Importance of Checklists

When trading or investing, having a checklist can make the difference between having a profitable trade or a losing trade. KDK Options had a great example using its own checklist today.

KDK Options was looking at buying Morgan Stanley calls. The price of the stock was in a place where the trade had a good probability of success. The price of the option was lower than thought. The fundamental and technical expectations for the trade were met.

So what caused KDK Options to pull out of the trade? The expiration date of the option did not provide the needed amount of time needed for the trade. The option contract KDK originally started looking at was a May option. The trade looked pretty positive until getting to this one question. Because the expiration would be the third Friday, KDK originally thought that it would be in three weeks! But after answering the question on the checklist, it was made clear that the option only had two weeks left before expiration. This disqualified the trade.

The process of finding the right option trade can be long and tedious. Having a checklist can make that process a little clearer and simpler. It can mean the difference between a profitable trade and a losing trade. In the example above, the checklist highlighted the fact that the time left on the option was not sufficient for KDK Options to make the trade. It does not mean that the trade would not have been successful. It just meant that the probability for success with this trade was not high enough to go through with it.  

New Trade in DDD

KDK Options has purchased the 3D Systems (DDD) April $75.00 call option. The option cost $0.54 not including commissions and fees. 3D Systems stock is currently priced at $62.50. The target price for the option is $3.50. Reasons for the purchase are below:

- The stock has a double bottom formed at $60.00, weekly 50 day support

- The company is due to release earnings on Apr 29 with thinking there will be a run up to earnings.

- The 3-month daily 50 day SMA is at $77.00, the 2-year weekly 20 day SMA is at $78.00.

 If you would like to contact KDK Options, you can leave a comment, email at kdkoptions@gmail.com, twitter @kdkoptions, or find us on Stocktwits @kdkoptions. 

** This blog is used for informational purposes only. It should not be used as a recommendation to buy or sell any security. Do your own due diligence before trading or investing. **

Week In Review (Close VIX Trade, more)

There was one trade made this week. Currently the account is in all cash and will be looking for April or May options trades to make.

The VIX March $18.00 Call was sold for $0.75. This trade went as expected. But the account decided to sell instead of wait due to the uncertainty of political issues in Ukraine and Russia. The post link for the trade is here.

 If you would like to contact KDK Options, you can leave a comment, email at kdkoptions@gmail.com, or find us on Stocktwits @kdkoptions. 

** This blog is used for informational purposes only. It should not be used as a recommendation to buy or sell any security. Do your own due diligence before trading or investing. **

Closed Out of VIX March $18.00 Call Trade

KDK Options have closed the VIX March $18.00 call trade by selling the call. The call was sold for $0.75 before commissions and expenses. The VIX was priced at $16.80 at the time of the sale. The reasons for the sale are below:

- The option was still out of the money meaning the entire value of option was all time value. Expiration on the option is next week.

- Events involving Russia and Ukraine motivated the idea of being flexible and taking profits.

- Important to guard profits.

If you would like to contact KDK Options, you can leave a comment, email at kdkoptions@gmail.com, or find us on Stocktwits @kdkoptions. 

** This blog is used for informational purposes only. It should not be used as a recommendation to buy or sell any security. Do your own due diligence before trading or investing. **

Purchased VIX Mar $18.00 Call Option

KDK has purchased a VIX March $18.00 call option. The price for the option was $0.35 before commissions and fees. The goal of the option is $1.00. The reasons for the purchase are below:

- Continuing unrest in Ukraine with Russia

- Market hitting all time highs without corporate economic numbers to back it up.

- Previous movements have reached 20 with lower base price.

- Strong support at $14.00

Previous options trades include Morgan Stanley.

If you would like to contact KDK Options, you can leave a comment, email at kdkoptions@gmail.com, or find us on Stocktwits @kdkoptions. 

** This blog is used for informational purposes only. It should not be used as a recommendation to buy or sell any security. Do your own due diligence before trading or investing. **

MS Mar $32.00 Call Trade Closed Out

The Morgan Stanley Mar $32.00 call trade has been closed out at a profit. The call was sold for $0.59 before commissions and fees. The call was sold for the following reasons:

- Morgan Stanley stock reached its target point of $32.05. That is, it reached a 68% retracement of its most recent decline (Jan 17th-Feb4th). 

- A stop order was placed to protect profit.

Things to consider for following trades include:

- incorrect judgement of option price at stock target price. 

** This blog is used for informational purposes only. It should not be used as a recommendation to buy or sell any security. Do your own due diligence before trading or investing. **

Week End for Morgan Stanley March $32.00 Call Trade

The Morgan Stanley March $32.00 call option ended the week at $0.23. That is a rise of $0.06 from when the option was purchased on Thursday. The stock is currently at $30.80. KDK Options will continue to hold the trade into next week. The goal of the trade is still $1.00.

 ** This blog is used for informational purposes only. It should not be used as a recommendation to buy or sell any security. Do your own due diligence before trading or investing. **