July 2013
Beginner
256 pages
5h 28m
English
book
Keene on the Market: Trade to Win Using Unusual Options Activity, Volatility, and Earnings
by Andrew Keene
Content preview from Keene on the Market: Trade to Win Using Unusual Options Activity, Volatility, and Earnings
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CHAPTER 17
Andrew Keene's Non-Blowout Trading Plan
How Much of Your Portfolio Can You Risk?
Finally, after 16 chapters of options education, we get to my proprietary trading plans, which I have been working on for over 11 years. This is how I have lasted in the world of trading for so long. I have made 30 percent year-over-year on my cash, and netted over $7 million in profits trading equities and equities.
I want to start with a little story from the trading floor about blowout risk.
■ Trading Pepsi Back in the Day
Early on in my career, I traded PEP (Pepsi) when it was trading between $60 and $70; had it one day opened at $35, I would have lost over $1.5 million. My partner pulled me into the office and said, “What's going on with Pepsi?” I said, “I am short puts, calls, and straddles.” He said, “You know, if the stock opens at $35, you lose over $1.5 million, your trading career is over, and you're out of business.” I looked at him and laughed. “It won't.” Pepsi has always been a rock-solid company with few flaws. He said, “What if they find 10 syringes in Pepsi cans in China, it could happen.” I said, “You're right, it's not worth it.” So, I altered my position and bought about 500 puts for $.10 and then sold about 50 puts for $1, taking my risk down a lot. Did the worst ever happen? No. However, you never know what can happen. I have blown out before and it is no fun. I want to make certain it never happens again.
Going back to my example of protecting myself in AAPL, say ...
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I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.Addison B.
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I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.