When day trading options for profit, options are typically the most expensive at market open due to time until expiration is the greatest the whole day and uncertainty in direction equals a higher premium. The stock that you are watching could move in the direction you expected and the option probably won't be worth more because the directional movement made up for the loss of time until expiration and uncertainty.
I typically trade options on JP Morgan, but today I also attempted to trade options on Tesla and Apple. I am writing this blog as a learning lesson of patience to avoid doing what I did today and make more consistent profits moving forward.
Tesla
Tesla reported record deliveries in the 2nd quarter of 2019. This should have been expected as Elon Musk stated in the 1st quarter numbers were deflated due to many of the deliveries not making it until the 2nd quarter. Either way, the stock shot up nicely in the after hours and fell today during the shortened trading day. If you bought put options with this expectation near open, you would have been disappointed, especially since the stock did not move substantially lower. Please refer to my first chart:
This provides the greatest example of why you you don't buy options near open. Looking at the next chart, you had to wait only 30 minutes until 10am to buy the put options and you would have had a better target of 235 strike price. I even drew on the chart where is the best place to sell them.
Hindsight is 20/20, so it is always obvious when looking at the chart after the fact. The key is to see the chart, wait for the retest to buy your options and have your defined stopping point in mind.
Apple
Apple looked interesting today and with the drop in JP Morgan, I was expecting Apple to have a bigger drop towards the end of the day and I was wrong. As you can see on my graph, there was a point where it could have gone either way and I was expecting it to go down thinking the upside movement was exhausted. I think I stated this already, "I was wrong."
The break in trend was going to determine the direction for the afternoon. It broke to the upside. Since we can not read the mind of the market without our artificial hindsight, we must wait for the breakout, wait for the retest and then buy call options. I am quite proud of how I have drawn on these charts today and hope that I can be more patient to be able to recognize the pattern and profit larger rather than making the wrong decision.
I hope these help me do better and help you as well. Making 300 to 500 a day can be done easily if you are patient, wait for the right opportunity and get the direction correct.
I typically trade options on JP Morgan, but today I also attempted to trade options on Tesla and Apple. I am writing this blog as a learning lesson of patience to avoid doing what I did today and make more consistent profits moving forward.
Tesla
Hindsight is 20/20, so it is always obvious when looking at the chart after the fact. The key is to see the chart, wait for the retest to buy your options and have your defined stopping point in mind.
Apple
Apple looked interesting today and with the drop in JP Morgan, I was expecting Apple to have a bigger drop towards the end of the day and I was wrong. As you can see on my graph, there was a point where it could have gone either way and I was expecting it to go down thinking the upside movement was exhausted. I think I stated this already, "I was wrong."
The break in trend was going to determine the direction for the afternoon. It broke to the upside. Since we can not read the mind of the market without our artificial hindsight, we must wait for the breakout, wait for the retest and then buy call options. I am quite proud of how I have drawn on these charts today and hope that I can be more patient to be able to recognize the pattern and profit larger rather than making the wrong decision.
I hope these help me do better and help you as well. Making 300 to 500 a day can be done easily if you are patient, wait for the right opportunity and get the direction correct.
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