Day Trading GOOOG

Session 1 - This months No Risk stock: GOOG

This month I will record all the activity of GOOG to show you how this strategy can make you a lot of money with little to no risk.

With the stock markets in full bull mode, I anticipate that GOOG will continue higher, so I am going long stock and selling Naked puts to pay for my weekly protective puts. Because GOOG has very volatile price action, I am able to collect a good amount of premium; and then I can buy weekly options at 2:1 with that money to cover me. In fact, I like buying the weekly options because GOOG can have very large price moves from day to day so any bad news event could make my protective puts very profitable.

As I build profits, I will keep adding more puts and maybe a couple of calls too.

Session 2 – Options

Here are the options plays I placed today:

As you can see, I sold 10 of the 630 Apr puts and collected $15,800 and then I bought 20 of the weekly 630 puts and only paid $4,300.

Next I bought 1000 shares and I already I have profits building in my stock trade. I will have a stop loss in place at $630 and trail it up. As my puts depreciate in value I will be able to buy them back at a profit and will roll up the strike price to keep my insurance policy in place as I make daily profits!

Next we look at the ATR of GOOG for the past 10 trading days to get a baseline of expected movement each day:

As you can see, the stock has a daily average of $10.00 which is a very good amount of volatility for us to capture profits.

Next we look at our cost of insurance and our total risk to determine our daily profit needs to assure we are covered.

GOOG
Current Price		$644.77
Shares Traded	1,000.00
10 Apr 630 Naked Puts Sold	15.80	$15,800.00
Buy 20 Apr Weekly 630 Puts	(2.15)	($4,300.00)

Out of pocket to cover insurance		$0.00

Spread between Naked Puts and Stock		$14.00
Max Risk		($14,000.00)
Trading Days to expiration	20
10 Day ATR	$ 10.00
Average Daily Profit to cover spread risk		($700.00)
Min daily profit to cover risk		$0.70
Target daily profits at 50% of ATR		$5,000.00
Anticipated gain by expiration		$100,000.00

As you can see, we only need to make .70 cents per day to cover our maximum risk.

Our stop will be placed at $630 and trailed as we make profits.

As you can see, our potential for this months trade is $100k on the stock trading, and if we get stopped out, our insurance puts will be there to reduce our losses and/or make us a profit.

3/26/12 - Trading Results

The ATR has dropped a little bit but you can still make some very nice daily gains on GOOG.

I was busy trading other stocks so I did not make as many trades as I wanted to this week, but we still ended up with some good profits for the week. Looking over the chart below, we may see some more selling down to possibly $600 but no worries here, the protective puts are there and we will be ready to jump on the short side if GOOG shows weakness next week. Once we make profits shorting, we buy some calls for the rebound.

GOOG Weekly Chart for 3/26 - 3/30/2012

3/27/12 - Nice Doji today indicating a top is in the future. GOOG will be reporting earnings on the 12th and they missed last time so you can be pretty sure the stock will be slowing down as the big day approaches. I do not like the action going forward so I am changing my bias to a short and will start picking up more puts as I progress the trading.

3/29/12 - The beginning of the selling cycle has begun.

4/10/12 - GOOG popped up on my Bull 180 scan today. Earnings are in two days so I anticipate a couple of days of upside heading into the big announcement. My protective puts have gained nicely and now that I am below $630 I am at risk of having the stock put to me. Any rise above $630 and I will buy back the Naked puts.

4/12/12 - Bought back the Naked Puts and picked up some more puts for the big day tomorrow. I am picking up some calls too just in case they surprise this time.

4/13/12 - Wow, they beat estimates but fell short on revenue. Then they drop what appears to be a BOMB in the way of a 2:1 Stock split, but instead of launching the stock to the moon, the details of the split killed it on the launch pad. The split is going to be paid out as a dividend with a new issues of class "C" shares. That is to say, they are setting up a new symbol and giving shareholders of record a new share for each one they own of GOOG. Now the killer, these shares have NO voting power...huh? Needless to say, this pissed off the big money buyers because they cannot get their greedy hands on the typical leveraged position they get on voting power when one controls a disproportioned amount of the companies shares. Sounds like a genius move by the owners of the company to maintain total control of their company—Bravo! Larry and Sergey!!

4/14/12 - After the deluge from the unusual split announcement played out, GOOG was sold off and now appears to be on its way lower going forward. My protective puts will be looking like a nice profit coming next week should things keep going my way.

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4/16/12 - Another day at the profits table -

More No Risk Day Trading Plays:

Profits Up!

The donFranko

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