WRITE OPTIONS

Selling Naked Put Options - AAPL

2009-02-01T23:43:00.004+07:00

Selling naked Put Options can be very rewarding on this market situation. However, you really have to know the stock and really want to own it when you were assigned.

I have written the Sell Put Options methodology before, and the following video is one of my trade at AAPL.

When you Sell PUT Options, you need to ensure that your break-event point has strong support. During this volatile market, premium is rich and your risk is compensated. Your decision to pickup the strike price is important and by deducting with the premium, you will get your break-event point.

What is good about this strategy is that your win ratio is relatively high. You will win on 3 out of 4 probabilities. When the stock went up, stayed, and went down (a little bit), your trade will win. You will loose if the stock sold-off and went through your support (break-event point). But, as you believe on the stock and you want to buy it, think that you get the stock on discount.

The margin of Selling Naked Put is also friendlier that Covered Call strategy. Brokers only keep 20% from the strike price. Since it is only one leg options strategy, your commission is lower and less slippage. So, why searching for other strategy? Just search and scan stock that have good positive Relative Strength Index and fundamental and get the monthly income strategy.

Good Luck...

Market SOLD OFF - What to DO Next ?

2008-10-24T20:54:00.002+07:00

Today: October 24th, 2008

My prediction on breakout possibility yesterday was happen today. Following global recession fears and Asian & European stock market slid, SPY sold off by 5.50 points on market open. The VIX jumped to high level of 80, showing signs of market biggest fear.
There is support on SPY 85 (see above chart) and market rebound a bit. If this support line is breached, I assume market will go a free fall.

So, what to do next for an Options Writer? This market is unforgiven so you need to be patient. I will not dare to go long as a contrarian (as usual), but will wait market to rebound. If that is so, a decending triangle is formed. It is wise to go short when market rebound approaching the resistance line (SPY 97/98), however, you just need to be patient.

Options Writer - Wait for a Breakout

2008-10-23T20:25:00.003+07:00

Today 23/10/2008

I just want to give a brief comment about Writing Options on Volatile market. If you read my last article, you must be very careful to be an Options Writer on this market condition. Yes, you may get very rich premium, however, the volatility index (VIX) is so high currently on the 70 level. Anything can happen, i.e big rallying on good news and sell off on bad news. This is always happen on Bear Market, very strong move on either side.

Looking at one hour chart, the market is consolidating. A triangle is formed by higher low and lower high. Buyers and sellers are consolidating, and this can bring a potential breakout when it is approaching 2/3 of the triangle.
So, I suggest to wait and see a breakout before you put any position. The breakout can be upward or downward, regardless of bearmarket condition.

Use PUT OPTIONS to get GOOD Bargain on Buying Stock

2008-10-03T15:59:00.002+07:00

The Dow made its third 300-point swing of the week Thursday. This time it finished near its worst point of the session after trending lower throughout the day. The two days previous reversal was not supported by public confidence on the impact of $700 billion bailout plan, amid the dismal jobless claim for the week ending 27 September, increased 1,000 to 497,000, exceeding the 475,000 claims that were expected.

Now the question is do we on the bottom yet? Do you wish to buy your favorite/good stock, but you are afraid to do so because of current volatility that might push the stock price even lower again? But, on the other side, the market has big possibility to rallying at any time once House of Representative approve the bailout plan and you will feel miss the train.....

Well, to buy stock even at larger bargain, you can SELL PUT OPTIONS. This options strategy is very simple, yet provide us with lower break-even to get our favorite stock. Sell Put is a synthetic of Covered Call, however, we use differently on different situation.

Say APPL (Apple Corp)is currently at 100.10 on yesterday closing (Thursday). The stock has been depressed lately because analyst lowering the stock grades in anticipation of lower earnings due to lower demand on products. Well, traders and analyst has different opinion. Traders just buy low and sell high. The price of APPL can be a bargain for us since the company is a rich cash company with great product and innovation.

If we look at 95 PUT, we can sell options with premium of 11.05 (1 lot)for November expiration (49days). The huge premium is due to high stock volatility - 101%. If you SELL PUT OPTIONS, your account will be credited by $1,105. If the stock does not go beyond 95 on the expiration date, the premium is yours. Therefore, if you believe that current stock position is on the lowest capitulation, why not SELL PUT?

If the stock goes beyond 95 on the expiration, you will be assigned 1 lot (100 shares) with the price of 95 per unit. However, you have receive in advance 11.05 so the net stock price that you buy is 83.95. I still remember that when APPL on the high of 180, and people still chased the stock as they believed it would hit 200 very easily.

The analogy is like this.... I went to a department store and I like Apple computer and wish to buy one. The price is $1,200 (stock price). Then, I bargain again to $1,000 (strike price, for 49 days). While the store owner is still considering my proposition, I walked out from the store with $132 advance payment (since I put commitment to buy at $1,000). The advance payment will be mine whether he agrees or not on my proposition. If he agreed on my bargain price, my net Apple computer price will be $868 ($1,000-$132).

If you love the merchandise, why not using PUT OPTIONS to get good bargain on buying your favorite stock? Consider this while it is not too late......

Options Trading Opportunity in Volatile Market

2008-09-19T06:52:00.003+07:00

For some people, volatile market is very scary and they tend to run away. However, there are quite a number of them also believe that there are huge opportunities to trade in a volatile market. For me, it all depends on your believe and conviction. If you see this situation is an opportunity to trade, you will get it. But don't forget that you must have trading methodology, money management, and discipline, otherwise you plunge yourself on gambling trading situation.

Below are the situations that create opportunity in Options Trading:

- Market is very Liquid.
I like to trade on liquid market. On current volatile market, the liquidity is there and spread bid/ask is on penny. Therefore, it allows me to get in and out easily and reduce my slippage.
- The volatility is high.
When volatility is very low, we only see dry paint picture on our screen. This current volatility provides excitement on trading. When volatility is very high and everybody is scared, to be a contrarian, I always want to be an insurance provider.
- When market is on choppy trading, there is tendency price spike one to the other very wide. You can take your safely spot (strike price) and put a limit order (with acceptable risk/reward). Be patient and market will consequently grab you. So, you will be a liquidity provider to the market.

This is a one lifetime opportunity to see volatile market like this. If you can survive trading on this market, you will be a better trader tomorrow. Therefore, dare to step in is the course of action that you need to do. Only watching on the sidelines does not do any good. You just see things are moving back and forth which does not mean anything.

Options Trading - in Volatile Market (part 2)

2008-09-17T10:49:00.002+07:00

One of forum member commented that he could not get filled when he wanted to close his position. He was very upset since he got quite a big loss since he could not cover his position fast.

Later, I found that he traded stock that trade very thinly. During volatile market like this, it is very important to find stocks that very liquid. If you used to trade with volume stock above 1 million shares, you have to seek stock with volume more than 3 million shares. Liquidity is one main important keys on options trading in volatile market. You have to ensure that bid-ask very tight so you avoid any slippage. Bigger spread means you reduce your profitability and this will not make you around very long to trade on this situation.

So, consider this advise, look for LIQUIDITY with the underlying assets that you trade, especially on this bear market/volatile market.

OPTIONS TRADING IN VOLATILE MARKET

2008-08-11T23:21:00.001+07:00

Options trading in Volatile market can be frustrating, especially when you are a premium seller. Market can easily go one to another way very fast. There were several Forum readers asked me how I trade in a volatile market. Well, there are some advise from me:

1. Trade small
Do not trade more than you can afford. It is easy to say but sometimes it is very difficult to apply. It needs self discipline not too greedy when you look for opportunities. Beginner always see profits first and risks second. This pitfall can really make a hard hit to your account. There are 3 things can happen: you will act slower to cut your loss, your mind is not clear as usual, and your account can be easily wiped out.

2. Do “Guerilla” Battle with the Market
In volatile market, it is good not to chase a rally or a sell off to sell premium (as an Options Writer). This is due to big slippage on a wider bid and ask. You also do not know when the rallying/sell off will be ended. Therefore, people usually buy top and sell bottom, a contradiction of basic trading rules. I used to put my position in a such way with price that I want. I let the market get it, instead of chasing it.

3. To be a Contrarian
To be a contrarian in a volatile market sometimes is very difficult. It needs trading experience and expertise on chart reading. However, this is where that professional traders usually do. When market sell off and go to low capitulation, people are buying insurance (Buy Put Options). Therefore, volatility is increasing and options premium pushed up. If I convince a strong support line and it is on a very low capitulation, I will sell Naked Put or Put Spread. If I like the stock, selling a naked put is a synthetic of Covered Call Writing. However, if I want a define risk with positive time decay, I will write Put Spread instead.

4. Loose a bit of your Stop Loss
Well, it is also a contrarian belief that you must loose your stop loss during volatile market. Stock trader will tighthen their stop loss, but I as options trader will loose my stop loss. This is because when market has big move, sometimes your short position will be threaten temporarily and market will come back again. Since I trade small with defined risks, I can play with this strategy properly psychological burden.

5. Expect more Return to your Position
When you trade small on volatile market, you can expect more return on your position. Sometimes I can double my return with probability of win almost 70%. Well, it is still a good bet. By doing so, your position can provide you with a yield as the same as when you trade big when market is not volatile.

Well, I hope this can provide you some information how I trade Options on a Volatile market.

Happy Trading…..

Options Trading: Can You Trust The Rally ???

2008-07-23T23:53:00.002+07:00

Wow….. last week I wrote beware to pick any bottom, and now the market has been rallying for 3 consecutive days. Positive earnings from leading companies and plunged oil price boosted the rally. Now the interesting question is: “Is it a true rally?

I still believe it is a minor rally. We are in the Bear Market and it needs time to heal the economic conditions, particularly the subprime mortgage turmoil. My technical indicator shows a nice upward move, a consistent higher high and higher low trend at SPY. If the market breaks SPY 130 and passes 50EMA, I expect market will be getting stronger. Otherwise, it will fluctuate around SPY 125 – SPY 130.
Pick your trade carefully and do with good money management. Indeed, you can use the minor bullish trend to take some profit, but remember, use tighter stop if market reverse back down. On this situation, beware to put position against the trend (bullish). If oil price keeps going down, I expect the rally will persist.

Options Strategy: Don’t Pick Any Bottom…

2008-07-15T10:50:00.003+07:00

If you follow what I advised last month (June 23, 2008), I hope you are ok with all of your options position (I was on cash position when market heavily sold off). The market was sold-off due to high and fluctuated energy price (broke USD 147 and is assumed to reached USD 150-155 in July) and many problems and issue on the financial market due to sub-prime mortgage.

The largest mortgage creditor Fannie Mae and Freddie Mac traded lower and lower this week and government need to rescue both of them from further catastrophic conditions. In an unprecedented move, the government stated that they would go as far as buying equity on both agencies. This helped to calm the fears and market jumped higher on the open. However, on the late trading day, the selling pressure was still there and made market slipped again on higher low.

For Options trader, be-aware of picking any bottom. We as a trader usually got a contrarian opinion about market. When the market sell-off, it is opportunity to go long and when market rallying, it is opportunity to go short. However, we have to remember that we are currently on the Bear market and we are still on the bottoming process. The banking industry coupled with high fuel prices made everything difficult for a reversal. Therefore, you need to be more patient.

My advise is to trade small, preserve your hard earning capital and always wait for technical confirmation for an entry.

I see that VIX has been pushed up to 28.48 today. This means that VIX has jumped almost 30% since I wrote my last blog. It is an opportunity for options seller to get richer premium, but you can be always wiped out by the volatility of the underlying assets. Therefore, control and manage your position tightly and always do what options sellers/writers do for strategy: define your risks, positive theta for time decay, and a flat delta.

OPTIONS Trading…. Step aside and wait for a Reversal

2008-06-23T23:23:00.005+07:00

I wrote to my forum (http://options.forum2u.org/) about 10 days ago and recommended readers to cover long position (Options Spread – Bull Put) since SPY would break down SPY 135, which was the support line. My argumentation was the fluctuation of Oil price during the past weeks and SPY experienced lower high and lower low on technical indicator.

On my surprise, the VIX did not get higher despite the downturn and writing options was not my strategy on this situation. It was very hard for me to find acceptable risk-reward on writing options since market was fluctuated but the VIX was low. Since the implied volatility/options premium that market maker priced did not corresponding with the actual situation….. so it was time for me to step aside (I converted most of my position to cash).

Up to this writing, the index has been depressed for 4 days in a row. It was really bearish condition and it could reach the lowest point SPY 126 like in November 2007. My advise is don’t take any bottom before a good technical indicator confirmation. To know this, I would look at multiple time frames graph and ensure there is no conflict one to the other. I also usually look for good stocks that depressed obecause of negative news and fears surround the whole situation. If the VIX is not so high, buying long term Options with deep in the money can be a choice (this will show you that an Options Writer can also do straight Buy Options to leverage profit).

Time to go for GOLF and COLLECT your OPTIONS Premium

2008-06-05T12:00:00.002+07:00

It has been quite sometime I have not updated my blog. Do you know why……? Well, I’m too busy to do other things and not concentrate on market movement. One of my friend asked me how can I trade Options without looking at my position closely? I told him that no matter where market moved, my position was safe and I collect premium options everyday. Even… I collected options premium during my sleep and weekends !

Current market movement is on “Trading Ranges”, means it is going up and down on a range bound by strong resistance and support line. This condition is really heaven for traders who have style “Market Neutral” and/or “Write Options” on their portfolio. After wild movement on the past months, market is on consolidation phase. A relatively good news or bad news usually made the market went up and down a bit, and no wild volatility.

VIX or volatility index on the S&P is relatively low, ranging from 18-20. I believe the VIX will be on this range for about couple of months. This means, I still can relax and get the money every month without concentrating to the market.

My friend asked me: “how do you that? Well, it is easy if you know the methodology. On Market Trading Range movement, I did not go for bullish nor bearish. I have many combinations of Vertical Spreads, Iron Condor, Calendar Spread, Unbalanced Butterfly and even Sell Put if I like the stock. I aligned the “Delta” position as neutral as possible so that market movement did not hamper my profit and loss position. Since the VIX is low, the entry point must be precise, means I will sell / write options if VIX is on increasing trend to get “rich premium” on that spot. If the VIX went down, the options that I sold were certainly profitable already.

If the VIX is very low, I went for spread positions that help me/ increase in value when volatility is increasing. By doing this, I hedge myself no matter volatility is increasing or decreasing.

Other most important thing that I have to do is to watch the overall portfolio. I need to adjust properly if my “Delta” is far too positive or negative. This is what I call “Risk Assessment” toward a portfolio where every professional trader must understand this. Ok, I hope you can take profit out of the market on this trading range market and I will continue my other activities…..

BULLISH SIGN (short) in mid of BEAR MARKET ?

2008-04-22T19:41:00.004+07:00

please click picture to make larger...

This article is a continuation of what I wrote two weeks ago about SPY (spider). As we know that S&P 500 is the pulse of overall market direction/condition, it is worth to see its price action. For the consistency of analysis, I also used two past weeks data. Despite price broke down from the rising wedge (see April 9,2008 article), price was able to rally again to SPY 139 due to good 1^st Q earnings from leading companies. 30 dma has more conviction on the upward move. Despite it is still a process to cross the 50 dma, but the angle upward movement was getting steeper. Double bottom presence was replaced by the forming reverse Head and Shoulder pattern. Once the price have technical break out of SPY 140, we will have more conviction on this sign.

I still believe SPY 140 is still a strong resistance line. However, price has tested 200 dma and this made this resistance line getting weaker and weaker. SPY 145 will be the next resistance point should price break out SPY 140. It would be hard to surpass this line since we are still on Bear Market and market needs more time to recover.

For Neutral Options Player, watch out for the break-out SPY 140. You may reduce the short (bearish) position should technical show this conviction. I will be more comfortable having neutral to bullish sentiment on this short time period. But......always look for price action..... (as quoted by Brian Shannon).

A Heaven for Market Neutral Options Players?

2008-04-09T14:05:00.006+07:00

click for a larger picture...

“I was quite doubt that market will surpass SPY 140 level in the short time as subprime mortgage problem is still big…..” That was my comment in an article that I wrote on March 25, 2008.

The followings are what I see from the technical point of view now:

Despite many bad news on the market (i.e. recession slashed 80,000 jobs in March and national unemployment rate increased from 4.8% to 5.1%), SPY broke 50 dma after passing 30 dma.

30 dma has an upward movement and may crossing 50 dma. It is still a process and once it is happen, market will have more conviction on the move.

There was a presence of a rising wedge (triangle). Prices edged steadily higher in a converging pattern. The inability of prices to accelerate on the upside despite continued probes into new high ground suggests the existence of strong scale-up selling pressures – due to many bad news coming into the market.

There was a presence of forming double bottom. Despite it was not a strong indication market will move higher, the process had been taken months.

SPY 140 will still be a strong resistance point. If market gets a technical break out of this level, it will test the 200 dma and will reach SPY 145.

Any bad news from earnings this week will initiate pressure to the market and a sell signal may occurs when prices break below the wedge line.

Nevertheless, the bottoming process has been made and Fed will do everything to save the market. Therefore, I will not see that market will be easily drop to SPY 132 (the crossing of dma 30 and dma 50) or even the strong support line of SPY 125.

VIX (Volatility Index) is on decreasing trend to a low of 22.36.

Knowing that market is on a trading ranges, it can be an ideal situation for Market Neutral Options players. Iron Condor with high probability (i.e. 80%) can provide you with consistent income strategy. Be careful on market rally once it has a technical break out of SPY 140.

SPY Market Overview and Options Selling Opportunities

2008-03-25T23:00:00.003+07:00

note: click the graph for a bigger picture

Do you believe the recent rally will continue? Well, it is a tough question and everybody can only guess. The Fed cut the interest by 0.75% last week and quickly saved Bear & Sterns from deep trouble by merging the company with JP Morgan.

The collapse of venerable firm Bear Stearns has been dazzling. The company was supposed to be worth a bare minimum of $80 per share. It turns out to have been worth one-fortieth of that -- a catastrophe for its employees, whose fortunes lay largely in Bear's stock (a super-good lesson in diversification for everyone).

The $2/share bid price was very ridiculous and unreasonable, made many investors/shareholders irritated. A week before the company collapsed, the CEO ensured to shareholders that everything was in course, and many of them stayed and even add exposures to the company. This negative reaction can dampen down the market further, so Fed took critical steps by increasing the bid price higher to $10/share (the Fed bailed out Bern & Sterns at the amount of approximately $29 bio using tax payer money...). This action made the market rallied on Monday and Tuesday……

SPY passed the 30 dma and tested 50 dma. The downtrend line showed resistance point around SPY 135. If the market can passed this downtrend line resistance, it would be tested again on SPY 140. I was quite in doubt that market will surpass 140 level in the short time as subprime mortgage problem is still big. We still do not know which financial institution would be in trouble following Bear & Sterns. Currently, the Fed was making huge steps on saving the market, but only for short term approach. It was just like putting band aid on huge wound…..

If you look at the chart, there was trading ranges around a strong support line of SPY 125/126 and a resistance line of SPY 140. I am expecting choppy price action for the following weeks/months. Looking at this situation, what are the opportunities for Writing Options? Well……any rally to SPY 140, there is opportunity to Sell Credit Call Spread, and any decline to SPY 125, there is opportunity to Sell Credit Put Spread. However, be careful with strong false rally that usually happen for a short period of time due to good news that disseminated by analysts…..

OPTION MONEY MANAGEMENT – LIKE SEX???

2008-03-17T17:05:00.006+07:00

“Money management is like sex: Everyone does it,one way or another, but not many like to talk about it and some do it better than others. But there’s a big difference: Sex sites on the Web proliferate, while sites devoted to the art and science of money management are somewhat difficult to find…..” written by Gibbons Burke.

Yes, Gibbons is right….money management is a rare commodity especially on Options courses. “Get Rich Quick” is the strong password to sell Options Course for many speakers/seminars. They put pictures of ex-students and commented that Mr. A- had been profiting more than 1000% in in GOOG Options trading…. When I looked at this advertisement… “yes”, it happen on paper trading and it was only occurred one time, not everytime…….

Money management in Options is indeed very important. Yet, it is very difficult to execute it if you overtrade and do not trade based on your level or expertise. On one occasion, I had been on one single big trade and using more than 50% of my fund margin (note: it is only a foolish who uses 50% margin fund for one position). I was so “Greed” and saw only profit potential and did not see the catastrophic possibility. I was so sure that the stock would not move down passed the strong support level that I believed in. This was due to that the stock had been lowered on an extended period of time and experienced exhaustion. Well, there was one important lesson here that during a Bearish Market, anything can be happen…. and the stock really against toward my position…..

Since I was over-trade, cutting loss means huge pain. Therefore, I fixed the position by rolling my position to next month, putting to more conservative strike price and expecting time will help to recover the loss.

My expectation was half true. I was right that the stock crept up again.. but only for certain period of time and began to be pressured by whole discouraging market conditions. When the stock rebound, I actually could make a good stop loss, nevertheless, over-trade made me hesitate to do that…….

A week later, the stock showed further deterioration and luckily, I could be able to discipline myself to get out from this trade and ate my loss (around 40% from the margin and I really did not like the whole technical indicators). The prediction was right, the stock plunged more than 20% to the lowest level for over 2-3 years. Should I waited again, I could loss the whole margin……

The thing that I want to share to you is that “over-trade” can definitely make you stunned on executing important move. I experienced that I can cut loss earlier when I did not over trade. It was really easy and no emotional involvement. I can also close my profitable positions earlier (if I have more than 80% of profit and options expiration is still more than 2 weeks) and look for another options trading opportunities. Not to over-trade is one important step to Money Management.

Gibbons Burke wrote an interesting article about “Money Management”. The article discussed about:

Money Management Task
Determining per Trade Risk
It is more than Stops
OverTrading and UnderTrading
Understanding Trading Risk
Tools for understanding and practicing money management

….for those of you who are interested to read the article (in PDF format), please send me an email to kxdhar@yahoo.com and posted “Article Intrested”. I will send you the download link.

Faith, hope and prayer should be reserved for God …. the markets are false and fickle idols.

GUIDE TO SWING TRADING - A BONUS FOR WRITE-OPTIONS READER

2008-02-25T22:59:00.003+07:00

LEARNING OPTIONS without knowing to where the STOCK will move? Big Mistake.....
Options is a Derivative Product and an Investor/Trader has to know Technical Analysis to have an edge.

If you want to know:

- Why Technical Analysis Work?
- Japanese Candle Sticks.
- Moving Averages
- Force Index/Directional Moving Index
- What is Swing Trading
- The Steps in Swing Trading
- What Can You Expect?
- Identifying Stocks that Appropriate for Swing Trading
- Taking Profit and Preserving Capital
- How to Enter The Trade
- When to Enter the Trade

And More.........

You can DOWNLOAD THE E-BOOK.... for FREE !!! (Please acknowledge your Friends if they are interested).

The E-Book will tell you about Swing Trading, but I believe you can learn the Technical Analysis discussion to anticipate to where stock will move.

Happy Reading.....

BUY OPTIONS ? Read this Article before you DO it…..

2008-02-18T15:04:00.004+07:00

Options has attracted many investors because the “LEVERAGE” factor. By buying Options, investor will have ‘LIMITED” Risks and “UNLIMITED” Return. This means that you can pay a certain amount of premium (depending on the volatility) to get Unlimited Return when the stock/underlying assets is moving based on your expectation….. Good, isn’t it?

Well, hold your conclusions for a while and be CAREFUL on Buying Options...... the followings are the points that you MUST consider:

1. Options is a wasted Asset.

Every assets are subject to be depreciated, based on the their categories. Indeed, there is asset that can not depreciated such as land. Every Options contract has tenor, and options value will be substantially reduced approaching the expiration date of the contract. This is what we call it “Time Decay” factor. I am really reluctant to buy Options that have high “Theta”, which is Time Decay is very fast. Many Options seminars teach students either to Buy Call or Put Options to cultivate gapping event of certain stocks before earning announcement. Some of them even suggest to make “STRADDLE” position, where you have to buy Call and Put options with the same strike price in anticipation you can hit the big bucks no matter the stock will gap up or down. Nevertheless, they never talk about suggested options tenor that must be bought. As I said, on one month options tenor, Theta is very high and Time Decay is against to all Options buyer. By buying Straddle without knowing momentum and volatility, it is a recipe of loosing the trade.

2. Even the STOCK is running to your direction, the OPTIONS value does not Move……

Many investors do not know why the options value do not move as their expectation despite the stock is moving onto their direction. Options is a derivative product and it is quite complex. The options value is calculated based on “Theoretical Options Value” (such as Black Scholes, Binominial model) and there are many factors affect the value… such as interest, tenor, strike price, dividend, etc. So, before buying options, you have to know “Delta” or the degree of change in option premium in relation to changes in the underlying stock. Many investors want to buy cheap options with the expectation of having Unlimited Return. Well, this is definitely wrong. By choosing OTM (Out of the Money) strike price, you will have higher breakeven (in case of buying call option), therefore, the stock must increase higher than your expectation.

The OTM Call Options usually have lower delta less than .50, and this means your option value will increase very slow compare to stock increase.

3. Even the Stock is running to your direction, your still loose the trade -> the “TIMING” is wrong…

Many Option buyers want to cultivate momentum when stock is gapped up or downward and they buy one-month options since it is cheaper to do that. This is what usually a seminar teach people to see which stock candidate that will bouncing up or down after earning announcement. Well, it may be right that due to good earning result, stock is increasing and running to their direction. But most of the time, the timing is wrong, means the stock is running/rallying after the option is expired. The direction bet is right, but the timing is wrong, and this is happening again and again….

4. You buy Pricey Options….

Every trader must do buy low - sell high. This is also work for Options trading. Options buyers bet options value to increase substantially. But, some investors buy options not considering options price when they buy options, but only looking for momentum that they think can push the price higher. When earning announcement is still pending and nobody know the company’s result, “greed and fear” are influencing the market and usually this drive higher implied volatility and consequently the options price. Nevertheless, when the momentum is decreasing (or no great news anymore), usually volatility is down and also the options price. For option buyers who is using momentum to bet, they usually loosing the trade when volatility goes down.

WRITING CALL OPTIONS TO BALANCE YOUR LOSS AND WRITING VERTICAL SPREADS TO PROFITING FROM CONSOLIDATING MARKET

2008-02-03T12:35:00.001+07:00

Bernanke made a bold move by cutting 75 basis point interest rate the day after the Martin Luther King’s Holiday (Jan 22, 2008). It was a shock therapy from him after future market went down substantially and the overall gloomy market outlook. SPY gapped down from above 130 to below around 126, the lowest low of the year. Many investors cringed as they just could only watch their 2007 investment return was washed out just in a blink.

The shaken of US market made big tidal wave to other countries as well. Europe and Asian market got the negative affect and made all investors in the world wondering what they had to do on this situation.

Before the FOMC meeting on 30 Jan 08, market also dictated Bernanke to make a further interest rate cut by 50 basis point instead of 25 basis point. I personally believed that if Bernanke only cut 25 basis point, the previous cut that he just made (75 basis point) will mean nothing to the market. Market really jitters on the whole condition and need assurance and commitment from the Fed and US government on the next move.

The last trading action on Friday closing (feb 1^st), little positive breeze felt already as all indices went up. SPY surged and closed at 138.00. Before the approved stimulus financial package really implemented, I may predict that the SPY index will move sideways around the channel trend that I drew previously (see graph). Strong resistance at 137/138 was got from low point in mid August 2007 and support trending sideway-trending lines since October 2007.

I was questioned by one of forum member about what to do if he owns stocks that he perceives good stock and he wants to hold them for long term investment. I suggested to him to Write Call Options against his stocks. By Writing a Call Options, he will get the premium and reduce his loss when the market gapped down.

I also told him to write the CALL OTM (Out of the Money) if the stock has positive relative strength to index (on historical point of view) and stock will move upward within short period of time. By writing on OTM strike price, he will get double return from price increase and premium sold.

For those stock that he wants to sell, I suggested not to Write Call Options deep ITM (In The Money). To do this, he must choose the Strike Price that produce High Time Value. By Writing ITM, there will be big possibility that the stock will be exercised and provide a downturn cushion.

When the market is consolidating and volatility went down to normal from current high (market moves sideways), Options Investors can reap profit by selling Vertical Spreads. This is one of my favorite strategies to have consistent return. For stocks that good Relative Strength, you may write Vertical Put Credit Spreads, and look for good support line. For stocks that have negative Relative Strength, you may write Vertical Call Credit Spreads and look for good resistance point. If you believe that the stocks will move on close and tight trending lines, you can use Iron Condor that have friendly margin. The probabilities and choices will be many if you use your imagination and creativity.

STOCKS…HOW LOW CAN YOU GO…? CREATING OPPORTUNITY FOR OPTIONS PLAYERS…?

2008-01-19T16:06:00.000+07:00

How Low Can You Go? This is one of the tag sentence of the most well known cigarette brand in Indonesia “Sampoerna Light” which was acquired by Altria Group/Phillip Morris (MO) a couple years ago. The questions of “How Low Can You Go” has the perception of how low the Tar and Nicotine content comparing to other rival cigarette products.

This tag reminds me to the current market condition. On the S&P daily chart, we can see that stocks were trading on the “Trading Range” , started with the high of 157.52. This is like a neutral zone in the ongoing battle between buyers and sellers. If the trading range is in uptrend, the buying army is obviously stronger than the selling side and rising prices result. The trading range that we have since mid of October 2007 is a downtrend, the flip side of the coin and the selling side is much more powerful than the buyers. So, there a couple of higher-lows and lower lows that make “BEARISH” message on the technical side.

There was a break-out on the 138, and a support level on the 137 the lowest level in August 2007, but once again, Sellers were dominance on the process and stocks were just falling down like a knife without any stops. 30 MA confirmed the downtrend since the beginning of November 2007. This is very ugly scenario and there were a lot of damage happen. The good news of IBM and GE Earnings that exceed analyst expectation just made small rallies, but the bad news on the whole recession possibility really caught investors tightly.

Investors need more assurance from Fed and US Government on real Solutions. It must be fast and comprehensive, otherwise the situations are getting worse. The Bush administration propose “Financial Stimulus” yesterday and some of key actions are:

- Tax incentives to Businesses

- Financial Stimulus of 1% of the GNP, or approximately $ 145 billion.

On the upcoming Fed’s meeting on 29-30 Jan 2008, interest will be cut by 0.5 basis point. I do not know whether this will be helping on the overall economic situation, but, the previous 0.25% reduction has not made the market move and the decision was below market expectations (see my writing on “Market Bullied Bernanke”). With the existing increasing of inflation threats, the Fed must be very careful on every steps that they made.

The down rally was getting worst by the options expiration week. Options buyers usually sell their ITM positions in order not to be assigned and market maker has to buy it. To hedge this position, market maker will sell shares and weighing additional pressures in the market.

I still do not see the “Bottom” yet despite market has been dropped so much. All of technical indicators are still showing downtrend. However, I believe there are quite a number bargain hunters are waiting for short rally, especially after Fed Meeting and Financial Stimulus.

To buy Call Options making a bet on good stocks that have been on their lows can be rewarding, just make sure the tenor is about 3 months to ensure the right movement. However, you must consider that you may pay premium price due to high volatility. Selling Put Credit Spread with far OTM strike price on good stocks that has found firm support is one of my favorite strategy. Just imagine, that market players need insurance and you sell the insurance to them with high price. However, this will be a good move if you choose good risk on good stock that quite robust with Bearish situation. There is always opportunity in a bad market condition and this is how you you look at it…….

PLAN YOUR TRADE AND TRADE WITH YOUR PLAN

2008-01-09T14:06:00.000+07:00

One way to be consistently profitable at Options Trading is that you have to Plan Your Trade in advance. This is very simple steps but crucial... where traders often forget to do it once they see opportunities to make money in the market. Sometimes "the allure of putting a position" is very big and we easily forget the discipline.

Below is "The Approach- One Way" from Pete Stolcer, one of most well known Options Trader. He is running 1option.com and also provide advise of stocks and options at his blog. I hope that his approach can help you to be a better trader:

1. First, form an overall market opinion for the next 30 days. Use technical and fundamental analysis to support your conclusions.
2. Get an early read on the market by viewing the Pre-Open searches in the Scanner. They will identify stocks that will be up/down right on the open. Identify groups that will be on the move and analyze the news to determine the driving market forces for the day. Look at the prior day's movers to refresh your memory.
3. In the first 30 minutes of trading, review the Movers searches in the Scanner. Identify areas of relative strength/weakness within the market. Form a market opinion for the day and determine intraday support/resistance levels.
4. Narrow the universe of stocks. The searches have eliminated the vast majority of stocks using sophisticated programs. You will see stocks that conform to a particular price pattern and they are poised to move.
5. Select the stock lists in the Scanner and quickly "flip" through hundreds of charts. Visually identify attractive candidates. This process is all about pattern recognition and it is explained in the Tutorials. Understand the concept and gain one of the most powerful trading skills.
6. Use the one-month and one-year charts to further reduce your list to a handful of candidates. If the one-week chart looks good, zoom-out and look at the one-month chart. If that looks good, zoom-out and look at the one-year chart.
7. Review the news. What's driving the stock? Avoid trading "hot" news. There is too much "noise" and the stock needs to digest the event. By all means do not initiate a position before earnings are released. Identify long term guidance revisions up or down by the company. That is valuable trade information.
8. Look at the financials. Is the company making money? Are the profit margins improving? Do they have cash so that they can increase dividends and buybacks? Are they a "pipe dream"? What is the overall state of the business?
9. If your answers to the above questions warrant it - develop a game plan. Identify support and resistance levels and know when you are getting in and out.
10. Form an opinion on the direction, magnitude and duration of the expected move.
11. Consider your overall confidence level in the trade and "size" your position accordingly. Your market opinion also needs to be factored in here. If your market opinion is neutral try to balance long and short positions.
12. Characterize the options markets in terms of implied volatilities and liquidity. Are the options expensive? Are the bid/ask spreads wide? Is there any volume or open interest?
13. If appropriate identify an option strategy.
14. Try to carry a balance of bullish and bearish positions where you are long relative strength and short relative weakness. This portfolio can be weighted toward a bias but there should always be a mix. This will help reduce "market risk".

COVERED PUT OPTIONS STRATEGY

2007-12-30T22:32:00.000+07:00

I wrote and discussed this strategy as one of forum member (http://options.forum2u.org/) asking whether this strategy is good or not compared to Covered Call Strategy. Well, actually Covered Put strategy is just the opposite of the Covered Call Strategy...... it is a BEARISH STRATEGY. What you do is you sell SHORT the Stock to cover the Put that is written. Below is the comparison:

Covered Put Covered Call
Short the Stock Buy the Stock
Collect prem on write PUT Collect prem on write CALL
If assigned, deliver stock If called, deliver stock owned

The Covered Put is a neutral to Bearish strategy. So, the investor is expecting the stock to go down or stay constant. When the stock goes down, the Sell Put position will be assigned and and this covers the obligation of the shares of stock that were shorted (just like in the case of Covered Call where the owned stock is delivered for an exercise when the stock go up).

Investor will keep the Collected Premium and this premium is a cushion if stock goes up. However, it only covers the amount of premium and if stock is rallying, the LOSS will be maximum (due to Short Stock Position).

Despite this strategy is quite the same with Covered Call (just opposite), personally I do not suggest this strategy. Because we have MAXIMUM LOSS when stock goes up and as you know, there is no limit stock can go up. The potential loss is very enormous if this strategy is taken by an amateur/beginner (no tight cut loss).

It is different with Covered Call, when the stock goes down, investor always know that they hold a good/bluechip stock. And this is a good cushion that stock will not go down as big as market and can rebound very easily.

OPTIONS AS A SHELTER FROM TURBULENCE

2007-12-27T16:26:00.000+07:00

Browsing into a magazine stand is one of my routines when I go to a bookstore. I used to start looking at the gossip celebrity magazines as this can clear my mind a little bit from daily job routine. After that I browse Newsweek, Time and Business Week. My eyes caught to the Special Edition of Business Week about Investment for 2008 that have publishment date on December 2007. It discussed about investment strategies and conducting interview to leading analysts. However, this is not make my attention get in through. Right in page 82, I struck with an article of Options as a Shelter from Turbulence……

To my surprise, the article does not discuss complex options strategy, but it just discussed about SELLING OPTIONS or WRITING OPTIONS. It stated that Covered Call can provide you big cushion when market is not going good. Well I must agree with this, since Covered Call Strategy is an Income Strategy from Options that will maximize overall return.

Say you have a blue chip stocks that went down due to the market condition. As we know, due to Subprime Mortgage Issue, market is “Bearish” and the FED is trying to use several monetary policy to tame it. As an individual stock, no matter how good is the fundamental, it usually affected by the market movement by around 60%-75% all the time.

Since that you have a good Blue Chip stock, do not sell your stock because of this condition. What you can do is Sell Covered Call Options. If you have 200 shares, you can do 2 lots of contract. Since the market is quite volatile, it is the time to REAP BIG PREMIUMS. Write on ATM (At the Money) positions, which the strike price usually have the biggest premium of Time Value. So, when your stock stays flat or decline a little bit, you will be covered by the rich premium from Covered Call. This is one of the excellent strategy if you own Blue Chip stock, you do not want to sell your stock and market is not doing good for you like now. If the market is still persistent trading in range, you can do Covered Call every month and still get the premium.

Someone will questions to you that if the market is rallying so you will loose opportunities for the capital gain and your stock will be exercised. Don’t worry……, there are many repair strategy that you can do such as Roll Over and Roll Up your position. And if you do on the right timing, you can even enhance your ROI. So, don’t worry about the market and do Covered Call to your Blue Chip stock portfolio.

BE AWARE OF JANUARY EFFECT

2007-12-24T10:13:00.000+07:00

One of my favorite book is One Up on Wall Street by Peter Lynch. He is America’s number one money manager and he believes that average investors (like us) can become experts in their own field and can pick winning stocks as effectively as Wall Street Professionals by doing just a little research. Are you interested to know it? Well, you can search the book by clicking the Amazon Book Link (on the right block) and try to find one….

On his book, he mentioned about January Effect that investors must know and understand. January effect is a general increase in stock prices during the month of January. This rally is generally attributed to an increase in buying by bargain hunters, which follows the drop in price that typically happens in December when investors, seeking to create tax losses to offset capital gains, prompt a sell-off.

The January effect is said to affect small caps more than mid/large caps. This historical trend, however, has been less pronounced in recent years because the markets have adjusted for it. Another reason the January effect is now considered less important is that more people are using tax-sheltered retirement plans and therefore have no reason to sell at the end of the year for a tax loss.

What we should do with this January Effect? I believe just to see and prove it during end of this December. If the Small and Mid Cap stock price is falling based on this prophecy, well, there will be opportunities. Check on Russel 2000 index (RUT) to see the whole effect.

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2007-12-17T22:19:00.000+07:00

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THE MARKET (INVESTORS) BULLIED BERNANKE..?

2007-12-12T17:58:00.000+07:00

It is very interesting phenomena. The Market is really a Veto Machine. We just can not do a “Fundamental Analysis” to see whether company is worth to buy or not. When the market crashed due to SubPrime Mortgage Histeria, many good stocks that have good earnings results were also Plummeted to new low. I saw this on Technology stock such as AAPL and GOOG. No matter how good the analysts view on these two stocks, 70% of their down performance were affected by the market.

The stocks and indexes were corrected and rebound again just because of “WHISPER” from the FED that they plan to cut the interest rate again about a quarter or half percent. Just because Bernanke and his assistant made commitments, market rallied quite vigorously.

My previous writing suggested that I will sit tight and see for market confirmation after the FED decided on lowering the interest. And it was right…., despite the FED cut a quarter point, the market was still “DOWN”, just because investors are expecting more than a quarter cut…..Don’t you think the Market Bullied Bernanke???

This is the third time Fed is cutting the interest rate in a row in order to make the econonomy active. Whether this move will be success or not, let us see what is happening in the near future, but everybody know that the INFLATION is a GHOST to the American Worker. So, who is benefit with this situation? Yes….. you bet, the Short Term Trader. The more volatile the market the better they are. However, it is not for Write Options Strategy. We really need moderate volatility in order make our position safer.

I still believe that during this period, Trade Small and look for market direction for confirmation. Don’t make any big bet since the signal is mixed à where the market rally does not conform with the Sub Prime problems. One week ahead is December Options Expiry date and maybe it is good to look opportunies on short tenor trading. As the VOLATILITY is HIGH, there will be good premium to SELL OPTIONS……

GOING DOWN…. GOING UP…???

2007-11-30T22:21:00.000+07:00

Kemarin lusa di forum (http://options.forum2u.org/) ada new member bertanya mengenai strategi apa yang cocok untuk main options bagi pemula? Untuk itu saya menjawab: “Lebih baik untuk sementara kita “SIT TIGHT”...dan menunggu confirmation dari market”. Mengapa demikian? Karena dengan situasi VOLATILITY seperti sekarang, akan sangat sulit sekali untuk mendapatkan keuntungan dari Options. Perkecualian adalah untuk para Short Term Trader (saham) yang sangat berpengalaman, disiplin dengan stop loss, agresif, dan tidak mengambil posisi meskipun untuk 1 hari…..

Sehari setelah saya menulis mengenai hal ini di forum, esoknya terjadi MARKET REBOUND setelah beberapa minggu mengalami depressing downtrend. Hal ini hanya disebabkan celetukan salah satu orang Fed yang memberikan angin segar bahwa FED akan memberikan pemotongan suku bunga kembali, entah itu 0.25 atau 0.50 basis point.

Saham-saham unggulan di sector industri teknologi seperti GOOG rallying dengan sangat cepat, dari harga sekitar 630 ke 700. Demikian juga dengan semua index mengalami rallying yang cukup signifikant dan buying pressure masih terus terasa sampai kemarin. Bagi para trader yang bermain “Short Selling”, tentunya mereka mendapatkan “SHORT SQUEEZE”, dan beberapa dari mereka mengalami kerugian yang cukup besar.

Apakah market akan terus GO UP…., atau GO Down….? Nah, inilah pertanyaan yang cukup interesting….. Saya pribadi melihat masih banyak “WOUND” (luka) yang ditinggalkan oleh kejadian “SubPrime”. Sektor Financial masih memerlukan waktu untuk membenahi diri, dan apakah luka masih terus melebar atau tidak akan sangat sulit sekali di prediksi.

Kemarin Fed mengatakan adanya kecenderungan naiknya UNEMPLOYMENT, dan ini di konfirmasi dengan statistic yang ada. Apabila ini benar, unemployment akan memberikan dampak akselerasi Credit Problem, karena tanpa pekerjaan bagaimana mereka dapat membayar cicilan. Dan apabila Fed betul2 menurunkan interest rate, hal ini disebabkan mereka have NO CHOICE, karena keputusan ini bukannya keputusan yang paling baik. Ada beberapa DILEMA dari keputusan ini…..

Dengan menurunkan Suku Bunga, bayang bayang inflasi tinggi akan menjadi kenyataan. Turunnya mata uang USD dari currency lainnya sekarang ini, merupakan fenomena nilai currency terendah selama 30 tahun. Dua hal ini menambah runyamnya keadaan….

Marilah kita melihat SPY (Spider) dari segi Teknikal Analisis. Dari awal November sampai tgl 27 index mengalami downtrend dan membentuk “WEDGE”, suatu bentuk Declining Triangle. Market memperlihatkan Lower High dan Lower Low, suatu konsistensi menuju trend Bearish. Ada suatu tanda untuk “Break Out” dengan adanya konsolidasi dari pergerakan index yang mengerucut. Konfirmasi ini diperkuat oleh Positive Convergence dari MACD yang menunjukkan adanya momentum. Dan tanda2 dari Teknikal sesuai dengan apa yang terjadi saat ini…….

Tetapi apakah ini merupakan tanda-tanda market akan mengalami Bullish? Saya pribadi masih expecting adanya beberapa Pull Back dari Rallying ini. Level 149 dan 155 akan merupakan resistance point.

Nah, strategi apa yang dapat kita gunakan untuk keadaan seperti ini? Untuk sementara, sangatlah penting untuk melihat konfirmasi dari market lebih lanjut. Tetapi trend dari Bearish masih sangat kuat. Hal ini disebabkan oleh Fundamental yang ada di market (Subprime, Inflation, High Oil Price, etc). Bagi yang ingin pasang posisi, Credit Call Spread akan cukup cocok. Mainlah dengan aman (OTM) dan disertai oleh konfirmasi market dikemudian hari…..

LESSONS FROM RECENT MARKET CRASH….

2007-11-15T12:31:00.000+07:00

Kita semua mengetahui bahwa masalah “Subprime Mortgage” di Amerika masih menghantui para investor…..
Citibank NA, bank yang cukup kawakan dan mempunyai Conservative Approach didalam memberikan pinjaman, ternyata juga “Terhempas” dengan masalah ini. Stock dari Bank ini “GAPPED DOWN” dari High $49.3 (di October 10) ke $31.2 (di Nov 7) dan dipaksa oleh keadaan untuk WRITE-OFF bad debtnya yang diperkirakan sekitar $11 Billion!!! Karena kasus ini, CEO dari Citibank harus sampai mengundurkan diri…….
Lain halnya dengan Merril Lynch. Karena kasus Subprime, CEOnya di depak keluar…..

Sekitar 2 minggu sebelum November Options expiry date, Sektor Financial terus menekan Market ke bawah. Spider Index (SPY) tertekan terus dan bouncing up and down di kisaran 149-151. Tapi akhirnya….SELLING PRESSURE terlalu kuat, yang pastinya disebabkan juga oleh beberapa Bad/Mediocre “Earning Announcement” dari beberapa perusahaan. Akhirnya SPY Gapped Down ke kisaran 145-146 pada permulaan minggu ini….

Pada hari Senin (12/11/2007), market mengalami “Crash” yang cukup dalam. Tidak terkecuali Tehnology stock yang dikiranya sangat “BULLET PROOF” juga kena dampaknya. AAPL (Apple) dan GOOG (Google), setelah beberapa minggu RALLY, terhempas juga, hanya gara2 announcement dari Cisco. APPL yang tadinya diperkirakan dapat menembus $200/share gapped down ke low 150. Dari diskusi para pemegang saham retail di forum, banyak dari mereka mengalami LOSS. Ada seorang investor yang mempunyai potensi Profit $100,000, dan harus Cut Loss dan hanya mengambil profit $25,000. Tentunya dia kehilangan $75,000 yang harusnya dapat di realisasikan pada saat sebelum Gapped Down…..What a Loss…

Tepat pada hari Selasa (13/11/2007), hanya disebabkan karena announcement dari Wall Mart yang mempunyai Earning cukup bagus dan beberapa indicator ekonomi lainnya, saham kembali Rallying….. APPL yang tadinya dikisaran harga 150, menjadi 175…..

Dari tulisan diatas…. Apa yang kita bisa pelajari dari Market? Berikut ini adalah pandangan dan pengalaman saya…..

1. Secara “SHORT TERM”, market sangat dipengaruhi oleh GREED and FEAR. Hanya karena berita secuil, investor beramai ramai Jual saham dan dapat pula Beli Saham. Tentunya hal ini memberikan ‘VOLATILITY”/gejolak yang sangat tinggi.
2. Pada tingkat Volatility yang sangat “Tinggi”, hanya pemain “Short Term” yang dapat bermain di market. Mereka pada umumnya para Trader kawakan yang pegang saham dalam beberapa hari, bahkan beberapa menit. Para Short Term Trader has the belief “Cash is a King”. Mereka tidak ambil posisi, bahkan dalam satu haripunàdalam satu hari market dapat naik/turun secara drastis.
3. Untuk para pemain Long Term (Buy and Hold), keadaan ini tidak akan begitu mempengaruhi mereka, dengan catatan mereka betul2 “HOLD”. Secara Short Term, market adalah is a Voting Machine….. dan Stock Value is just a “Perception”.
4. Untuk para pemain “Write-Options”, Anda harus betul2 menjaga “Stop Loss”. Posisi Short OTM anda akan sangat berbahaya apabila harga saham/index menjadi ITM. Karena, sewaktu waktu Anda akan dapat Assignment atau bahkan menjadikan Max Loss dan kehilangan semua margin yang ada. Secara konservatif, jangan sampai kehilangan modal 10-20%, karena dengan kehilangan 50% modal anda, Anda harus meraup 100% kemenangan dikemudian hari…..
5. Pertimbangan untuk “Rolling Down” dengan Tenor after month. Apabila Timing tepat, Anda bahkan dapat menikmati premi yang cukup bagus (disebabkan Volatility yang tinggi). Dengan demikian, posisi Short Anda akan lebih “Aman” dan menikmati “Premi” pula…..
6. Apabila Stop Loss anda kena “trigger”, just “WALK AWAY” AND ACCEPT YOUR LOSS. DON’T REVENGE. YOU JUST CAN’T REVENGE TO THE MARKET. -à sebagai catatan: Hal ini membuat Saya mendapatkan banyak kerugian…..
7. Apabila Volatility masih Tinggi, “Trade Small or Don’t Trade”. Write Options is good for relatively Low to Normal Volatility…..

Semoga pandangan dan pengalaman diatas dapat memberikan LESSON to all of US…..

GET “RICH QUICK” WITH OPTIONS ???

2007-11-02T12:46:00.000+07:00

WOW, there are lot of OPTIONS SEMINAR lately in Jakarta !!! Most of them are offering to GET RICH very FAST….. Is it a PHENOMENAL…..???

Setiap kali saya mendengar radio Smart FM, pasti ada seminar baru. Itu baru yang terhitung di radio, belum yang ada di Koran KOMPAS. Ada penyelenggara yang sudah pemain lama dan ada pula pemain baru….. If everybody is talking about OPTIONS, is this a tool to GET RICH QUICKLY or WHAT……???

Berinvestasi di SAHAM sudah bisa disebut sangat AGGRESSIVE di bidang Investasi. Maka itu, banyak Mutual Fund atau Reksadana mencampur ASSET ALLOCATION nya dengan BONDS dan Money Market untuk mendapatkan penghasilan tetap. Dengan naiknya saham gabungan di BEJ, bermain saham adalah PRIMADONA. Pada saat ini, kalau tidak bermain OPTIONS, bisa bisa disebut “KATROK” atau “NDESO”, menurut ukuran seorang TUKUL……

Banyak SEMINAR yang menjajikan keuntungan RATUSAN HINGGA RIBUAN PERSEN UNTUK BERMAIN DI OPTIONS. Bisa…? Jawabannya BISA !!!! Tapi…… harus tahu RISIKOnya …..
OPTIONS adalah produk DERIVATIF. Jadi dengan bermain OPTIONS, kita hanya pegang KONTRAK dan tidak ada barang yang kita pegang. Options mempunyai daya LEVERAGE (daya ungkit) yang sangat tinggi, maka itu IT IS POSSIBLE TO GET HUGE RETURN….
Tapi mestinya janjinya adalah “YOU CAN GET RICH QUICK, AND YOU CAN GET POOR FASTER”….. IF YOU DON’T KNOW WHAT IT IS AND THE MARKET……

To me, OPTIONS is NOT designed for LAYMAN atau Orang Awam. Hanya bagi orang-orang tertentu produk ini cocok untuk mereka. Options is very FAST, and it is like 3 times faster than driving a formula 1. Maka itu, apabila kita salah banting stir atau belok, mobil dapat terjungkal dengan mudah.

REMEMBER THE LAW OF NATURE: “MORE RISK – MORE REWARD, EASY COME EASY GO”

Jadi, lihat barangnya, pelajarilah dan mainkanlah dengan Kalkulasi yang BENAR. It is not for a TRIAL GAME….

Itu adalah pendapat saya…….

VERTICAL SPREAD STRATEGY (PART 1)

2007-10-26T13:13:00.000+07:00

Setiap Trader tentunya mempunyai karakteristik yang berbeda dalam mengelola risiko. Hal ini disebabkan tiap manusia mempunyai toleransi RISK/REWARD yang berlainan. Tetapi toleransi ini dapat saja berubah sesuai dengan pengetahuan dan pengalaman yang berkembang dari waktu ke waktu. Maka itu kata orang, belajar tidak ada batasnya, seperti kita menatap langit yang berwarna biru, tetapi kita tidak pernah bisa menebak warna apakah sebetulnya diatas tanpa kita berusaha untuk berusaha naik keatas dari waktu ke waktu…..

Beberapa strategi yang ditulis di BLOG ini sebelumnya mengenai COVERED CALL. Hal ini disebabkan karena Saya percaya sebelum seorang Trader belajar strategi yang lebih Advance, dia harus benar2 mengetahui strategi Covered Call (ini menurut pandangan saya saja……). Pada kesempatan kali ini saya ingin mengulas Vertical Spread Strategy di Options.

Vertical Spread Strategy adalah strategi Intermediate to Advance tergantung dari variasi yang di-implementasikan. Dari yang paling sederhana: Vertical Spread, sampai dengan Horizontal Spread, Calendar Spread, Diagonal Spread, dsb…..

Vertical Spread Strategy menggunakan dua kaki (legs) sewaktu kita put the order. Kedua kaki ini biasanya posisi LONG dan SHORT. Dengan demikian, posisi mempunyai sifat HEDGING secara natural. Maka itu, Vertical Spread Strategy adalah strategi yang mempunyai LIMITED RISK dan LIMITED RETURN. Risk dan Reward terbagi secara sangat FAIR, dan apabila dipergunakan secara benar, strategi ini dapat menghasilkan KONSISTEN WINNING TRADE…..

Untuk mengulasnya, marilah kita simak BEAR PUT SPREAD yang dilakukan pada IWM Index yang saya ambil contohnya dari ivolatility.com Blog pada tgl 22/10/2007.

<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

Bear Put Spread

IWM Hedging Strategy
iShare Russell 2000 Index (IWM) 79.09.

When the DJ Industrials and the S&P 500 were briefly trading above their July highs the IWM did not show the same relative strength and was stopped short of a new high at the 85 level. With fewer large multi-national companies the IWM does not have the translation advantage of lower dollar exchange rates. With more domestic exposure this relative weakness is understandable and should also be reflected in a market correction.
Using a put spread will reduce the probability of overpaying for expensive puts and will offset time decay of the long put with time decay of a short put. The current Historical Volatility of the IWM is 22.59 and the IV Index for the puts is 30.53.
Consider this Bear Put Spread:

DR: Downside Hedge
SU: On a close back above 84 the spread should be unwound or closed entirely.

Buy IWM Dec 80 put IQQXB 4.225 IV 28.65 Delta -.4926
Sell IWM Dec 75 put IQQXW 2.425 IV 31.82 Delta .3115
Debit 1.80
Position net delta -.1811

The risk is the debit of 1.80 while the gain is limited to the difference between the strike prices of five points, less the debit. This means we are risking 1.80 to make 3.20, which is a good risk reward ratio for a trade with defined and limited downside risk. With substantial volume and good bid/offer spreads the IWM makes a good hedging tool.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

BEAR PUT SPREAD adalah Vertical Spread untuk sentiment market BEARISH. Artinya trader mempunyai sentiment harga index/saham akan TURUN. Trader yang memasang strategi ini sebetulnya ingin BUY PUT di harga strike 80. Apabila dia hanya memasang BUY PUT, PROFIT yang didapat akan UNLIMITED (sesuai dengan bottom yang ada, pada case ini adalah 80). Jadi, dengan membayar premi $422.5, trader tsb dapat mengontrol pergerakan 100 saham yang ada (1 lot).

Nah, pertanyaanya, mengapa trader tsb SELL PUT di strike 75? Apabila kita lihat dari hitungan matematik, dengan SELL PUT ini, dia akan mendapatkan $242.5 per 100 sahamnya. Jadi, enak juga, sudah dapat mengontrol pergerakan 100 saham, dan dapat SUBSIDI…… Dengan demikian, trader hanya membayar $180 untuk strategi ini.
Tapi ingat, SUBSIDI ini tidak GRATIS lho. Karena dengan adanya Subsidi ini, UNLIMITED PROFIT menjadi LIMITED PROFIT (Keuntungan TERBATAS). Dengan posisi ini, MAX PROFIT adalah jarak dari posisi BUY dan SELL, yaitu 5 (80-75) atau $500. Karena trader harus membayar $180 untuk posisi ini, maka NET PROFIT MAX adalah $320 per lot ($500-$180).

Apabila seseorang percaya bahwa BUY PUT adalah sebuah permainan CASINO (spt judi, yang mana kemungkinan menang tipis, karena saham harus cepat begerak turun untuk mendapatkan profit), permainan BEAR PUT SPREAD ini adalah MINI CASINO atau CASINO on DISCOUNT. Dengan ditambahnya satu kaki SELL PUT, NATURAL HEDGING telah dilakukan….

Seperti BUY PUT/BUY CALL, minimum tenor yang dipilih minimum adalah 3 bulan, untuk menghindari TIME DECAY dan memberikan saham/index untuk mempunyai ruang gerak yang lebih leluasa. Implied Volatility (gejolak) lebih tinggi daripada Historical Volatility akan lebih bagus, karena dengan demikian index/saham akan dapat cepat mencapai target yang dituju (cepat turun).

REVIEW ON SPY – October 19, 2007 Closing

2007-10-20T22:34:00.001+07:00

Hari Jumat kemarin merupakan expiration date dari Options di bulan Oktober. Kali ini, market diramaikan dengan laporan Third Quarter Earnings dari perusahaan. Perlu dicatat, Financial Sector mempunyai portfolio sekitar 20% dari index SPY, dan karena kekuatiran Subprime Market masih menghantui dan disertai oleh 4th Q prediction yang kurang bagus, banyak investor yang mempunyai sentiment negative terhadap market.

Sejak hari Kamis yang lalu, tekanan kepada SPY telah dirasakan. Pada tulisan kemarin, Support Line 155 telah di “Break” dan kekuatan Rebound ternyata gagal. Salah satu factor penyebabnya adalah laporan 3rd Q yang kurang memuaskan dari beberapa perusahaan. Pada jam2 terakhir penutupan di hari Jumat, SPY menembus Support Line yang harusnya cukup kuat di kisaran 150 (tepat pada Moving Average 50 days) dan bertengger di 149.67. Gejolak ini dirasakan juga di RUT (Russel Index 2000) yang merupakan Small Cap dari perusahaan2 kecil. Selain itu, minggu ini juga merupakan peringatan Black Monday 20th Anniversary, jadi jatuhnya index dipengaruhi juga oleh emotional dari market secara keseluruhan. Harga minyak melejit ke $90 per barrel juga sebagai pemicu karena akan memberikan dampak costs yang cukup tinggi kepada operational perusahaan.

Meskipun demikian, sector teknologi spt GOOG (Google) dan AAPL (Apple) tidak begitu terkena dampaknya. GOOG tetap kokoh dengan BULLISH Trendnya dan menembus level 600, bertengger di 644.71 pada penutupan. Demikian juga dengan AAPL di kisaran 170.42. Satu catatan menarik mengenai IBM. Perusahaan raksasa ini mempunyai hasil Earning yang bagus dan business yang solid, tetapi harga saham terkoreksi dari high position 118-119 ke 112.28 pada penutupan. Ah,ternyata IBM mempunyai sekitar 30-40% business ke perbankan. Karena sector financial industry dirasakan cukup tertekan dengan oleh Subprime, maka itu saham IBM kena dampaknya…..

Apakah pada pembukaan hari Senin market akan Rebound? Ini akan menjadi pertanyaan yang menarik. Seperti yang kita ketahui, pada expiry date of options, Volatility selalu menjadi tinggi, lebih2 disertai oleh laporan Earnings. Dan tentunya, hal ini diikuti oleh FEAR/GREED dari para pemain di market. Kita tidak bisa menentukan, tetapi secara teknikal SHORT TERM, harga masih akan tertekan terus. Secara Medium to Long Term, signal teknikal masih memberikan Neutral dengan posisi MA (moving average) yang cukup bagusà dengan perkecualian di MA20 yang mempunyai tendensi ke bawah (downtrend).

Bagi mereka yang mempunyai posisi SHORT dibawah 148 (atau posisi Short di saham lainnya), hati2 dengan pembukaan di hari Senin dan harus mempunyai DISIPLIN dengan STOP LOSS, karena kita tidak akan tahu sampai mana market akan melemah. Saya me asumsikan akan ada rekonsiliasi, tetapi siap yang tahu…? Maka itu, yang paling penting adalah memerhatikan PRICE ACTION dan LISTEN to the MARKET……

LITTLE REVIEW ON SPY – October 12, 2007 (3pm)

2007-10-13T23:24:00.000+07:00

(klik gambar untuk memperbesar)

Setelah mengalami downtrend seminggu sejak SPY gapped up ke high 156.33 (pd tgl 19/9/2007), index mengalam UPTREND yang cukup meyakinkan dari tgl 15/9/2007 sampai 11/10/2007. Hal ini diperkuat oleh HIGHER HIGH dan HIGHER LOW yang berkesinambungan (lihat chart). UPTREND ini terus berlangsung dan kelihatannya market mengalami OVER EXTENDED, dan ini diikuti oleh Selling Action pada pembukaan di tanggal 12/10/2007.

Market terkoreksi ke 154.8, tetapi hal ini tidak lama berlangsung dan kemudian REBOUND kembali. Pada saat market terkoreksi, harga index BREAK the TRENDLINE dan menjadikan Trend Line ini sebagai RESISTANCE. Kita bisa melihat pada jam2 terakhir, harga mengalami sideways pada resistance line ini.

Meskipun ada PULL BACK pada tgl 12/10/2007, saya pribadi masih melihat market masih BULLISH. Hal ini dibuktikan dengan Moving Average 50 days dan 200 days masih mempunyai trend yang sangat positif.

Harga di kisaran 155 akan merupakan SUPPORT LINE yang cukup bagus…… Pesan singkat, BULLISH is still on everybody side…..

GREEDY PIGS GET SLAUGHTERED . . .

2007-10-06T00:24:00.000+07:00

Wow, setelah the FED, Ben Bernanke CUT the INTEREST RATE, harga saham dan index terus melaju. Hari Jumat malam ini (5 Oktober 2007) ketika saya buka Trading Platform, semua index “JUMPED UP”. SPY menembus 155, RUT naik hampir 14 pts ke 842.92, dan saham GOOG hampir menembus 600. Hal ini diperkuat oleh report dari US government yang menyatakan data JOB GROWTH cukup bagus di September 2007, dibandingkan dengan bulan Agustus 2007.

Ada satu hal yang PENTING dan perlu diingat bagi para TRADER, yaitu kata yang saya petik dari Brian Shannon:

It is easy to lose track of your dicsipline when so many stocks are soaring. Do not allow yourself to be complacent. Bulls and bears make money, greedy pigs get slaugheterd and disciplined pigs get rich. Be a disciplined pig.

Brian Shannon adalah seorang Trader yang mempunyai kemampuan Technical Analysis yang tinggi. Dia berkata bahwa kita jangan sampai GREEDY dalam menghadapi BULL MARKET. Janganlah sampai kita mengejar demi keuntungan yang tinggi, karena sebagai TRADER, kita tetap dapat profit untuk market BULLISH maupun BEARISH.

Sebelum saya menemukan kata2 dia, saya mempunyai pengalaman pribadi mengenai sifat GREEDY ini. Pada hari RABU minggu ini, Market terus menunjukkan BULLISH trend. Maka itu, saya mencoba untuk mempunyai position Vertical Credit Spread (BULL PUT) dengan objective return lebih dari 10%. Seperti yang anda ketahui, sangat sulit sekali untuk memasang posisi pada saat market bergerak dan mendapatkan harga bagus (dan tentunya strike price yang bagus juga) untuk dapat filled. Karena market naik terus, tidak terasa, saya telah mengorbankan Technical Consideration dengan mempunyai posisi yang cukup RISKY dan ingin mendapatkan return lebih dari 10% (avg per month). Untung, kata hati lebih kuat, dan lebih untung lagi, price yang saya minta belum di execute oleh broker pada akhir hari itu. Maka pada keesokan harinya saya Cancel the order dan memasang posisi yang lebih bagus dilihat dari sisi RISK and REWARD nya.

Dari pengalaman ini, HATI HATILAH MENGHADAPI BULL MARKET. KARENA, “GREEDY” AKAN SELALU MENGHANTUI ANDA. Ingat, Trading is 60%-80% Psychology, and the rest is TECHNICAL AND KNOWLEDGE…..

ASYIK NYA TRADING DENGAN TOS

2007-10-01T22:39:00.000+07:00

Trading kadang merupakan hal yang membosankan pada waktu kita didepan layar komputer dan hanya melihat angka yang berkedip-kedip. Maka itu, saya biasanya sering pindah dari satu layar ke layar lainnya.

Tapi, pada minggu ini, ada satu hal yang membuat saya untuk bertahan dan duduk tenang dimuka layar komputer saya. Pada malam ini, saya mencoba "UPGRADE" Program dari TOS (ThinkOrSwim) mengenai beberapa hal. Salah satunya adalah saya dapat melihat CNBC LIVE. WOOW, IT IS REALLY COOL ...... Acara favorit saya di cable TV sekarang dapat saya lihat di layar komputer. Dengan bertambahnya kecepatan internet connection dan harga yang makin kompetitif, kita dapat berlangganan 3/3.5G dan tentunya dapat menenteng notebook kemanapun kita mau. Dengan demikian, kita dapat ngopi di Starbuck pada malam hari pada waktu Wall Street buka dan pasang Options Strategi......

What a Live....., itu tentunya yang sedang saya bayangkan. Dengan makin canggihnya teknologi, tembok2 pemisah di dunia ini makin tidak ada, dan siapa pun yang dapat me CULTIVATE teknologi dan mempunyai KNOW HOW, bisa mendapatkan quite "Easy Money" (dengan catatan tentunya harus canggih di pengetahuan Investment). Tertarik???

Lihatlah gambar demo dibawah ini........

“HOPE” IS NOT A STRATEGY

2007-09-29T12:41:00.000+07:00

Anton adalah seorang Trader yang cukup handal. Hampir semua strategi OPTIONS dia menguasainya. Karena dia sangat pandai Matematika, perhitungan Profit and Loss Options bagi dia seperti hitungan anak SMP/SMA. Strategi yang cukup kompleks seperti Iron Condor, Butterfly, Calendar Spread sangat mudah dipahami oleh dia….

Anton mempunyai teman cukup dekat sebut saja Sulistyo. Pak Sulistyo sama seperti Anton yaitu seorang Trader. Tetapi bagi Sulistyo, matematika merupakan hal yang cukup rumit baginya. Dahulu sewaktu sekolah, pelajaran Matematika merupakan pelajaran yang memberikan stress bagi dia, maka itulah dia memilih pelajaran yang bersifat ilmu sosial pada waktu dia kuliah.

Tetapi, ketidakmampuan dalam hal Matematik tidak membuatnya patah arang, karena begitu konsep mengenai Options diketahui, perhitungan tambah, kali dan kurang tidak berbeda dengan perhitungan anak SMP. Bagi Sulistyo, mengetahui strategi yang Sophisticated seperti Iron Condor/Butterfly amatlah sulit. Meskipun dia tahu konsep dasarnya, tetapi mengetahui secara detil tidaklah mudah…..

Pada waktu bulan Agustus 2007 mereka mempunyai kepercayaan market Sentimen yang sama yaitu Bullish. Baik Anton dan Sulistyo mempunyai strategi yang sama di portofolionya yaitu Write BULL PUT SPREAD. Dengan strategi ini, mereka menjual PUT Options di strike price yang lebih tinggi dan secara bersamaan membeli PUT Options di strike price yang lebih rendah, sehingga posisi adalah CREDIT dan menerima PREMI dimuka. Tidak dinyana, beberapa hari setelah posisi dipasang, ternyata market di Amerika di pengaruhi oleh Subprime Housing, dan diikuti pula oleh beberapa HEDGE FUND yang tutup. Banyak investor kalang kabut dan mereka semua SELL semua securities yang ada ditangan. Hal ini tentunya mengakibatkan semua index dan saham terkemuka kena imbas, dan harga saham/index GAPPED DOWN secara drastis. Posisi Short yang dipunyai oleh Anton dan Sulistyo masih sama2 aman, tetapi karena market masih sangat volatile sekali, tentunya harga saham/index mempunyai kemungkinan yang sangat besar untuk turun lebih dalam.

Meskipun Sulistyo adalah seorang Trader yang mempunyai pengetahuan biasa2 saja, tetapi dia sangat DISIPLIN. Trading bagi dia adalah sebuah Game, dan tanpa emosi dia CUT LOSS posisi BULL PUT dengan membelinya kembali di pasar. Meskipun posisi rugi, tetapi dia sangat tahu apabila market turun kembali, kerugian akan bertambah besar.

Tidak demikian dengan Anton. Dia kurang DISIPLIN dalam CUT LOSS. Meskipun sinyal STOP LOSS telah diperhitungkan, tetapi dia mempunyai “HOPE” market akan REBOUND kembali. Ternyata market masih turun terus dan posisi Short terlewati. Sampai mendekati expiry date of options, posisi Short berada di ITM dan tentunya mempunyai kemungkinan Assignment maka dengan sangat terpaksa Anton harus menutup posisi Shortnya tepat sebelum options expiry date. Dengan demikian, cukup banyak kerugian yang dideritanya, karena dengan posisi ITM pada posisi short dan Volatility yang tinggi, sangatlah mahal untuk membeli kembali posisi nya……

Cerita diatas tentunya memberikan illustrasi bahwa “HOPE” is NOT a strategy. Berharap market akan Rebound bukan merupakan strategi di OPTIONS. Dari pengalaman saya, pemikiran HOPE sangat dipengaruhi oleh GREED and FEAR…..

Dalam Options, sekitar 60% keberhasilan strategi sangat dipengaruhi oleh Psychology. Meskipun Anton lebih Piawai dalam pengetahuan Options dari pada Sulistyo, tetapi karena “HOPE”, dia mengalami kerugian lebih dalam kasus ini. Dalam Trading, semua keputusan harus mengikuti Trade Plan. Seperti yang dikatakan oleh salah satu member dari Forum saya, Plan your Trade and Trade based on your Plan.

Saya harap artikel ini dapat memberikan illustrasi bahwa “HOPE” IS NOT A STRATEGY.

COVERED CALL STRATEGY – ROLL UP (Part IV)

2007-09-23T20:51:00.000+07:00

Ingat kepada Covered Call Strategy? Apabila lupa, silahkan melihat kepada posting yang terdahulu….

Covered Call Strategy dilakukan dengan SELL CALL dengan menggunakan saham sebagai jaminan Underlying Assets apabila posisi Short di “exercise” yang disebabkan harga saham naik melampaui harga strike. Apabila kita memasang Covered Call Strategy, kemungkinan di Exercise adalah suatu hal yang biasa. Kita tidak boleh memikirkan bahwa Exercise adalah suatu hal yang buruk.

Tetapi, ada satu cara supaya saham yang kita punyai TIDAK di exercise. Yaitu dengan menggunakan REPAIR STRATEGY – ROLL UP.
ROLL UP adalah strategi yang digunakan pada Covered Call apabila saham naik dan mendekati Strike Price. Apabila kita yakin saham dalam keadaan BULLISH dan kita tidak ingin saham unggulan kita di exercise, kita dapat melakukan Roll Up.

Berikut ini adalah persyaratan untuk melakukan ROLL UP:

- Harga saham dipastikan akan naik terus melampaui strike Price, sehingga kemungkinan Exercise sangat besar sekali.
- Saham merupakan saham unggulan dan kita menginginkan profit tambahan dengan Bullish Trend.
- Apabila kita menutup posisi CALL, harus dipastikan penjualan PREMI di front end month ditambah dengan kenaikan saham harus lebih menguntungkan dari premi yang dibayar untuk menutup posisi CALL.

ROLL UP strike price dapat dipilih sesuai dengan antisipasi kenaikan harga saham sampai pada level tertentu. Semakin kita mengharapkan saham sangat BULLISH, tentunya strike price akan makin tinggi, tetapi premi yang akan diterima untuk membayar Closing posisi pada saat ini akan cukup kecil. Tetapi dengan kenaikan harga saham yang cepat, kita dapat meraih keuntungan.

Satu hal yang harus diperhatikan adalah jangan sampai melakukan ROLL UP ke 3 bulan ke depan. Hal ini disebabkan saham dapat reverse dan turun kembali, sehingga keuntungan yang kita prediksikan dari kenaikan saham dengan ROLL UP tidak maksimal, atau bahkan dapat merugi apabila saham terjadi gerakan reverse back down. Maka itu, ROLL UP strategi amat cocok dilakukan bagi investor yang sudah sangat kenal dengan saham yang dipegang. Apabila tidak, pilihan untuk di exercise adalah pilihan yang cukup baik, karena dengan profit yang telah dihitung sebelumnya (3-5%) merupakan profit yang cukup bagus. Jangan sampai kita menginginkan profit yang lebih tetapi tidak cukup mengetahui saham tsb.

Lagi2 apabila sifat dari Trading Plan adalah BUY-WRITE, yaitu beli saham dan langsung SELL CALL. Sifat dari Trading ini adalah Short Term, dan exercise merupakan pilihan yang bagus. Karena dengan demikian kita dapat menggunakan dana untuk melakukan BUY WRITE terhadap kandidat saham lainnya dengan Return yang lebih bagus……

TIME DECAY (THETA)

2007-09-13T20:13:00.000+07:00

WAKTU adalah UANG ? Banyak orang dan bahkan pembicara seminar terkenal mengemukakan kepada kita bahwa WAKTU adalah UANG…. Maka itu hati2 lah didalam mengatur waktu hidup kita !

Dalam satu hari kita mempunyai waktu 24 jam. Apabila tidur diperlukan waktu sekitar 8 jam, makan 3 kali sekitar 2 jam, perjalanan ke kantor 3 jam (bersama macetnya), maka masih ada 14 jam yang harus kita bagi untuk pekerjaan, keluarga dan lain-lainnya. Saya mempunyai teman harus pergi bolak-balik dari daerah Jakarta Barat ke Cibubur dan harus dijalan sekitar 4 jam dalam satu hari. Dia bekerja 6 hari satu minggu….. Bisa dibayangkan, dia harus di jalan sekitar 96 jam satu bulannya…., atau sama dengan waktu tidur 12 hari dalam satu bulan (96:8 jam = 12 hari). Kadang2, kita berpikir “It is Wasting Time…”.

Alan Weiss, seorang Consultant Perusahaan terkemuka di Amerika memberikan pemikiran tentang WAKTU kepada subscribers emailnya baru2 ini, dan dia mengatakan bahwa “WAKTU” lebih berharga daripada UANG !!! Menurut dia UANG dapat dicari dan dapat berlimpah dalam waktu yang singkat, sedangkan WAKTU tidak akan kembali lagi apabila sudah terlewatkan…… Hmm, menurut saya betul juga, maka itu saya pergunakan waktu sebaik-baiknya untuk hobi, keluarga dan pekerjaan yang saya sukai……(salah satunya Options Trading).

THETA dalam Options mempunyai pengertian yang amat penting berhubungan dengan WAKTU. Theta mengukur bagaimana Time Decay mempengaruhi Options premium (harga options). Semakin dekat kita pada Expiry Date, semakin cepat erosi dari Options Premium….

Bagi seorang Trader yang mempunyai srategi “Write Options”, Time Decay berada di posisinya. Dengan demikian, apabila dia SELL OPTIONS (dengan harga Options premium yang cukup tinggi), harga premi Options akan turun secara Exponentially mendekati expiry day (meskipun harga saham tidak bergerak). Dengan kata lain, EROSI WAKTU memberikan INCOME tambahan. Kedengarannya is TOO GOOD TO BE TRUE, tetapi demikianlah adanya. Apabila ini benar, bermain Options (terutama Write Options) memberikan jawaban kepada kita untuk me – CULTIVATE WAKTU sebaik mungkin. Coba bayangkan, tanpa kita bekerja secara fisik, posisi Write Options is generating Income for us….. (dengan catatan underlying assets is not against us).

Karena TIME DECAY mempunyai mempunyai kecepatan EROSI pada expiry date, maka itu strategi Write Options amatlah cocok untuk posisi yang mempunyai 30-45 hari until expiry date. Dengan demikian, WAKTU betul2 disisi kita, dan WAKTU is generating INCOME….

Bagaimana pendapat Anda ??? Silahkan posting di http://options.forum2u.org/ apabila ada komentar……

DELTA (Part 2)

2007-09-02T12:27:00.000+07:00

Pada bagian Delta part I, kita telah membahas mengenai apa itu Delta, harga Delta dan bagaimana perubahannya apabila harga saham naik/turun. Pada kesempatan kali ini, Saya ingin membahas mengenai “DELTA NEUTRAL TRADING”, merupakan metoda trading yang dipakai oleh pada Trader yang berpengalaman dan umumnya para FLOOR TRADER.

Seperti definisi yang dipunyai, Delta Neutral Trading adalah bagaimana kita me-posisikan strategi Options dimana SUMS (jumlah) dari Delta adalah 0 (zero). Idenya dengan me HEDGE posisi, sehingga resiko secara keseluruhan dapat di minimize dengan memperlambat SPEED / KECEPATAN Options Price relatively terhadap dari Saham.

Biasanya, para Delta Neutral Trader, terus melakukan ADJUSTMENTS pada trading posisinya apabila harga saham Fluctuates (naik/turun). Hal ini dilakukan apabila saham telah bergerak sekitar 20% dari harga semula (naik maupun turun).

Contoh beberapa Strategi Options yang mempunyai Delta Neutral Trading adalah:

- Straddle ATM (At The Money)
- Strangle ATM (At The Money)
- BULL Spread – Nilai Delta Positive tetapi Delta telah di Hedge*
- BEAR Spread – Nilai Delta Negative tetapi Delta telah di Hedge*

Cat *) Meskipun nilai Delta tidak 0, tetapi besaran Delta di minimize.

Sekarang pertanyaan yang mendasar adalah apakah kita dapat melakukan hal yang sama dilakukan para FLOOR TRADER dengan teknik Delta Neutral Trading? Menurut saya jawabannya tentunya “TIDAK”. Untuk melakukan beberapa adjustments, individual Trader akan melakukan banyak Slippage (beda jual dan beli) dan komisi yang harus ditanggung. Sehingga strategi Delta Neutral Trading tidak sesuai untuk seorang individu trader, tetapi lebih kepada Floor Trader, yang dimana mereka tidak bayar komisi dan perbedaan slippage sangat kecil atau hampir tidak ada.

Maka itu, Delta Neutral Trading cukup dimengerti konsepnya saja, tetapi bukan untuk benar2 di praktekan. Beberapa strategi Options yang pernah dibahas (spt Straddle dan Spreads) tentunya telah automatically memberikan posisi Delta yang cukup Neutral.

DELTA (Part 1)

2007-08-18T18:53:00.000+07:00

Mempunyai Options Kontrak, kita tentunya mempunyai “LEVERAGE” atau daya ungkit yang amat besar terhadap suatu Underslying ASSETS (disini kita menggunakan saham). Dengan modal yang cukup kecil, kita dapat me – kontrol saham dengan jumlah dan value yang cukup besar. Untuk itulah mengapa Options amat menarik bagi investors maupun Spekulan…… Untuk mengetahui daya LEVERAGE ini, seseorang tentunya harus mengetahui DELTA, salah satu dari Abjad GREEK yang sering dibicarakan oleh para Trader.

Options Delta adalah “Rate of Change” dari harga OPTIONS dibandingkan dengan pergerakan harga SAHAM. Dengan kata lain, DELTA memperhitungkan SPEED dan KECEPATAN dari harga Options dibandingkan dengan harga saham tsb. Delta mempunyai rumusan sbb:

Delta = Rate of Change in Options Price / Rate of Change in Underlying Assets (shares).

Dapat juga kita me-asumsi bahwa Delta adalah PROBABILITY dari Options untuk Expiry di posisi ITM (In The Money). Apabila Call Options pada posisi ATM (At the Money), biasanya Options tsb mempunyai harga Delta 0.5. Jadi, apabila harga saham bergerak $1, harga Call Options akan bergerak kira2 0.5. Tetapi pergerakan Delta tidak akan terus konstan, karena dengan menjauhi posisi ATM tsb, besaran Delta juga akan berubah dari 0.5.

Delta dengan harga +/- 50 (asumsi dengan 100 shares dengan delta 0.5) akan mempunyai probabilitas untuk expired di posisi ITM atau OTM sebesar 50%.

CALL pada posisi ATM akan mempunyai Delta +0.5, dan PUT pada posisi ATM akan mempunyai harga –0.5. Dengan harga minus yang pada PUT Options, artinya adalah harga Options akan “NAIK” 0.5 apabila harga saham TURUN 1 point.

Semua BUY CALL OPTIONS mempunyai DELTA Positif, dan semua SELL CALL OPTIONS mempunyai DELTA Negatif. Untuk PUT OPTIONS adalah kebalikannya. Semua BUY PUT OPTIONS mempunyai DELTA Negatif, dan semua SELL PUT OPTIONS mempunyai DELTA Positif.

Sebelum Anda melakukan Trading, ada baiknya mengetahui besaran Delta, sehingga Anda tahu persis bagaimana HARGA OPTIONS apabila saham naik/turun 1 point. Untuk mengetahui Delta, Anda dapat melihatnya di Trading Platform yang biasanya menu tsb disediakan oleh Broker Anda. Dengan demikian Anda dapat merencanakan Trading dengan lebih baik……

FAKES

2007-08-08T00:09:00.000+07:00

Judul diatas memberikan kesan "KEPALSUAN" suatu benda/merchandise yang kita beli. Tentunya kita "OGAH" untuk membeli barang ASPAL, atau asli tapi palsu, meskipun barang tersebut dapat diperoleh dengan harga yang lebih murah......

FAKE yang akan dibahas kali ini bukanlah suatu barang atau merchandise, tetapi suatu DIRECTION dari market yang "PALSU".
Di saham atau index, FAKE terjadi apabila:

1. Bottom is Broken dan kemudian harga saham/index Spring Back UP......
2. The TOP is Broken dan kemudian Falls Back DOWN.....

Sudah 2X saya 1 bulan ini mengalami FAKE, dan tentunya merasa betul2 dikibulin oleh market. Bagaimana tidak ? Dengan keyakinan suatu Resistance dan Support Line yang sangat KUAT (Strong), FAKE ini tetap menggoda kita untuk mengambil langkah STOP LOSS. Tetapi begitu kita STOP LOSS, arah saham/index berubah kembali........

Nah, bagaimana caranya untuk kita lebih berhati-hati? Berikut ini beberapa KIAT nya:

a. Setiap saham dan index mempunyai personality yang berbeda. Dengan mengetahui Personality mereka (memperhatikan/menganalisanya), kita akan lebih mengetahui bagaimana ciri FAKE mereka dan tentunya Anda dapat me-adjust posisi sesuai dengan FAKE yang ada.

b. FAKES juga terjadi apabila SPECIALISTS DAN MARKET MAKERS me identify banyaknya level "INTEREST" pada suatu Resistance dan Support, dan secara sengaja mereka me DRIVE PRICE "BEYOND" dari area Resistance atau Support tsb. Misalnya harga saham jatuh pada suatu LEVEL SUPPORT tertentu dan banyak STOP ORDER. Melihat kondisi ini, Specialist/Market Maker dapat me DRIVE harga turun kebawah dan Automated SElling Action terjadilah. Pada saat ini mereka cepat2 membeli saham, dan harga akan rebound kembali dan mereka mendapatkan profit. SUPPORT BROKEN temporarily dan biasanya ini terjadi pada 30 menit. Hal ini juga disebut "WASH and RINSE"

Maka itu, Technical Analysis memberikan IDE mengenai Trend dari Market, tetapi merupakan suatu "ART" yang sangat sulit untuk dikuasai.....

ADJUSTMENT - IRON CONDOR INITIATED ON JULY 11, 2007

2007-07-26T23:15:00.000+07:00

Setiap posisi di Options tentunya harus mempunyai repair strategy apabila market is against us.......

Pada saat saya melakukan tulisan ini, Bearish di RUT tentunya akan mempengaruhi profit and loss pada posisi yang dilakukan pada tanggal 11 July 2007. Untuk itu, Gary (from MarketNeutralOptions) melakukan updated untuk ADJUSTMENT dari posisi IRON CONDOR yang beliau Rekomendasikan. Adjustment tersebut adalah dengan melakukan Roll Down posisi Put maupun Call.

Berikut ini adalah email dari Beliau berikut penjelasannya.......

RUT (Russell 2000 Index) Iron Condor initiated on 11 Jul 2007
by MarketNeutralOptions

Adjustment Summary RUT at 809.3421 days to Aug expiration.

Roll Call Spread

Buy RUT Aug 900 Call
Sell RUT Aug 910 Call
Sell RUT Aug 860 Call
Buy RUT Aug 870 Call
(enter as vertical roll, do not leg-in)
For a net price of $0.70 Credit or better.
Total risk per position: $850 (updated).

Roll Put Spread
Buy RUT Aug 790 Put
ell RUT Aug 780 Put
Sell RUT Aug 760 Put
Buy RUT Aug 750 Put
(enter as vertical roll, do not leg-in)
For a net price of $1.35 Debit or better.

Updated Trade Analysis

What a day! Suddenly the bears came crashing into this tranquil range-bound market that we were seeing. We sensed the weakness in the RUT and that was why we initated the IWM bear call spread on Monday (23 Jul). But we didn't expect it to crashed the way it did yesterday. So much so that we have to adjust our RUT iron condor. Adjusting our RUT iron condor is something we try to avoid at all cost because of the difficulty in getting filled. As you may have guessed it, we too have had a hard time trying to get filled. To make things worse, the market is moving, or shall I say falling fast, and that is affecting the stability of the price. That is why we urged you to enter this adjustment as soon as you can. Otherwise, the price may move on and you might not get the target price that we want.
We apologise for sending two separate emails for this adjustment exercise. I hope they haven't caused any confusion. We were wa
iting to be filled for both rolls and the moment we got filled for the put side, we sent out the advisory. We sent out another one (for the call side) after we got filled. That was why there were 2 emails. One for the put side and the other for the call side.
This analysis will be an update on the entire position that we have currently. It closed below our alarm of 820 yesterday and it wasn't showing much strength today. There was a high chance of our original condor getting more expensive.

What we are essentially doing with this adjustment is that we are moving the entire condor downward in tandem with the market. We spent a net total of $0.65 for this adjustment. This means that our original risk of $785 per position is now increased by $65 to $850 per position (we now have this condor at a net price of $1.50 credit [$2.15-$1.35+$0.70=$1.50]). Our new breakeven points are now 861.5 [860+$1.50] on the upside and 758.5 [760-$1.50] on the downside. This condor now has a very neutral delta of only -0.19. At the time of writing, we have a 69.33% chance of success with this trade. We are now again within 1 standard deviation of the price range.

The reason we initiated this adjustment was because we are getting uncomfortable with the RUT falling closer to our short put of 790. Since this is not a 1:1 condor, it is important that we do not wait till it's too late to do any adjustment. Although we increased our risk by $65 per position, we feel that with this adjustment we can still have a good chance of profit. Without this adjustment, we may be facing a loss if RUT continues to be weak and drops further.
From the daily chart, we can see that the 855 area represents a strong resistance. At the moment, the only support we can use is the 200-day MA (the purple line). RUT broke all support levels in a very quick time. As such, there is no clear indication of the next bottom.
We will continue to monitor this position and inform you if there should be any more adjustment required.
Good trading,
Gary

TRADING PLATFORM

2007-07-24T12:29:00.000+07:00

Pernah melihat film 300 ? Film ini menceritakan sebuah pertempuran Antara bangsa Spartan dan Persian. Bangsa Spartan hanya mempunyai 300 pasukan dan melawan ribuan pasukan bangsa Persian.

Meskipun di Akhir Film ke 300 pasukan Spartan kalah karena di-khianati oleh bangsa sendiri, kita dapat melihat bagaimana mereka menggunakan TEKNIK PERANG untuk dapat bertahan dan akhirnya menang dalam pertempuran. Mereka Tidak Saja menggunakan SKILLS bertempur yang memang sudah dipunyai turun menurun, tetapi juga menggunakan STRATEGI bertahan tepat di gua jalan masuk ke bangsa Spartan, dan dekat Gua tsb ada jurang ke Laut yang dapat digunakan untuk mendorong/ membuang bangsa Persian.

Apabila kita bandingkan perang jaman dahulu dg sekarang, TEKNIK DAN STRATEGI mungkin kita mempunyainya, tetapi ada satu hal FAKTOR yang dapat membantu kita untuk menang di peperangan, yaitu dengan mempunyai INFORMASI dan TEKNOLOGI. Yah, tanpa mereka, kita akan Sulit untuk menang. Apalagi kita dihadapkan informasi yang mempunyai perpindahan harga per detik.......

Dibawah ini adalah keterangan NEW FEATURES dari TOS (thinkorswim) Trading Platform. Selama saya menggunakan TOS, sudah 2 X mereka selau me-upgrade Trading Platform mereka makin baik dalam hal FEATURES. TOS tidak hanya bisa digunakan di computer, tetapi juga di mobile gadget. Selain itu, TOS mempunyai FILLING PRICE yang sangat cepat dg harga competitif. Nah tunggu apa lagi........ ini adalah salah satu Trading Platform yang perlu anda Pertimbangkan...........

Berikut ini Email mereka kepada Saya:

___________________________________________________________
Hello swimmers-Smart kids go to Space Camp, but smart developers go to the Programming Olympics. Our best and brightest spent the last few weeks winning gold medals by day, having Red Bull drinking contests and claiming that J2ME is Kanye West's little sister on Java message boards by night. Yes, TOS programmers know how to have fun. It's their world. We just download their apps.Tuesday, July 24, at 4:00am CDT, we will release version #927. New features include:

Trade Page - Algorithmic order type choices, including single-click bracket orders, stop orders for spreads, stops based on bid, ask or mark price and conditional orders, can now be placed based on price and volatility triggers*. Snapshot pricing from the prior day's close has been added and you can now save multiple windows on the Trade Grid layout.

Chat Rooms - Our chat rooms, Shadowtrader, VirtualTrader and weekly chats now have video. You can watch video posted by the chat host for the purposes of demonstrating certain techniques. Click the 'WATCH' button on your chat window to have a look.

Prophet Charts - We have added e-mini futures and the ability to save your default layout.

TOS Charts - Many new features:

1. Save multiple chart grids with up to 20 symbols per page.

2. Drag and drop of limit and stop orders to another price.

3. Vertical extension of main graph.

4. Extended hours marked by dotted lines on intraday charts (will be marked by a colored highlight in the next release).

5. Charts now switch to Percent Scale for superimposed studies only when more than 1 study is being graphed.

6. STARC Band and Ichimoku studies were added and floor trading pivots improved.

7. Person's Pivots were added (TOS Proprietary study).

8. Candlestick pattern indicators - Doji, Hammer/HangingMan and ShootingStar.

thinkMicro - Our new wireless platform supporting Blackberry and other non-stylus devices will be released into beta. Download instructions and user documentation will follow in the next few days.
Portfolio Margining - Portfolio-based index cross margining to supplement portfolio margined accounts has now been added to the TOS desktop for accounts that qualify.
webBasedTrading - We've added several new features to webBasedTrading over the past few months:

1. Monitor Tab - Click the new button to see analysis of your positions in pie-chart form.

2. Audio Content - Links to the Shadow Trader and weekly TOS chat audio streams are now available in a cool looking radio player.

3. New Symbol Menu - Every menu attached to an element with a symbol (order, positions, etc.) now includes more options for working with that symbol including a mini day-chart snapshot.

4. Prophet Charts - With all of the same wiz-bang features you've seen on thinkDesktop, Prophet Charts are now available in webBasedTrading. You can even save your studies!

5. thinkSpreads - Once again, just like on thinkDesktop, thinkSpreads for web-based lets you see all the spread orders that thinkorswimmers are currently working, including each order's limit price and current mark, and create orders of your own.

6. Trading Tab - We've added per-expiration implied volatility numbers as well as two new information layout choices: 'Probability of Touching' and 'Probability of Expiring'.

7. Privacy Mode - Via the setup page, you can now hide all of your sensitive account information in the platform via the new 'privacy mode' setting.

IRON CONDOR - INITIATED ON 11 JULY 2007

2007-07-14T00:18:00.000+07:00

Saya mendapatkan Email dari Gary (Market Neutral Options) mengenai posisi Iron Condor yang baru saja dia lakukan pada tanggal 11 July 2007. Seperti teman2 ketahui, Strategi Iron Condor adalah Neutral Market, yang mana kita mengharapkan Underlying Assets bergerak pada suatu Band tertentu. Untuk itulah, dipilih RUT Indices, yang merupakan Index Russel 2000.

Trade Summary adalah sbb:

RUT at 840.45 35 days to Aug expiration.
Sell RUT Aug 900 Call
Buy RUT Aug 910 Call
Sell RUT Aug 790 Put
Buy RUT Aug 780 Put
For a net price of $2.15 Credit or better.
Total margin required: $785.

Trade dibuat dengan melihat market secara keseluruhan adalah NEUTRAL, dengan Delta -0.54. Untuk batas atas, posisi mempunyai band 60, dan batas bawah adalah 50. Jadi Band Width dari posisi RUT adalah 110 untuk Bounced UP and DOWN untuk 35 hari ke depan. Trade ini mempunyai PROBABILITY SUCCESS OF 67.42%.

Posisi Resistance adalah 855, dan SUPPORT line pada 821. Breakeven point pada posisi atas adalah 902.15 dan posisi bawah adalah 787.85. Tetapi tentunya kita tidak akan menunggu breakeven ini untuk menutup salah satu SPREAD posisi apabila market is against us. Untuk itu kita mencanangkan 870 pada upside dan 820 pada downside. Untuk itu apabila RUT is CROSSING nilai tersebut, kita harus segera Tutup posisi, atau Roll Up/Down.

OK, bagi Anda yang penasaran hasilnya, Silahkan pasang di Virtual dahulu. Apabila hasilnya bagus, Anda akan mendapatkan pelajaran yang sangat BAGUS, karena keterangan diatas tentunya memberikan IDE STRATEGI yang sangat jelas dan mudah diikuti.

VOLATILITY PART 3

2007-07-11T17:26:00.000+07:00

Saya adalah salah satu penggemar dari Pete Stolcers, seorang Trader yang keluar dari kursi empuk Vice President di salah satu broker terkemuka di Chicago dan kemudian hidup dari Trading Activity. Ini adalah suatu resiko yang sangat tinggi yang dia ambil karena hidup hanya dari Trading tentunya seseorang harus mempunyai NYALI yang sangat tinggi (karena beberapa trading activity yang dia lakukan menggunakan margin pinjaman untuk menutupi biaya hidup per bulan). Tapi, dengan FOKUS pada pekerjaan yang dia sukai, dia sekarang adalah seseorang yang sukses bukannya hanya sebagai Trader, tetapi sebagai Consultant dari perusahaan2 besar yang membutuhkan investment advise.

Pembahasan Volatility kali ini saya mengambil beberapa point dari pengalaman beliau, karena saya adalah fans dari tulisan2 Nya….

Didalam Trading, kita harus focus dalam “DIRECTION OF STOCK”, dan mempertimbangkan 3 hal ini, yaitu:

- Historical Volatility of the Stock.
- Historical Implied Volatility of the Options
- Implied Volatility of the Options (now)

Historical IV dan Implied Volatility mempunyai pengertian dasar yang sama. Implied Volatility mengambarkan EKSPEKTASI GEJOLAK/MOVEMENT dari PRICE, dan mempunyai component Time Premium. Historical Implied Volatility adalah Implied Volatility yang telah terjadi sebelumnya. Nah, dengan ini, kita dapat mengetahui apakah IMPLIED VOLATILITY yang sekarang ini dalam taraf NORMAL atau TIDAK NORMAL apabila dibandingkan dengan HISTORICAL IMPLIED VOLATILITY.

Apabila terjadi ABNORMALITIES, misalnya sangat tinggi sekali dibandingkan dengan Historical IV, kita harus hati2 dalam menghadapinya. Setidak-tidaknya kita harus lebih banyak mencari tahu dari NEWS mengenai saham ini sebelum Trading. Apabila Abnormalities terjadi pada Ekspektasi EARNING announcement, Patent, FDA approval, Law Suit; sebaiknya kita menghindari dari Trade ini, karena saham sangat rentan untuk GAPPING UP/DOWN. Beberapa Trader menggunakan OPPORTUNITY ini untuk posisi STRADDLE ATAU STRANGLE (yaitu Buy CALL dan PUT pada strike yang sama/berbeda).

OptionsXPRESS mempunyai TOOL yang cukup bagus dengan memperlihatkan 3 Volatilities yang berbeda sbb:

Warna kuning menunjukkan turun/naiknya harga saham, Biru menunjukkan Current/Historical IMPLIED VOLATILITY, dan Merah menunjukkan Historical Volatility harga Saham. Dari Graph, Anda dapat melihat bagaimana IV NAIK secara drastis ke 200 dari average 50. Ini adalah suatu pertanda bahwa seorang TRADER harus sangat berhati2. Seorang TRADER yang WISE, akan menghindari kondisi ini……

2007-07-07T22:34:00.000+07:00

VOLATILITY PART 2

Tulisan di blog kali ini saya akan melanjutkan diskusi mengenai Options Volatility. Volatility dapat dibagi menjadi 2, yaitu HISTORICAL VOLATILITY (HV) DAN IMPLIED VOLATILITY (IV).

Historical Volatility (HV) didapatkan dengan menggunakan Historical Stock Prices, dan kemudian menghitung Standard Deviasi dari perubahan harga historical saham tsb. Untuk menghitung Historical Volatility, kita dapat menggunakan seberapa lama data yang kita maui. Misalnya kita dapat menggunakan data 1, 3, 6 atau 12 bulan. Masing masing perhitungan akan menghasilkan hasil yang berbeda.

Untuk itu, kita harus memperkirakan historical data mana yang akan kita ambil. Ada cara yang lebih mudah, yaitu dengan me – adjust perhitungan volatility tersebut. Misalnya, apabila kita mengetahui Volatility untuk 1 tahun yaitu 30%, kita dapat menghitung Volatility untuk 1 minggu yaitu dengan mekalikan 30% dengan Akar (Square root) dari 7 hari dan dibagi 365:

30% X Square Root 7/365 = 0.0415.

Artinya adalah: dalam 1 minggu, 2/3 dari waktu tsb harga saham akan berkisar antara PLUS 4.15% dan MINUS 4.15%.
Apabila harga saham adalah $ 50, didalam satu minggu, harga saham akan berkisar antara 47.93 dan 52.08 dari 2/3 waktu yang ada…….

Sedangkan Implied Volatility (IV) didapatkan dari THEORITICAL OPTION PRICING MODEL, dengan menggunakan data stock price, strike price, interest rate, dividends, time to expiration. IV juga dipengaruhi kuat oleh MARKET HOPES AND FEARS, yang menyebabkan lebih kompleks untuk dipelajari.

Dalam Real Trading, saya biasanya lebih menggunakan Implied Volatility (IV) yang biasanya tercantum pada trading platform dari suatu broker. Itulah saatnya untuk melihat suatu opportunity yang ada untuk Write-Options...……

NIKMATNYA SELL PUT . . .

2007-07-04T13:52:00.000+07:00

Harusnya saya melanjutkan diskusi mengenai Volatility Part II, tetapi pengalaman REAL TRADING membuat saya ingin menulis di blog ini.

Seperti yang kita ketahui, minggu kemarin semua Indices (Index) dan saham berguguran (pertengahan Juni 2007). Hal ini disebabkan karena sentimen naiknya Interest Rate di negara Amerika dan disusul dengan naiknya Bond Yield……

Tidak terkecuali, saya juga kena imbas di posisi Covered Call saya. Karena saham unggulan yang saya pilih mempunyai daya reaksi lebih cepat bergerak dari market……. Ah , satu pelajaran buat saya bahwa saya harus memperhatikan “BETA” dari saham tsb…….(akan saya bahas di kemudian hari nanti kenapa “GREED” membuat saya jadi loss)
Melihat perkembangan yang ada, saya tentunya harus me- recover apa yang sudah terjadi. Lima posisi kontrak saya “Cut Loss” dan mencari opportunity baru…..

Dari Scanning, saya menemukan AAPL (Apple). Pada saat itu saham AAPL juga mengalami koreksi. Dari harga 124-125, Gapping Down menjadi 119.
Wow….. suatu event yang menarik tentunya untuk para Trader yang suka SELL PUT. Karena, dengan turunnya saham, harga PUT akan naik (banyak orang cari Asuransi….). Keputusan saya ambil untuk masuk posisi ini dengan asumsi sbb:

1. Saham AAPL mempunyai Support Line yang sangat kuat di 117.
2. Saham dalam trend Bullish meskipun “Gapping Down”.
3. Expiry options tinggal 21 hari lagi, sehingga TIME DECAY factor memberikan hal yang sangat positif.
4. Bullish Trend diperkuat oleh launch Iphone yang sukses, ribuan Iphone sells like hotcakes di Amerika……..

Saya masuk posisi SELL PUT dengan perincian sbb:

SELL AAPL July 115 PUT @ 2.95 for 2 lots.

Dengan transaksi ini, account saya langsung di credit $590 (komisi diabaikan utk perhitungan ini).

Analisa saya menuju kebenaran….. Saham APPL me tested harga 119 dengan support line 117 tetapi tidak berhasil menembus lebih rendah. Tidak lama kemudian harga beranjak naik menjadi 122-123 selama 2-3 hari setelah posisi saya tutup. Kemudian pada hari ke 6, terdapat kabar bahwa Bond Yield merendah dan hal ini memicu semua kenaikan dari indices, tidak terkecuali saham2 unggulan. AAPL petang kemarin tgl 3 Juli 2007 “Gapping UP” ke 126-127.

Apa yang terjadi dengan harga Options saya ? Dengan Gapping UP, harga options saya menjadi sekitar 0.45. Dengan kata lain, saya menjual dengan harga $2.95 dan dapat membelinya kembali dengan 0.45. Jadi kalau dihitung, posisi adalah profit 85% dari harga semula.

Waktu expiry masih 2 minggu lagi. Apabila saya menunggu, saya tetap yakin Options akan expiry worthless. Tetapi buat apa? Jangan serakah bung….., itu motto saya. Dengan profit sudah mencapai 85%, saya close the position dengan membayar options $90. Jadi dalam seminggu saya kantongi $ 500 dan menutup TRADE RISK saya. Berikut ini adalah perhitungan Profit and Lossnya:

SELL AAPL July 115 PUT @ 2.95 for 2 lots - $590
BUY AAPL July 115 PUT @ 0.45 for 2 lots - $ 90
Net Incoming Proceeds: $590 - $90 = $500

Return = $500 : $4,600 (margin 20% dari 2 lot AAPL pada strike 115)
Return= 10.87% (dalam 1 minggu)
Return= 10.87 X 52 = 565.24% (dalam 1 tahun)

Melihat ini, saya berpikir…..AAHH Nikmatnya SELL PUT……..

Happy Trading

VOLATILITY – PART 1

2007-06-26T13:22:00.000+07:00

Untuk bermain Options, seorang trader harus mengetahui VOLATILITY, atau disebut “GEJOLAK” harga saham. Pada kesempatan ini, Saya akan mendiskusikannya.

Volatility menunjukkan seberapa besar variable untuk perubahan harga saham di pasar. Makin besar variablenya, semakin besar perubahan harga saham tersebut. Sebagai contoh: apabila volatility adalah 40%, artinya harga saham akan berkisar sekitar PLUS 40% dan MINUS 40%, 2/3 dari waktu yang ada (two thirds of time). Jadi apabila harga Saham adalah $50 dan Volatility adalah 40%, harga saham akan berkisar sekitar $30 sampai $70 untuk 2/3 waktu yang ada…….

Menarik bukan? Dengan mengetahui volatility, seseorang dapat mengetahui gejolak harga saham pada suatu band tertentu, dan dengan demikian seorang Trader akan dapat memilih strategi yang cocok…….

Harga OPTIONS sangat tergantung dari besarnya satuan Volatility ini. Apabila market memprediksi gejolak harga saham tinggi, maka nilai EXTRINSINC OPTIONS akan naik. Begitu pula sebaliknya, apabila market menilai gejolak harga saham rendah, nilai Extrinsic harga options juga rendah…….

Nah, saya menggunakan Volatility ini untuk me -timing kapan akan Write Options (Sell Options). Saya biasanya akan scan saham-saham unggulan yang pada waktu itu mengalami Volatility SKEW. Ini artinya, banyak sekali spekulan yang me-asumsi harga saham akan melonjak dengan drastis……. Sebagai seorang SELLER, saya bertanding dengan para SPEKULAN. Apabila Spekulan BENAR dengan arah pergerakan saham, saya tetap UNTUNG, karena profit dari PREMI sangat besar (meskipun saya tidak mendapatkan opportunity untuk menikmati harga saham naik). Tetapi apabila harga saham tenang2 saja (meskipun Volatility tinggi), para SPEKULAN tentunya akan gigit jari…….. Seperti yang kita ketahui, Volatility SKEW tidak memberikan informasi apakah harga saham akan naik atau turun. Yang pasti market psychology sangat mengharapkan harga saham bergejolak…..

Untuk selanjutnya, saya akan bahas Volatility dengan perbedaan antara Historical dan Implied Volatility.

COVERED CALL PADA MC DONALD (MCD)

2007-06-19T22:28:00.000+07:00

Berikut ini adalah contoh Covered Call strategy pada Mc Donald Stock (Provided by Options University). Meskipun contoh ini diambil dari Juni 2003, tetapi yang perlu diperhatikan adalah bahwa Covered Call Strategy sangat baik dilakukan pada:

- Trending Increasing Movement dari Saham (naik tetapi secara gradual/perlahan).
- Dari Trending Movement tsb, akan menyebabkan Volatility (gejolak saham) turun, dan situasi ini amat menguntungkan bagi Covered Call Writer.
- Tipe Trending ini memberikan Appresiasi Capital dan Return dari Premi.

Berikut ini petikannya:

1. Around June 2, 2003, MCD breaks out through a resistance level established back in late Nov. early Dec. 2002 after failing to break that resistance level in mid May 2003.

2. MCD climbs up from $20.00 to the $25.00 range in a slow gradual uptrend step like pattern. This type of pattern is an opportunity for buy-writers because this type of gradual rise normally brings about a decreasing implied volatility period which is great for premium selling.

3. Notice the size of the daily vertical lines during the period from mid-August 2003 to December 2003. The size of the lines represents the daily trading range of the stock. As you can see, the lines are very short which indicates that the stock does not move much intra-day. Again, this is an indication of decreasing volatility which is a positive sign for buy-writers.

Conclusion: The two most prominent and noticeable patterns both bode well for buy-writers. The covered call options strategy does not need a lack of movement, as much as slow, consistent non-volatile movement.So, in the case of McDonalds above, the slow trending movement of the stock brings about a decreasing volatility for the covered call options. Added to this is the contraction of intra-day movement, as shown by the decreasing range of daily trading.

COVERED CALL STRATEGY (PART III)

2007-06-17T12:01:00.000+07:00

Covered Call Strategy kelihatannya suatu strategi yang sangat mudah dan simple. Tetapi apabila kita telusuri lebih dalam, strategi PEMILIHAN STRIKE PRICE AMATLAH PENTING. Karena tentunya hal ini akan mempengaruhi RETURN dan RISK PROFILE dari strategi secara keseluruhan.

Kali ini kita akan membahas posisi STRIKE pada Covered Call Strategy. Seperti kita ketahui ada tiga posisi strike price yang dapat kita pilih yaitu:

ITM (In The Money) – mempunyai nilai intrinsic dan extrinsic
ATM (At The Money) – mempunyai nilai extrinsic (kadang2 ada sedikit nilai intrinsic nya).
OTM (Out of The Money) – Semuanya berupa Time Value Money.

Pemilihan STRIKE PRICE untuk Covered Call Strategy sangatlah penting didalam melihat asumsi dari movement SAHAM yang akan kita BELI. Seorang Investor harus mempunyai TREND Assumption pada saham tsb, apakah akan Neutral, Decreasing Trend, ataukah Increasing Trend ?

Hal yang paling ditakuti oleh seorang INVESTOR apabila saham PULL BACK / GAPPING Down. Karena premi yang diterima TIDAK akan sebanding dengan kerugian dari saham.
Bagi mereka yang ingin SAFE dalam strategi ini adalah memilih STRIKE PRICE CALL OPTIONS DEEP IN THE MONEY. Dengan demikian terdapat nilai INTRINSIC VALUE yang amat besar dan dapat merupakan BUMPER apabila harga saham TURUN. Tentunya kita harus melihat juga nilai dari TIME VALUEnya. Jangan sampai RETURN VS TRADE RISK sangat kecil.

Pemilihan STRIKE PRICE pada ATM (At the Money) dapat juga sebagai acuan apabila kita takut saham mengalami sedikit koreksi kebawah. Selain itu, biasanya ATM premi memberikan return percentage yang cukup tinggi (memiliki Time Value yang amat besar).

Pemilihan STRIKE PRICE pada OTM (Out of The Money) hanya dilakukan apabila kita betul2 yakin bahwa saham akan NAIK. Dengan demikian, Investor mendapatkan Return dari kenaikan saham dan Premi yang diterima.

Strategi pemilihan strike price pada OTM ini juga dilakukan bagi Investor tulen di saham. Investor betul2 suka pada saham dan ingin PROBABILITY EXERCISE tidak besar. Maka itu, dengan WRITE on OTM strike price, kemungkinan untuk Exercise akan lebih kecil dan Saham dapat disewakan tiap bulannya seperti mempunyai RUKO.

COVERED CALL STRATEGY (PART II)

2007-06-14T13:11:00.000+07:00

Illustrasi Strategi dan Perhitungan ROI (Return On Investment) telah kita bahas pada bagian I (Part I), dan sekarang Saya akan membahas cara sudut pandang yang sederhana seorang Investor melakukan strategi ini…..

Bagi Investor “Buy and Hold” stock, saham dapat digunakan sebagai layaknya mempunyai RUKO atau PROPERTI. Apabila kita mempunyai RUKO, kita akan mengharapkan UANG SEWA dan kenaikan dari HARGA property tsb tiap tahunnya. Dengan mempunyai saham, kita mengharapkan:

1. Kenaikan harga Saham sesuai dengan Earning Perusahaan.
2. Menerima Dividend tiap Quarter atau tiap Tahun.
3. Saham dapat “DISEWAKAN” kepada pihak lainnya.

Kata “DISEWAKAN” ini tentunya membuat beberapa orang bertanya-tanya. Bagaimana mungkin saham disewakan kepada Orang Lain ?

Jawabannya adalah dengan OPTIONS. Strategi Covered Call di Options memberikan peluang bagi investor untuk memberikan “HAK”/”Right” bagi Pembeli Options (umumnya Spekulator) untuk dapat membeli sahamnya pada harga suatu Strike.

Sebagai contoh:

Investor mempunyai saham (ruko) dengan harga $75. Dengan SELL OPTIONS July 80 - $ 2.5, Investor menerima dimuka harga uang sewa (premi) sebesar $2.5 per saham atau $250 per lot (100 saham).
Pembeli Options tentunya mengharapkan harga saham akan naik sampai lebih dari $80 pada akhir kontrak. Apabila saham tidak naik, kontrak Options akan berakhir “Worthless” dan saham akan tetap dimiliki oleh Investor.

Apakah Investor SELL OPTIONS termasuk sebagai Spekulator atau Penjudi ? Jawabannya adalah “TIDAK” dengan keterangan sbb:

a. Dengan SELL OPTIONS, investor mempunyai “Cushion” apabila sahamnya Turun sebesar $2.5.
b. Apabila harga saham tidak berubah, Investor hitung2 mempunyai additional Return $2.5.
c. Apabila saham naik, saham Investor tidak akan di Exercise apabila saham naiknya tidak melebihi Strike Price $80. Meskipun saham naik melebihi $80, investor telah mempunyai keuntungan ganda. Karena dia SELL OPTION pada OTM (Out of the Money), maka dia mendapatkan untung dari kenaikan saham (dari $75-$80) dia juga menerima uang sewa (premi) $2.5.

Banyak orang mengatakan bahwa Investor akan mempunyai UNLIMITED OPPORTUNITY LOSS karena harga saham dapat naik tak terhingga. Yah, memang itu yang terjadi, tetapi ada berapa banyak saham yang dapat naik tak terhingga dalam suatu TENOR tertentu ? Jawabannya PROBABILITYnya akan sangat kecil…..

Bagi pembeli OPTIONS (Buy Options), dia harus benar dalam 2 hal. Saham harus naik diatas $80 dan dalam tenor KONTRAK. Apabila tidak, uang sewa harus tetap dibayarkan ke Investor.

Saya kira strategi ini sangat baik bagi mereka yang mempunyai saham unggulan, harga saham tidak terlalu Volatile dan tentunya seorang Investor yang ingin memiliki saham tsb.

COVERED CALL STRATEGY I

2007-06-12T12:11:00.000+07:00

Covered Call Strategy adalah strategi di Options yang paling sederhana. Karena dinilai sangat sederhana, tidak banyak orang ingin mendiskusikannya, bahkan dilihat sebagai permainan para pemula. Di Amerika, Covered Call Strategy dinilai strategi yang konservatif, sehingga dana pensiun diperbolehkan untuk bermain strategi ini.

Covered Call strategi dapat dilakukan dengan membeli saham dan kemudian menjual CALL Options. Sebagai contoh:

Buy XYZ shares $20
Sell Call $20 at $1

Grafik Profit and Loss adalah sbb:

Persentasi keuntungan ROI (Return On Investment) dapat dijabarkan sbb:

Bought XYZ shares -$20
Sold $20 Calls +$1
Net Debit (breakeven) -$19
Profit (Loss) +$1
ROI (net premi/cost) $1/$19 = 5.25%

Pada transaksi ini didapatkan return 5.25%. Untuk dapat me ANNUALIZED return tsb Anda dapat me-kalikan Return dengan 360 dan dibagi dengan tenor dari Options tsb. Sebagai contoh, apabila trade dilakukan dalam 21 hari, maka Annualized Return adalah:

ANNUALIZED Return = (360/21)X5.25% = 89.99%.

Untuk me annualized return adalah suatu perhitungan yang lebih tepat. Karena, tenor trade akan berbeda dan sesuai dengan kapan Options dijual. Dengan menghitung Return untuk Satu Tahun, Anda tentunya dapat membandingkan dengan Return Deposito atau Bond/Obligasi.

BUY OPTIONS IS A GAMBLING ? (Part II)

2007-06-10T19:23:00.001+07:00

Artikel ini lanjutan dari Buy Options is a Gambling (part I)…

Salah satu Pitfalls (kelemahan) dari Buy Options adalah seseorang tidak tahu pasti kapan saham akan NAIK atau TURUN. Dengan BUY CALL, seseorang tentunya berharap saham akan naik, dan sebaliknya dengan BUY PUT – berharap agar saham akan turun.
Dengan demikian, kita mempunyai 50:50 “CHANCE”/Kesempatan apakah tebakan kita benar atau tidak.

Hal ini ditambah dengan factor apakah Directional dari Prediksi kita betul2 terealisasi sesuai dengan waktu TENOR Options. Seperti yang dijelaskan pada Part I, Options adalah suatu kontrak yang mempunyai TIME DECAY. Dengan demikian, saham diharapkan harus cepat bergerak, apakah itu NAIK (Buy CALL) atau TURUN (BUY PUT).

Apakah Anda berani mengambil 50:50 Chance ini? Anda sendiri yang bisa menjawabnya…

BUY OPTIONS IS A GAMBLING ? (Part I)

2007-06-10T19:21:00.000+07:00

Judul ini sangat menarik bagi mereka yang mulai bermain OPTIONS. Dengan Buy Options, kita mempunyai LIMITED RISK dan UNLIMITED RETURN. WOW….., ini dinamakan “LEVERAGE” atau ‘Daya Ungkit” yang sangat besar. Bayangkan saja, dengan BUY OPTIONS, kita hanya mempunyai RISIKO hanya sebesar PREMI yang kita bayar, dan mempunyai potensi keuntungan yang Berlipat hingga ratusan bahkan ribuan persen (%). Yang penting, kita mengetahui STOCK DIRECTION akan kemana pada suatu Periode Tertentu.

Masalahnya adalah, harga SAHAM pasti akan naik (untuk saham2 unggulan) tetapi TIDAK SATUPUN MANUSIA dapat me-prediksi kapan SAHAM AKAN NAIK !!! Apabila ada manusia yang dapat me-prediksinya, pasti Dia sudah lebih kaya daripada Bill Gates atau Warren Buffet !!! Semua “Technical Analysis Technique” atau istilah kerennya “Charting”, hanya akan memberikan suatu TREND, bukannya kepastian.

Dengan BUY OPTIONS, Anda akan dihadapkan oleh 2 faktor yang menekan Anda, yaitu saham harus bergerak sesuai dengan PREDIKSI dan dalam suatu JANGKA WAKTU tertentu. Hal ini tidak mudah….. Maka itu, meskipun Buy Options mempunyai Limited Risk dan UNLIMITED RETURN, dengan adanya 2 faktor tsb diatas, kita dapat berkata bahwa Buy Options is a Speculation Move atau Gambling. Yah, bisa menang sih pasti, tetapi dengan PROBABILITY yang sangat KECIL……

WRITE OPTIONS VS BUY OPTIONS

2007-06-10T19:19:00.000+07:00

Strategi Write Options akan memberikan NET PREMI dimuka. Account kita di broker akan di Credit dan dikurangi dengan komisi broker. Jadi, kita menerima uang dimuka, dan mengharapkan nilai Options kita makin kecil. Strategi Write Options mengharapkan PREMI yang diterima makin turun dengan adanya “TIME DECAY” sampai 0 pada expiry date Options tsb.

Lain halnya dengan Buy Options. Strategi ini kita harus “BAYAR” Premi dimuka sebagai “NET DEBIT”. Dengan demikian, kita mempunyai hak untuk menjual/membeli saham pada suatu nilai “Strike Price” yang dipilih untuk suatu tenor tertentu. Bagi mereka yang mempunyai posisi Buy Options, TIME DECAY is their ENEMY…..

Hal diatas dapat dijelaskan dengan mudah. Dalam ilmu dagang yang paling sederhana, kita pasti harus BUY LOW – SELL HIGH, atau SELL HIGH – BUY LOW. Dengan Write Options, TIME DECAY akan memberikan nilai options yang makin berkurang dengan jalannya waktu, sehingga proses SELL HIGH – BUY LOW terjadi. Lain halnya pada Buy Options, TIME DECAY akan memperburuk situasi mereka sehingga dengan berjalannya waktu, harga options makin mengecil. Apabila semua factor tidak berubah, mereka melakukan BUY HIGH – SELL LOW. Maka itu, bagi mereka yang BUY OPTIONS, mereka harus berdoa 2X lebih rajin supaya saham bergerak/gapping UP atau DOWN sesuai dengan Options yang mereka beli.

Site ini diberi nama WRITE OPTIONS dengan tujuan memberikan informasi lebih untuk melakukan “JUAL OPTIONS” bukannya “BELI OPTIONS”.

WRITING OPTIONS

2007-06-10T12:22:00.001+07:00

Write Options mempunyai pengertian kita menjual Options, bukan membeli Options. Write Options adalah cara yang Conservative untuk dapat secara konsisten "Win The Trades". Tentunya hal ini akan terjadi dengan catatan…… apabila dilakukan dengan strategi yang benar.

Beberapa strategi Write Options adalah Covered Calls, Sell PUTS, dan kumpulan dari CREDIT SPREADS, dari yang paling sederhana sampai dengan yang kompleks. Apabila kita menerima PREMI dari posisi Options (NET CREDIT), kita berarti melakukan WRITE OPTIONS.