Bank of AMerica

9:25 am PST. How did I know to go long BAC yesterday at the open? Mostly pattern recognition and a few other hints, such as watching the market makers. I only got 25% on that move up, actually, not the whole thing. Being new to options I was not sure how theta would decay it against delta on an option expiring the next day, so I got out after showing a little profit wanting to lock it in and not turn it into a loss. Time decay goes a lot faster the closer you get to expiration.

I bought the 23.5 calls at .14, March 31 weeklys. They eventually went up 340%. Today they are trading at .38, in the money now. So it appears that once you go in the money theta has less of an effect because you can now buy the underlying at a lower price than where it trades today. The option expires today.

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Closing Thoughts

1:05 pm PST. Yes! We are on the verge of a vertical market! …. Until about May. 🙂 And then in May it will be sell and go away. The market will probably correct all summer long, and then continue to the phase transition after the summer.

I think the Dow could reach 21,500 by May. I am very bullish here.

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Those BAC calls ultimately went to +340%. Breathe, breathe. I have never made those sorts of returns in 5.5 hours. But I deserve to. lol.



Bank of America

8:39 am PST. BAC high 23.75, options 100%. I want to see at what price they expire tomorrow.

8:08 am PST. BAC almost reached my target 23.78, reaching a high so far of 23.72. My options would have increased 90% at 23.72. Very interesting!! On an option that I purchased just out of the money and expiring tomorrow, I had no clue how theta would play against delta and whether BAC would actually reach my target. Target practice is key! On an option that expires in one day, theta is going to eat away real fast at those contracts. You want the stock to move in your favor immediately on an option that expires the next day, and here that is what BAC did. The trade would have taken about 1.5 hours with a return of 90% from the print to the target, with an underlying price move of .28. 🙂 The stock went from out of the money to in the money. I think once the price moves in the money, theta has less of an effect. Just learning these things – half real trading, and half paper trading in my mind. I have to have some skin in the game to really learn. 🙂 Also, to learn how much the options would move against me on the minuet corrections.

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