The main focus of tonight’s class was how I prepare for a trading day the night before the market opens. In addition, I go over strategies for picking which stocks make you “comfortable,” knowing when to get out of a penny stock, and explain the process of buying and selling an option. There is extensive discussion on AAPL, as well as some analysis of BIDU. Enjoy!
Below is a text version of the submitted questions and some of my commentary:
2.) My question is on JCP and other options plays that are not
so volatile in movements. I have hit real good on JCP twice in the last
month. It has been downgraded before and the market reacts but it seems to
make good intra day moves and its starting to become one of my favorite
“safe” stocks to play that I know. I wanted to know your opinion on this
stock for options and if you had any other recommendations as well for
options plays that are a little less volatile. I think it was just upgraded
by Citi on Friday and there was a sharp move up right after the
– look for stocks that you notice trade similar to JCP… price range/volume/etc..
– focus on the monthly options vs the weekly options
3.) HOW DO WE KNOW WITH THESE SPECIAL PROMOS WHEN TO GET OUT, BECAUSE IT SEEMS
THEY TAKE SUCH A FAST NOSE DIVE WE CAN BE LEFT HOLDING THE EMPTY BAG!
– sell on the way up… is by having a target to take profits at
– when would someone who is bearish on the promo, start liking what they see?
– ALWAYS HAVE A PLAN… you can adjust that plan, but then follow that one
“get out criteria” — i recommend this criteria be based on volume.. supply volume picking up… demand volume slowing down
4.) After watching a lot of penny stocks recently, 1 example TAGG, I am wonder=
ing what are the some indicators that companies like this will actually turn=
out to be a solid stocks/companies and not just pump and dump promos that e=
ventually fizzle down to a couple of cents?
– #1 there is no ‘paid’ promotion being done on the stock
– #2.. does it have revenues? does it have a small accumulated deficit? what is the employee based compensation? is the share structure shareholder friendly?
5.) Hey, I just have a question about options. I understand what options are,
but when I was watching a Trading U video about them, I didn’t understand
the terminology. Can you go through an option purchase and explain what
all the numbers mean on an options chart?
– 1 contract x $8.85 x 100 = principle amount of $885
6.) I noticed that in your live AAPL trading video
that you chased a move down on the 610 puts in the beginning. Those
options went from $4-5 to $6 but you decided to chase it anyways. Many people I know would use a chart that is showing price action with
substantial increasing volume to chase a move like that but I saw that
you only used Level 2. My question is: how do you know when to chase a
move that has already resulted in a 20-50% gain on the option using just
L2 such that you’re not prone to a violent reversal?
– PREPARATION… experience, just watch AAPL’s level 2
7.) Watching your recent live trading video on AAPL I noticed you rarely looked
at the charts when entering/exiting your trades. Is that something that you
think helps more when it comes to the big board stocks like AAPL or was
that more extinct and experience for you when it comes to placing your
– level 2 is simply more up to date… it tells you what’s going on vs charts telling you what went on
8.) Due to the incoming hurricane, and NYSE using backup generators would you
recommend new investors not trade tomorrow?
1.) I have a question regarding getting a idea how
to play AAPL on a Monday. Right now for example I’m simply going off
momentum, and if I see a huge enough move then I’ll play accordingly. Is
that what you pretty much do? And if not, what indicators do you use that
suggest that a stock might not be continuing it’s previous weeks trend?
– opening volume criteria
– what is the first thing the stock shows you the ability to do?… go higher? go lower? trade flat?
– what is your bias?
previous days range… making note especially of the afternoon range
volume pace — supply/demand
opening range — size of the range
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