Random Option plays on Market Update stock plays

[SOL]

Very funny, can't remember sweing that one before!

I sometimes forget to comment on what Harry states because I am howling with laughter and then forget to comment. Harry is unique and with that memory he is a deadly foe, be forewarned better to have Harry in your corner than face him in a corner

I was referring to the video you posted!

See what uncontrollable laughter does to one. It makes me look dumber than I am hahahah

[bpcw]

I sometimes forget to comment on what Harry states because I am howling with laughter and then forget to comment. Harry is unique and with that memory he is a deadly foe, be forewarned better to have Harry in your corner than face him in a corner

I was referring to the video you posted!

See what uncontrollable laughter does to one. It makes me look dumber than I am hahahah

It's a really great quality, makes life a whole lot easier!

Harry's probably gone into his vault to find something appropriate, the encyclopedia of humor!

[Yodean]

Provided the MOAB/FOAB comes to pass... Is it to say that an unofficial (as in "riskier but with more potential gains") way to play MU recommended stocks is to purchase somewhat far-dated slightly-OTM call contracts (instead of the underlying stocks themselves) and reposition on every pullback to get in-and-out these contracts, along the way, until the price of the underlying stocks eventually match MU's recommended closing price? Is it what "canon-balling" MU's picks is, in a nutshell?

Thanks and have a good Sunday!

Jayce

To my best knowledge, there has been no official or unofficial TIT cannonball trades issued.

There are different varieties of cannonballing - what you posted could be considered one version - a mild version. "Baby Cannonball," in a way.

However, the major determinant of the success of cannonballing is the market context in which one starts cannonballing.

In essence, you want to Cannonball Long when there has a been a huge crash in the equity markets - e.g. the potential upcoming Q4 Slaughter, if it comes to pass.

You can Cannonball Short at euphoric tops in equity markets, or even sectors.

If you Cannonball at the wrong time (e.g. like now, possibly), you will get turned into a little Pinball.

Nfa.

[SOL]

No official trades on Cannonballing have been issued as it is a high-risk strategy with the potential for very high payouts, but timing is crucial.

Once again, remember this is a very high-risk strategy, and it can only be utilised at certain times. So you need to be disciplined also.

The very best time to put this strategy into play is when a MOAB or FOAB is triggered, then the odds of success move from 10% to slightly over 55%. Advanced traders; this means you have discipline and patience can push the odds of success during such times up to 65%

The second best time is after the markets have crashed and the Dow has shed at least 15% (the ideal number is 18% or more) or the Nasdaq has shed 24% or more


Other important conditions

1) Every stock you are buying options on should be trading in the extreme to insanely oversold ranges on the monthly charts; no exceptions.

2) 60 to 70 per cent of your funds should only be used to buy options on good, strong companies. They are either leaders in their field or growing at a fantastic rate

3) 30 to 40 per cent of the funds can be allocated to companies in various other sectors, but all these companies should have been in an up trend prior to the correction. In other words, if the company was a dog before the correction, it will likely remain a dog after the correction is over.


Other rules that could help

1) wait for the bull-bear spread to hit extreme levels. For example, a bull reading of 10 and a bearish reading of 65 to 70. Individuals in the Neutral camp during market crashes are generally bears without teeth

2) Best days to buy calls, on down days where the up volume is less than 15%. Ideally, it is 10% or less, and the Down volume is at 90%. Alternatively, 90% of stocks should close lower on that day

3) If over 50% of stocks are trading below their 200MA, that is another good signal


One variant of cannonballing

One would be to sell puts on days when the market is massively down. It should shed at least 3%; before this occurs, it should be trading well off its highs. For example, the Dow puts in a high of 34,800. It then drops to 30,900. A week later, it sheds over 3% in one day and trades below 29,900. At this point, selling puts and using the funds to buy calls would be a good idea. There will be a bear market rally, so this rally can be used to close both positions out. You then wait and repeat until a bottom is reached. Only sell puts on stocks you would not mind holding.

Always attempt to customise the above rules at some point. No two traders are alike.

Finally, at this stage of the game, it would be close to suicide to put this strategy into play. The markets need to let out a whole lot of steam.

[JayceP]

Yodean and Sol: Thanks so much to both of you for the thoughtful replies and the ingenious strategies (nfa, etc.)

Out of curiosity, is "cannonballing" the prevalent strategy used in the Trail Blazer service (either or both of its portfolios)?

Have a good day!

Jayce

[Yodean]

Out of curiosity, is "cannonballing" the prevalent strategy used in the Trail Blazer service (either or both of its portfolios)?

Have a good day!

Jayce

No. TBS is undergoing quite a few changes atm.

An easier way to think about Cannonballing conceptually is that it is "doubling down." Over and over again.

So theoretically you can do it by buying and selling shares as well. Options leverage the Cannonball effect.

For shares, you would do something like, say, Google drops to $1800. You buy a bunch of shares. It goes up to $2300. You take profits. It goes back down to $2100. You redeploy your capital. It goes up to $2600. You take profits, wait for it to go back down to $2400, then reploy original capital plus all the profits, thus the "Cannonball" effect. You keep doing this until it looks like Google has hit an interim high of some sort.

With long call options, you keep on striking higher, as you take profits and redeploy. Etc.

Something along those lines.

But remember, trying to Cannonball may turn you into a Pinball.

[JayceP]

Thanks so much again, Yodean!

It is crystal clear when you put it like that. The example you provided really helps to grasp the nature of the strategy, as it does not necessarily pertain to option contracts only. Trying to "time" (directionally, that is) the legs of any given stock during an uptrend makes for a more hands-on, but evidently quite lucrative approach, given proper execution.

But remember, trying to Cannonball may turn you into a Pinball.

I like the metaphor ahah. Thanks for the disclaimer; I am not eager to start "canonballing" right now, but I'm trying to wrap my head around the concept to be ready if/when the Q4-correction comes to pass.

Thanks again, I really appreciate your time and help!

-Jayce

[bobdylan]

I know each person will have their own preference, but does anyone have thoughts on the best bang-for-the-buck delta to target for a long cannonball play? Something like .10 delta?

[Yodean]

I know each person will have their own preference, but does anyone have thoughts on the best bang-for-the-buck delta to target for a long cannonball play? Something like .10 delta?

I don't like using the Greeks for these types of plays.

To Cannonball Long effectively, the most important thing, imo, is to pick the right stock, at the right time. You want the TrendForce behind the stock to be really strong, the stock to be really oversold, and preferably the indices to be really oversold as well, on all time frames.

In other words, when it looks like the world's going to Hell in a handbasket.

The best time to Cannonball Long will be when no one is talking about it.

The best time to Cannonball Short will be when enough noobs are starting to Cannonball Long on their own.

Those are my triggers, anyways ...

[LoriPrecisely]

Is there is any downside to selling covered call with a long expiry?
I am thinking ASAN $30 covered call with expiry Jan 2024,
so as to get a decent premium.
If the market keeps dropping, I will buy to close.

[SOL]

I know each person will have their own preference, but does anyone have thoughts on the best bang-for-the-buck delta to target for a long cannonball play? Something like .10 delta?

I don't like using the Greeks for these types of plays.

To Cannonball Long effectively, the most important thing, imo, is to pick the right stock, at the right time. You want the TrendForce behind the stock to be really strong, the stock to be really oversold, and preferably the indices to be really oversold as well, on all time frames.

In other words, when it looks like the world's going to Hell in a handbasket.

The best time to Cannonball Long will be when no one is talking about it.

The best time to Cannonball Short will be when enough noobs are starting to Cannonball Long on their own.

Those are my triggers, anyways ...

Yodean Makes some good points. If you cannonball at the wrong time, you could end up being a pinball(courtesy of Yodean)

Cannonballing, while it sounds cool, can only be implemented when all the following conditions are met. You could argue it is a strategy where discipline is of paramount importance.

At least two major indices should be trading in the Extremely oversold ranges on the monthly charts.
The stock you want to enter should not be a speculative company. it should be a company that is making money but has taken a beating. And this stock also needs to be trading in the extremely oversold ranges on the monthly charts.
Overall Bearish sentiment should be trading towards the upper limits (60 to 65, but in this environment, I would say 65 to 70 is better).

Whatever you do, please don't start to cannonball too early. Wait for the ideal set-up.
FYI we will be telegraphing when the time to cannonball is at hand, as we intend to use the conservative version of it here.

It is a powerful strategy, but as with anything powerful, used incorrectly, it could knock you out.

[jonnyfrank]

SOL, can you start a new thread called "CANNONBALL" so the posts don't get mixed in with others? That would be very helpful, and would make for a great learning tool!

[Eric]

Is there is any downside to selling covered call with a long expiry?
I am thinking ASAN $30 covered call with expiry Jan 2024,
so as to get a decent premium.
If the market keeps dropping, I will buy to close.

If you sold a $3-$5 OTM call every month you're going to collect $23 or so in premium by Jan 2024 compared to the $7 you'd collect according to recent bid/ask spread.

[SOL]

SOL, can you start a new thread called "CANNONBALL" so the posts don't get mixed in with others? That would be very helpful, and would make for a great learning tool!

I will create one, and most likely will copy and post most of what I posted here and add some commentary. However, there is no rush as its not time to cannonball yet

[harryg]

The stock you want to enter should not be a speculative company. it should be a company that is making money but has taken a beating. And this stock also needs to be trading in the extremely oversold ranges on the monthly charts.

Any More Directions?