19 October 2007
Way of the Turtle - its a great book
The best turtle told us how to make money in trading. What are the important ideas from the book?
(1) Even for best traders, only 30% trades are successful. 70% trades a wrong. Then the 30% trade's profit must be more than enough to cover the 70% of losses. Thus the concept that all big trends can not be missed. And can not exit too early.
(2) Every trade should only risk a small fix % of the total capital (eg. 2% for the turtle). When the % is up, cut loss no matter what. That is crucial for capital preservation.
(3) Enter trade whenever the entry signals are clear. Dont pick and choose which trade to enter. Over the long run, trader will lose out.
I believe these are the 3 principles hardest for me to swallow from this book.
But well ... it works that way. I cant argue otherwise at my own perils.
19-10-07 : MA option choice for pre-earning play
As a follow up of my own recommendation on playing MA for pre-earning, which option is there to choose from?
Choice A : $150 Nov07 Call - $11.30
Choice B : $155 Nov07 Call - $8.70
Lets analyse these 2 options closely.
$150 call has intrinsic value of $153.70 - 150 = 3.70
thus the time value = 11.30 - 3.70 = $7.60 for 21 days left before expiration.
$155 call has intrinsic value of $153.70 - 155 = -1.30
thus time value = $8.70 + 1.30 = $10 for 21 days left before expiration.
Thus how much we are actually paying for the option?
$155 call : $10
$150 call : $7.60
$150 call is cheaper. I will get this one. ^_^
Choice A : $150 Nov07 Call - $11.30
Choice B : $155 Nov07 Call - $8.70
Lets analyse these 2 options closely.
$150 call has intrinsic value of $153.70 - 150 = 3.70
thus the time value = 11.30 - 3.70 = $7.60 for 21 days left before expiration.
$155 call has intrinsic value of $153.70 - 155 = -1.30
thus time value = $8.70 + 1.30 = $10 for 21 days left before expiration.
Thus how much we are actually paying for the option?
$155 call : $10
$150 call : $7.60
$150 call is cheaper. I will get this one. ^_^
19-10-07 : MA pre earning play (31-10-07)
With GOOG's pre-earning play come to and end, its time to search for next
play. I suggest MA has a good potential to earn some quick profit within these 10 days. Now is the 8th day before the earning announcement on 31/10/07.
Daily chart sees support at 150.
15min chart sees reversal towards uptrend.
Take profit pt : $169
Cut loss pt : $149.50
Holding period : 8 days
play. I suggest MA has a good potential to earn some quick profit within these 10 days. Now is the 8th day before the earning announcement on 31/10/07.
Daily chart sees support at 150.
15min chart sees reversal towards uptrend.
Take profit pt : $169
Cut loss pt : $149.50
Holding period : 8 days
19-10-07 : Pre-earning play summary
GS (20/9/07) 2 weeks = 7-9-07 to 19-9-07
Share price :
7/9/07 : $176.50
19/9/07: $220.50
Profit : $64
GOOG (19/10/07) 2 weeks = 8/10/07 - 18/10/07
Share price :
8/10/07 : $595
18/10/07: $640
Profit : $45
AAPL (23/10/07) 2 weeks = 8/10/07 - 22/10/07
8/10/07 : $163.5
18/10/07 (current) : $173.5
Profit : $10
BIDU (26/10/07) 2 weeks = 12/10/07-25/10/07
12/10/07 : $301
18/10/07 (current) : $320
Profit : $19
Share price :
7/9/07 : $176.50
19/9/07: $220.50
Profit : $64
GOOG (19/10/07) 2 weeks = 8/10/07 - 18/10/07
Share price :
8/10/07 : $595
18/10/07: $640
Profit : $45
AAPL (23/10/07) 2 weeks = 8/10/07 - 22/10/07
8/10/07 : $163.5
18/10/07 (current) : $173.5
Profit : $10
BIDU (26/10/07) 2 weeks = 12/10/07-25/10/07
12/10/07 : $301
18/10/07 (current) : $320
Profit : $19
19-10-07 : GOOG Pre-earning play comes to a close
As we wondered the day before, if its a bullish night, whether will path 1 or path 2 be fulfilled.
As it turns out, the market is bearish last nite, but path 1 is still fulfilled.
Price stayed at 630 throughout the 1st half, and never went down. 2nd half saw price sour to $640 level, as predicted.
After market close, the price went on to go to $647. But thats another story, since its gap play already. For those who play gap, its a gain, but to risk $15.50 to play a gap, its half my capital, and thus not worth the risk.
I also did not go for call last nite at 12am time, where the upside is more certain with strong 630 support. Why? I was sleepy and went to sleep like a pig.
For all of you who played the pre-earning play for GOOG, i want to congratulate you, because its a worthwhile cause.
As it turns out, the market is bearish last nite, but path 1 is still fulfilled.
Price stayed at 630 throughout the 1st half, and never went down. 2nd half saw price sour to $640 level, as predicted.
After market close, the price went on to go to $647. But thats another story, since its gap play already. For those who play gap, its a gain, but to risk $15.50 to play a gap, its half my capital, and thus not worth the risk.
I also did not go for call last nite at 12am time, where the upside is more certain with strong 630 support. Why? I was sleepy and went to sleep like a pig.
For all of you who played the pre-earning play for GOOG, i want to congratulate you, because its a worthwhile cause.
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