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All I do is keep this running. Every once in a while, I’ll just create a new spreadsheet. As I find a stock that I’m interested in doing some Gamma Scalping on, I will just continue to fill in what I have on that stock, and determine whether or not they’re a good candidate.
That’s all for now. We’ll talk again soon.
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Okay, just a quick update here. We’re still only half an hour into the trading session, but I want to show you the effect of being long Delta. As the stock moves up, as long as you’re long Delta, you’re going to make money. Even though you’re short the stock, you still have your long call and put position. As long as you’re long Delta, you’re going to make money. Today we’re up $85, not including our Gamma Scalping trading at all, because you are long Delta. As the stock continues to move up, you are going to make money.
It doesn’t matter how high this goes. As long as you are long Delta, you’re going to be making money. In fact, $102 for each dollar increase in the price of the stock itself. If this market continues to move, you make more money. The chances are, however, that at some point, the stock is going to pull back, and it’s going to go into a trading range.
The thing that you have to think about is where do you want to short again? As we take a look at this, we’re long 107 Deltas. What I would like to do and see is, “Yeah, okay. Maybe we’re going to have a slightly long Delta position, so I’m not going to totally eliminate and become totally Delta-neutral at this position.” I want to see where the stock goes. If it goes up another 200 Deltas, I might sell 100, and keep the stock 100 short.
At that point, we’re still long 100 Deltas. If you can combine some technical analysis skills with your Gamma trading, you’re going to be much better off, because you can take a look and see where the top to a potential trading range is. You can short the stock, to bring you back to Delta-neutral.
This is really a dynamic way to trade. It’s almost like the throttle on a car. If you press on the gas a little bit, if it continues to go up, you’re going to make money. If you think a stop sign is coming up, and you think the market is going to stop or even fall, you can get back to Delta-neutral, to take advantage of the drop in the market.
It’s a pretty interesting way to trade. You make money whether the stock goes up or down. If you’re a little bit more active, if you have time to watch your stocks, this is a terrific way to trade – especially if you can combine it with some technical analysis skills.
I’m going to keep an eye on this. We had a pretty good run-up here. It looks like we had some selling in here, but it’s continuing to run up. If it looks like it runs out of steam, at some point, I also might want to take a look at a slightly longer chart, and see if there are any potential resistance points coming into play.
Let’s go into a 9-month here. There might be a little bit of resistance around 38, so if I combine Gamma trading with some technical analysis tools, I might be able to determine where there’s a probability that the stock might pull back a little bit. I don’t see anything between where it is now, at $37.35 and $38, that indicates that it would pull back at all.
If I go back here… There’s not really much here. I could go back a little bit longer, maybe on a 10-year chart. It doesn’t look like there’s any significant support or resistance points here that we can take advantage of. On a weekly chart, it’s about the same.
Up until about here, I would say at this point, it’s $37.36 now. If it goes up another 60 cents, that’s more than… When it opened at $36.50, that’s over a dollar and a half, up to $38. That is three times our expected move for the intra-day trading stock. You can also think of it that way. The intra-day move that we calculated was 58 cents a day, based on the range probability, divided on the days until expiration.
If it moves 3 times that amount, or $1.50 in a single day, that is a tremendous move here. It opened at $36.50. If it goes to $38, that’s a $1.50 move. That’s 3 times our expected intra-day move. At that point, things get really interesting. We could end up having a tremendous short position at $38, and watch this particular stock sell off.
Anyway, I just want to bring that to your attention. You can play with Deltas. We’re still slightly long Delta. As long as the stock keeps moving up, we’ll keep making money. We have $127 right now, and if we combine it with our technical analysis skills, we can determine where a potential stop comes in, or support and resistance comes in on the stock. We can then get back to Delta-neutral by shorting more stock, thereby making money when the stock falls again.
Trade with confidence.
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Okay, we’re currently up about $142 in profit, and our Delta is 148. We may get a little bit of topping action here. Let’s take a quick look here. That shot up pretty strongly, at $37.60. I’m going to lock in some of those profits, by selling short another 100 shares of AVP. It could continue to roll. Who knows?
We sold another 100 shares short of AVP. That locks in our profit. We’re up $160 for the day. We’re short 500 shares now. We’re still slightly long Delta. If it continues to move up, we’ll continue to make money. If we get a sharp sell-off in AVP, then we will go back and capture some of those retracement profits.
Let’s see what happens. Now we can day-trade with confidence.
We’re still long Delta. If this thing continues to roar, we’ll continue to make money.
As you can see, AVP continues to chug ahead. It’s almost up to $37.88 now. As soon as it hits $38, we may be able to go short a little bit more. If we take a look at our analysis, because we are long Delta, we’re up to $263 in profit for a day. If it keeps chugging up, we’ll keep making more money. That’s how the miracle of Gamma trading works.
I just found a potential new candidate for Gamma scalping. Let’s take a look at this. The company’s name is Medtronic. It trades about a million or a million and a half shares a day, on average. It’s as high as 10 or 15 million.
We want to take a look at historical volatility. It’s at a relatively low level. Historically, it’s not at the lowest level, but it’s at a pretty low level.