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Dom,
A definite advantage to Ira's and your suggestions is that you are a player
no matter which way it goes.
And like I said my news reversal only works if something . .well reverses,
immediately.
I have a book Options as a Strategic Investment I once read probably 10
years ago but as I recall it does not deal with option/future combinations.
Are there any suggestions on a better book from anyone? (I am looking at the
website suggested by you also Dom).
I don't know if this question should be limited to just futures traders but
are those of us that are not actively using options strategies in
combination with futures trading, totally missing the boat (ala better
opportunity and less risk)? (Six year veteran here trading futures, one year
selling options (never have bought any)).
don ewers
----- Original Message -----
From: "Dom Perrino" <domenick@xxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxx>
Sent: Sunday, December 10, 2000 2:02 PM
Subject: Re: [RT] Re: Trading Events
> Don, I know exactly what you mean.One of the best ways to catch those big
> short term moves would bring us back to your original thought regarding
use
> of options and other strategies some of which were mentioned by Ira.One of
> the least complex strategies to catch a big move prior to release of
> important economic figures ,cpi, ppi, employment etc. would be to buy a
> straddle on the instrument we think is going to make a big move but we
want
> to limit risk and be on the right side whether the big is up or down .
>
> If the move is substantial we would exit the put or the call at a profit
> thus recovering the cost of both the call and the put. In, addition, we
> would still have either the put or the call in our possession. This would
be
> a freebie and we could unload it if a quick reversal occurs. In any event
> since we already recovered its cost we could just sell it since it served
> its purpose. The major problem with the straddle is that it can be
expensive
> especially if you stick to the true definition of a straddle i.e. same
> strike price A good way to reduce the cost would be to buy the call and
put
> 5 points away from the current price of the instrument Hope this is more
on
> your point.
> Regard,
> Dom . .
> ----- Original Message -----
> From: "Don Ewers" <dbewers@xxxxxxxxxxxxx>
> To: <realtraders@xxxxxxxxxxx>
> Sent: Sunday, December 10, 2000 2:17 PM
> Subject: Re: [RT] Re: Trading Events
>
>
> > Dom,
> > I think we are on the same page, because in your scenario there is no
> "news
> > reversal" the exist trend continues. The other thing to keep in mind is
> the
> > type of trades I am discussing are very short term in nature, a few
hours
> to
> > a day at best. Kind of like a capitulation.
> > don ewers
> > ----- Original Message -----
> > From: "Dom Perrino" <domenick@xxxxxxxxxxxx>
> > To: <realtraders@xxxxxxxxxxx>
> > Sent: Sunday, December 10, 2000 11:08 AM
> > Subject: Re: [RT] Re: Trading Events
> >
> >
> > > Don, I basically agree that reaction to news is more important (or at
> > least
> > > as important ) than the news itself. However, I have noticed on many
> > > occassions that looking at a chart prior to a major news event the
> > > chart(whatever the entity) indicated that if it was on a sell negative
> > news
> > > came out and the news confirmed the chart. The reverse for positive
> > > news.Even if this is not always the case, a glance at the chart of the
> > > entity you are trading will be of help or at least increase the odds
in
> > your
> > > favor when making a decision .The "Markets" seem to take on a mind of
> > their
> > > own . The participants individually don't know but when the crowd
> becomes
> > > one ,it forms the mind of the market , and this mind knows all that
is"
> > > knowable"
> > > Dom
> > > ----- Original Message -----
> > > From: "Don Ewers" <dbewers@xxxxxxxxxxxxx>
> > > To: <realtraders@xxxxxxxxxxx>
> > > Sent: Sunday, December 10, 2000 11:07 AM
> > > Subject: Re: [RT] Re: Trading Events
> > >
> > >
> > > > Dan,
> > > > Sure it really quite simple a simple trade to understand and not my
> own
> > (a
> > > > fellow trader shared it with me). Basically it is the
acknowledgement
> > > that
> > > > the "news or trading event" is already discounted in the price of
the
> > > > commodity. A reaction to the news occurs, but then the reaction
> quickly
> > > > fails. Grain traders use it frequently on a grain report day but
the
> > > bonds
> > > > and SP's with the current volatility are other good places to watch
> for
> > "a
> > > > news reversal trade".
> > > >
> > > > It is also discussed in the Raschke/Conners book "Street Smarts" I
> > think,
> > > > which may have been the trades origin, or at least documented.
> > > >
> > > > Basically when a market moving event is about to happen you note the
> > price
> > > > of the underlying commodity, then after the commodity reacts to the
> > event
> > > ,
> > > > lets say up for example, you place a sell stop at the price the
> > commodity
> > > > was at "before the event". If the commodity trades back down to that
> > price
> > > > you go short. They actually happen quite frequently.
> > > >
> > > > Here is an example, it is widely expected (or maybe not) that the
crop
> > > > report might show less yield, smaller acreage, larger exports
whatever
> > for
> > > > soybeans. The price prior to the report (the previous day because
crop
> > > > reports are at 7:30 am as I recall) had a range of $5.05 to $5.10
> > closing
> > > at
> > > > $5.08. The report comes out and beans when they open at 9:30 am gap
or
> > > trade
> > > > up to $5.21. At that point you would place a sell order at $5.10 and
> if
> > > > beans trade back into the previous days range you go short with a
stop
> > at
> > > > the gap high or a money stop whichever works with the risk you wish
to
> > > take.
> > > > Exit the trade (hopefully profitably) using any number of profit
> taking
> > > > techniques. The reversal in the commodity occurred because a
majority
> > of
> > > > the news was already in the price prior to the news. When the news
> came
> > > out
> > > > a few people/traders react to it only to find out that most people
are
> > > ready
> > > > to take their profits after the initial reaction. This profit
taking
> is
> > > the
> > > > reason the price declines and if it trades back into the prior range
> > > > increased selling occurs from those who were recently long hoping
for
> a
> > > > positive reaction.
> > > >
> > > > Several other examples happened this past Friday. Some people were
> long
> > > the
> > > > SP in the afternoon prior to the two court rulings around 1395
feeling
> > it
> > > > may go Bush's way. The ruling came out and the spoos rallied to
1404,
> > if
> > > a
> > > > sell stop was placed at 1395 you would have gone short and they
traded
> > > back
> > > > down to 1388 area. The bonds were another example opening at 7:20 at
> > > 103-21
> > > > and prior to the employment report they were around 103-25ish (a
> bullish
> > > > report was expected), the report came out the bonds traded to
103-31,
> at
> > > > that point place a sell order at 103-25 or slightly below since the
> > range
> > > > was tight. The report was not as bullish as expected, there was a
> slight
> > > > reaction up, then profit taking set in.
> > > >
> > > > The news reversal is simply buy the rumor sell the fact or sell the
> > rumor
> > > > buy the fact which may explain Intel's short term reaction to bad
> news.
> > > > "That warn" was already in the price of the stock, it was not a
> surprise
> > > to
> > > > most. Hope this all helps. Like I said they happen all the time.
Said
> > > simply
> > > > "it is not the news but the reaction to it that is important".
> > > > don ewers
> > > >
> > > > ----- Original Message -----
> > > > From: "Dan Cash" <dcash@xxxxxxxxxxxx>
> > > > To: <realtraders@xxxxxxxxxxx>
> > > > Sent: Saturday, December 09, 2000 9:17 PM
> > > > Subject: Re: [RT] Re: Trading Events
> > > >
> > > >
> > > > > Don,
> > > > >
> > > > > Do you mind expanding on your trading news reversal technique in
any
> > > > detail you
> > > > > care to, I would appreciate the insight?
> > > > >
> > > > > Dan
> > > > >
> > > > > Don Ewers wrote:
> > > > >
> > > > > > Ira,
> > > > > > Can you enlighten us with an example, since I only trade, "what
> are
> > > > billed
> > > > > > as major event s" from the "news reversal trading technique".
> > > Obviously
> > > > your
> > > > > > expertise utilizing options would be a welcome trading technique
> > that
> > > we
> > > > may
> > > > > > be able to learn from. I normally go flat ahead of these events
> > > feeling
> > > > it
> > > > > > is gambling in lieu of trading, so I am anxious to hear your
> reply.
> > > > > > don ewers
> > > > > > ----- Original Message -----
> > > > > > From: "Ira Tunik" <ist@xxxxxx>
> > > > > > To: <realtraders@xxxxxxxxxxx>
> > > > > > Sent: Thursday, December 07, 2000 1:22 AM
> > > > > > Subject: Re: [RT] Dow
> > > > > >
> > > > > > > If one is just trading the underlying, then a cardinal rule
> should
> > > be
> > > > to
> > > > > > be out
> > > > > > > of the markets when major announcements are to be made. If you
> > know
> > > > how to
> > > > > > > utilize options in volatility positions that are non
> directional,
> > > then
> > > > you
> > > > > > put
> > > > > > > on these positions just before announcements are made and
trade
> > the
> > > > > > volatile
> > > > > > > swings with glee. The bonds are a classic example of where
this
> > > works
> > > > > > > wonderfully. There is sufficient liquidity in both the options
> and
> > > > > > underlying
> > > > > > > bonds to allow one to trade some of the huge swings the bonds
> are
> > > know
> > > > to
> > > > > > make.
> > > > > > > Ira.
> > > > > > >
> > > > > > > Don Ewers wrote:
> > > > > > >
> > > > > > > > Dom, all-,
> > > > > > > > True, but one should not neglect events that "make the
> charts",
> > > > meaning
> > > > > > > > sometimes charts say one thing and an event and the price
> > reaction
> > > > to
> > > > > > it,
> > > > > > > > makes the chart say quite another and therefore a different
> > story
> > > > > > unfolds.
> > > > > > > > We need to be flexible enough in our trading to accommodate
> > this.
> > > > Charts
> > > > > > > > rule until they fail, one good reason depending on your
> trading
> > > > > > timeframe to
> > > > > > > > avoid major events that have been built up to be market
> movers.
> > It
> > > > is OK
> > > > > > to
> > > > > > > > stand aside at times and let the story be told?
> > > > > > > > don ewers
> > > > > > > >
> > > > > > > > ----- Original Message -----
> > > > > > > > From: "Dom Perrino" <domenick@xxxxxxxxxxxx>
> > > > > > > > To: <realtraders@xxxxxxxxxxx>
> > > > > > > > Sent: Wednesday, December 06, 2000 9:46 PM
> > > > > > > > Subject: Re: [RT] Dow
> > > > > > > >
> > > > > > > > > My belief is that technical analysis already reflects
> ALL,that
> > > is
> > > > > > known
> > > > > > > > > about a stock including all fundamental factors. I believe
> > that
> > > is
> > > > the
> > > > > > > > > standard belief of technicians. It seems that is what you
> are
> > > also
> > > > > > saying.
> > > > > > > > > My original email to Bob may have been ambiguous.
> > > > > > > > > Dom ----- Original
> > > > Message -----
> > > > > > > > > From: "Ira Tunik" <ist@xxxxxx>
> > > > > > > > > To: <realtraders@xxxxxxxxxxx>
> > > > > > > > > Sent: Wednesday, December 06, 2000 10:03 PM
> > > > > > > > > Subject: Re: [RT] Dow
> > > > > > > > >
> > > > > > > > >
> > > > > > > > > > Those factors would all have been factored in before you
> > > > selected
> > > > > > the
> > > > > > > > > stock to
> > > > > > > > > > trade. They would be terrible if you were looking for a
> > short
> > > > in a
> > > > > > down
> > > > > > > > > market
> > > > > > > > > > and they would be wonderful if you were looking for a
> stock
> > to
> > > > trade
> > > > > > in
> > > > > > > > an
> > > > > > > > > up
> > > > > > > > > > market. After the selection, you would trade it
> > technically.
> > > > Ira
> > > > > > > > > >
> > > > > > > > > > Dom Perrino wrote:
> > > > > > > > > >
> > > > > > > > > > > Bob,
> > > > > > > > > > > In your opinion,what would you consider key
differences
> > > > between a
> > > > > > > > > technician
> > > > > > > > > > > and a fundamentalist ( like yourself ) if both let the
> > > market
> > > > tape
> > > > > > > > call
> > > > > > > > > the
> > > > > > > > > > > shots on a day to day basis, and, as you well put it,
> > > keeping
> > > > the
> > > > > > > > > account
> > > > > > > > > > > healthy.
> > > > > > > > > > > It would seem to me that the technician would have an
> > easier
> > > > job
> > > > > > since
> > > > > > > > > on a
> > > > > > > > > > > short term basis p/e, book value,sales, balance sheet,
> > > current
> > > > > > ratio
> > > > > > > > > > > etc.would not need to be factored into the trade .
> > > > > > > > > > > Dom
> > > > > > > > > > >
> > > > > > > > > > > ----- Original Message -----
> > > > > > > > > > > From: "Bob" <bobskc@xxxxxxxxxxxx>
> > > > > > > > > > > To: <realtraders@xxxxxxxxxxx>
> > > > > > > > > > > Sent: Wednesday, December 06, 2000 1:21 PM
> > > > > > > > > > > Subject: Re: [RT] Dow
> > > > > > > > > > >
> > > > > > > > > > > > An elitist? I hope not and I certainly hope that
you
> > > detect
> > > > a
> > > > > > man
> > > > > > > > who
> > > > > > > > > > > > doesn't send insulting comments about someone he
knows
> > > > nothing
> > > > > > > > about.
> > > > > > > > > > > >
> > > > > > > > > > > > As to the content of my mail, I was trying to state
> that
> > > as
> > > > long
> > > > > > as
> > > > > > > > > > > > liquidity and beta are the principal drivers of the
> nas
> > > > while
> > > > > > value
> > > > > > > > > and
> > > > > > > > > > > > common sense take a back seat, all gains should be
> > viewed
> > > as
> > > > > > > > temporary
> > > > > > > > > and
> > > > > > > > > > > > unsustainable. As to "burning flesh", I don't care
> > which
> > > > way
> > > > > > this
> > > > > > > > > market
> > > > > > > > > > > > goes as long as it goes .. I let the market tell me
> what
> > > to
> > > > do
> > > > > > on a
> > > > > > > > > day to
> > > > > > > > > > > > day basis and I don't fight the tape. My account is
> > > healthy
> > > > ..
> > > > > > I
> > > > > > > > hope
> > > > > > > > > > > > yours is as well.
> > > > > > > > > > > >
> > > > > > > > > > > > Bob
> > > > > > > > > > > >
> > > > > > > > > > > > At 03:35 AM 12/6/2000 -0500, you wrote:
> > > > > > > > > > > > >Bob,
> > > > > > > > > > > > > I've been a student/investor for many years.
> > > Sounds
> > > > to
> > > > > > me
> > > > > > > > like
> > > > > > > > > > > you've
> > > > > > > > > > > > >become "insulted" that the mob out there doesn't
have
> > > your
> > > > > > > > > intelligence
> > > > > > > > > > > and
> > > > > > > > > > > > >prescience.
> > > > > > > > > > > > >
> > > > > > > > > > > > > Do I detect the burning flesh of an elitist?
> > > > > > > > > > > > >
> > > > > > > > > > > > >
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