Part of the reason trading is so addictive and fun, is that you never know what a stock is going to do. I found a trade setup and thought we could make a game out of it. it’s called, What Will LVS Do?

Here’s a screenshot of a daily chart on LVS as of midday today. As you can see from the chart, LVS has been trading in a range the last couple months, but with the news today is moving towards the upper resistance level.

Click on the Image to Enlarge

So What Will LVS Do?

Will it hit resitance and drop back into the range, or will it break through and go higher?

If you pick correctly you get the amazing prize of knowing you picked correctly.

So please post your answer and your thinking as a comment, and maybe we can all learn together about how stocks move and [...]

Just did a Put Credit Spread on Apple in my personal account.

Sell the Feb 320 Puts, Buy the Feb 310 puts for a credit of .95 cents

Total risk per spread, also the margin, $905.
Maximum return per spread: $95 for a potential ROI of 10.49% before commissions.
19 days left in this trade before expiration. 83% probability of profit according to thinkorswim.

This trade is a little too risky for the OptionGenius portfolio so I am posting it here. Why risky? Because it is not too far away from the current price of 338. There is support at 320 which is good, but if the market turns over, Apple will be one of the first to slide.

If Apple does drop, I will probably exit the trade when I am down 10-15% which is $135. I don’t know if I will have time to post any adjustments on the blog so trade at your [...]

The following is from a Barrons article by STEVEN M. SEARS

Butterfly Option Trade on Sprint

IF THE FEDERAL RESERVE can print money, so can you. All you need is a little cash, and a ton of nerve.

Consider Sprint Nextel (ticker: S). The $4 stock is a dog; it has declined 12% in the past three months, and yet trading volumes are surging, demonstrating that distressed equities – what institutional investors call penny stocks – are incredibly alluring in this market because of the potential to make double- or triple-digit returns on small price movements.

If you want to make a potential 500% return on one trade, Credit Suisse advised clients Tuesday to position for Sprint to move to $5 by January.

The bank told institutional clients to consider a “call fly” that entails buying January $4 calls and January $6 calls, and selling twice as many January $5 calls.

With the stock around $4, [...]

The following is from a Barrons article by STEVEN M. SEARS

A STRADDLE FOR GE

SHARES OF GENERAL ELECTRIC (ticker: GE) have been a disappointment for much of the 21st century.

The stock has lost half of its value in the past five years, and it’s gone nowhere in the past three months.

But there is a way to bring back that loving feeling for a stock that was a Wall Street darling under Jack Welch’s management during the 1990s.

All you have to do is use a simple options strategy to kick-start returns by taking advantage of unusual options pricing.

GE’s options implied volatility remains elevated even though the company recently reported third-quarter earnings. Normally, implied volatility, which is the most critical component of options pricing models as it deals with how likely a stock price is to change in the future, declines after earnings.

Yet, concerns about GE’s earnings power are so widespread, especially ahead [...]

Oh oh, GLD jumped up today along with the rest of the market. You’d think that if the stock market goes up because the economy is getting better than Gold would go down. Nope. So I guess the economy is not the reason the market is up today – contrary to what the news tells us.

As long as the dollar gets weaker, the markets and GLD will both go up.

But there was an interesting post on another blog Slope of Hope that showed graphically that Gold might be heading towards a retracement. Check it out if you are a Gold Bug.

OK, back to business. The up move today took GLD outside of our upside Calendar break even.

Here’s what it looks like right now.

So what do we do? I don’t want to add more capital to this, even though that is an option.

Step 1. Take off the spread hurting us the most. [...]

This article is from cnbc.com.  http://www.cnbc.com/id/39418129

Not only does the article tell the story of how the trader did it, but also gives you the trade he is in right NOW.

One thing I want to point out is that this trade had very little risk for this trader. Why? Because it seems that the trader was bullish on the stock and thus would have bought the shares had they gone down. So basically he would have gotten a discount on them as well as have the ability to buy them below what their “value” was.

Fun With Options: Trader Pockets $455K on Walgreen

Published: Wednesday, 29 Sep 2010 | 9:53 AM ET by Jeff Cox

Some (options) guys (or girls) have all the luck.

Nick Ut / AP

Well, at least one of them has had a tremendous amount of good fortune lately by playing long and short positions against each other on drug store chain [...]

Ok so GLD has continued to drift higher. It hit the upside breakeven of the calendar today and then pulled back a few cents. Time to add the adjustment. I added the 128 Oct/Nov Calendar in the same amount of contracts as the original. This doubled the amount of money in the trade.

Here’e the graph:

After Adjustment

 Notice the breakevens have moved to 123.61 and 129.59 on the upside.

The amount of money I have in the trade is now $2990 and so far I am down $85 since the trade has been opened. I am still looking to make 10-15% on the trade.

If GLD pulls back to 126 I will be sitting pretty. If it continues to advance I will make a move  when it gets to 129-129.50. And the adjustment I will make is to take off the first calendar – the 125 Oct/Nov. That will then reduce the amount [...]

It’s been a few days and GLD continues moving up slowly.

The weekly calendar needed to be adjusted but since it expires today I am not posting the picture here.

The Oct/Nov Calendar is still within the breakevens. It is trading right now at $126.72 and the upside breakeven is $127.95. Here is what the trade looks like right now. Notice how it has gotten close to the upside breakeven.

GLD Option Calendar Spread

If I add the 128 Oct/Nov Calendar it will look like this:

GLD Calendar Spread Update

This will center GLD in our trade and extend the breakevens. But I am going to hold off making this adjustment until GLD moves up a bit closer.

When adjusting you need to look at multiple factors. Time decay is working in our favor and so holding off on an adjustment can result in a higher yield. Also, even though the trade is far from [...]

Yesterday I added a GLD trade to the OptionGenius.com portfolio and I mentioned that GLD might be a good candidate for a Calendar Spread. Several members emailed me asking to explain how to set up the trade and the parameters so I decided to just post it on the blog. I tried making a video but I am a total non techie and screwed up the video. I got it uploaded to Youtube but everything on the screen is so small you cannot see what I am doing.

Anyway, here are some screenshots of the trade.

GLD Calendar Spread

Breakevens

The trade was to Sell the Oct 125 Calls and Buy the Nov 125 Calls. That sets up a simple calendar. You can use puts or calls, they are interchangeable but the puts are usually cheaper. The plan is to adjust when GLD hits a breakeven. The simplest adjustment is to just [...]

Here’s a trade I put on yesterday in my personal account. It is a straightforward put credit spread on CME.  Great for papertrading.

It is my belief that the markets will rally into the end of the month. Even without the rally, CME should do fine. It has been performing nicely the last few months and it confirms to the requirements of my new credit spread trading system that I am testing.

Sell to Open July 280 Puts 
Buy to Open July 270 Puts

Right now, you can get .85 cents credit for the trade which is $85 per spread. The max loss is $915 and so the Profit Potential is 9.3%. There are 30 days left in the trade until expiration.

The idea is to let it go to expiration and let it expire. If CME drops I would take this trade off when I was down about 15%.