue to look for opportunities to buy calls. This afternoon, I was messing with the bid on the ISRG 390 weekly calls when the spread was .15 x .35. I went to cancel a bid and they filled me at .20! More luck then anything else, and they were just a few lotto calls, but ISRG sure looks poised to break out. I’m looking for an ISRG break above $384 tomorrow.
I was looking for a key breakout on the stock at $384.39, and put $ISRG on the morning watchlist at Optionmillionaires the next day, (Thursday January 9th). This is what I said:
Stock Ticker Call/Put Strike Expiration Closing Price Entry Price MLNX CALL $50.00 February 0.60 0.60 ISRG CALL $395.00 Weekly .05 x .30 0.20
Intuitive Surgical (ISRG) opened at $380 on Thursday and then faded to $379. I figured the $390s were still worth a shot and added five more @ .4
Intuitive Surgical (ISRG) ramped throughout the day, hitting an intra-day high of $389.98 after breaking though $384.39. The $390 calls were available for sale @ 1.50, an over-700% gain on my calls, but I was betting on the momentum continuing into the next day so I held them and sent out a warning tweet on my private twitter:
Sure enough, Intuitive Surgical (ISRG) breaks over $390 today, slowly ramps to $394 then breaks into the $398 area. I locked my positions out throughout the morning with my last trade being $8.
10:14:40 ISRG JAN D10 2014 390.00 C 3 3 LIMIT SELL $ 3.00 $ 3.00 $ 900.00 Filled
9:55:19 ISRG JAN D10 2014 390.00 C 2 2 LIMIT SELL $ 2.00 $ 2.00 $ 400.00
01/10/2014 10:34:05 Sold 2 ISRG Jan 10 2014 390.0 Call @ 8
01/10/2014 10:19:52 Sold 3 ISRG Jan 10 2014 390.0 Call @ 5
One position was in my TD account, while the rest were in my DittoTrade account.
So pretty much, a $350 risk turned into $4400. And one of the trades was a 40x bagger, meaning a $40 investment for a $1600 profit. This is why options rock!
Below is the chart of the stock and the options. Buying and selling options, hoping for a 40x bagger, will result in your account being decimated.