IBM trade ideas
Cash Secured vs Naked PutsI’m Markus Heitkoetter and I’ve been an active trader for over 20 years. I often see people who start trading and expect their accounts to explode, based on promises and hype they see in ads and e-mails.
They start trading and realize it doesn’t work this way.
The purpose of these articles is to show you the trading strategies and tools that I personally use to trade my own account so that you can grow your own account systematically.
Real money…real trades.
Cash Secured vs Naked Puts
What I want to talk about right now is the difference between cash secured vs naked puts.
If you've been following Coffee with Markus, then you know that recently there was a comment from someone who said
“They are the same thing!”
Of course, that is not the case.
So in this article, I’ll show you the differences between cash secured vs naked puts.
I’ll also explain why I highly recommend that you trade cash secured puts when trading the Wheel strategy.
Selling A Put Option
When you sell a put option it means that you have to buy the stock at the strike price that you sold it for if the contract is exercised at expiration.
This is very important, and you are obligated to do it.
So, therefore, obviously what you want is that the stock stays above the strike price that you chose.
Because in this case, you just keep the premium.
Now, let me give you a very, very specific example here.
Put Example: IBM
So recently, I sold a 115 put on IBM .
I did this with three days to expiration and I received a premium of $43 per option that I traded.
Now, I traded two options, or two contracts. So this means that I received $86 in premium.
If you divide this by three days, this means that we are looking at approximately $29 per day in premium, which is what I’m looking for.
I mean, this is how I have achieved the very systematic results here of 22.7% over the last three months, and if I can keep this up, this would translate into 19.8% per year.
So thus far, what does it have to do with cash secured or naked puts here?
In this example, as long as IBM stays above 115 until expiration, I would just keep the $86 in premium and the option expires worthless.
However, if IBM would close below 115 at expiration, then I have to buy 100 shares of IBM at a price of $115.
So in my case, since I have sold two options, I would have to buy 200 shares of IBM at $115.
This means that I would have to bring $23,000 to the table.
But here’s the deal. In order to sell these puts, my broker only required around $4,400.
Let’s take a look at this.
See IBM here, it says capital required $4,453. That’s only 20% of the money that I actually need to buy the shares.
The Differences Between Cash Secured vs Naked Puts
Now let’s talk about the difference between cash-secured puts and naked puts.
Cash secured puts mean that you have $23,000 in your account to cover the stocks if you are getting assigned.
So if you only had $5,000 in your account, you could still place the trade.
As you can see, the broker only required $4,453.
However, you wouldn’t have enough money to actually buy the shares if you got assigned.
This means that you sold the naked puts. You just don’t have enough money. You just had enough money for the broker, what he required to sell it.
So why would the broker let me sell the puts for only $4,400 when I need $23,000 to buy the shares if I get assigned?
Well, here is why the broker does it. He does it for two reasons.
Reason number one, most options expire worthless.
And number two, even if they don’t expire worthless most traders buy the option back.
So they close it before they expire and the broker knows that.
That’s why he’s only requesting 1/5 of the buying power that you need for buying the shares. And that’s all good as long as you close your position before expiration.
However, when trading the Wheel, you actually want to get assigned. It is part of the strategy.
You see, we not only sell a put option, if we get assigned we will sell calls and get the premium.
So the question now is…
What Happens If You Don’t Have Enough Money And You Get Assigned?
Let’s say you have $5,000 in your account and you entered this trade.
Now IBM is below 115 at expiration and you have to buy 200 shares at $115, but you don’t have the money.
So what happens?
Well, now your broker is buying them for you and you get a so-called ‘margin call’.
What does it mean?
A margin call basically means the broker asks you to wire the remaining $19,000 that you need for this into the account, and he wants to have this pretty much that day.
What happens if you don’t have the money?
If you don’t do this, the broker will sell the shares the next day at whatever price he can get.
So this means that you lose all control over this trade. Your broker is now in control and that’s not good.
You see, when trading the Wheel strategy you want to remain in control. After we get assigned the shares, we want to sell calls against it and collect even more premium.
Summary
I highly recommend that you trade cash-secured puts so that you have enough money in the account in case you get assigned.
This way, you have full control over your shares and you can actually make money with them.
Now you know the difference between cash-secured puts vs naked puts and you know when to use what.
Sell: 117.25Ingenuity Trading Club-
Geometric Markov Model : In probability theory, a Markov model is a stochastic model used to predict randomly changing systems. Markov Models are used in all aspects of life from Google search to daily weather forecast. The randomly changing systems we focus on are the equity, futures, and forex markets. The geometric element of the model is the fractal wave structure you can find on any chart you look at across any market and across all time dimensions.
Our model focuses on the current wave formation (current state)- geometric price formation along with its volume and volatility over a given time period and using that information to predict the future state- future price movement.
$IBM Bearish Swing TradeGreen Line - Entry Target
Red Line - Exit Target
Pink Line - Stop-Loss
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Trading inside the range / Real example and trade Idea IBMToday we have a long set up to share + a clear explanation of why we are developing this trade.
a) First of all, let's start on the weekly chart:
We can see a massive support zone. The price has reversed from there, and we can project previous resolutions to the current scenario. In this case, "expect a new bullish impulse."
b) Now that we have a clear Macro scenario, we will go to the current range.
c) When we are trading a Range, the most important thing is understanding: the Support and the resistance that make the range. Why do we want to understand this? Because those areas are Supply and Demand levels. and if we wait for the correct signal, we can trade with confidence towards the next Resistance (if you are on a bullish scenario) or towards the next support (if you are on a bearish scenario)
d) The idea of the previous item is to explain that you should NOT buy or sell a support or a resistance just because the price is there. As we said before, you need Filters. Which is our filter? Broken descending trendline + Corrective Structure + Enough distance to trade towards the next level with a risk rewards ratio above 1.5
e) In this case, we have all the previous conditions, and we will trade the breakout of the Flag Pattern. Entry above B / Stop below C / Break-Even first Fibo Extension / Take Profit on the 2nd fibo extension
f) We will cancel this setup if the price goes below C. We expect a resolution of 15 days as maximum if the entry is executed
Smart tech time is coming IBM sep 20 buyback is the weakest in company history (
We are at the bottom of uprising long-term channel
Lets see if we fall
High risk trade be careful
$IBM Potential Gap Fill $120-$125
IBM in strong recovery as old tech outperforms growth.
Potential target to gap fill $120 & $122 to Channel trendline
IBM has entered the cloud 5GWith the worst case scenario out of the picture, markets have bounced and now even breaking out of channels. IBM did not have the best earnings report but by entering with cloud and possibly more government contracts with a Biden presidency, this stock will do well. Insider buying last week. Long. Keep an eye on RSI and MACD.
Stop Loss: 112
Take some profit: Above 120
Time frame: Less than one month
RSI Level: 60
$IBM Big Blue Trying to turn
The once Mighty IBM has finally seemed to have found a bottom after the 20% decline post earnings.
Within some very Volatile sessions IBM actually caught a bid as a VALUE tech stock.
Oversold indicators are reversing.
Targets to upside
$117.50 - Point Of Control (redline)
$119.35 - 20MA
$125.00 - Volume Gap and horizontal resistance
IBM Long IdeaWhile the market sold off on Thursday and Friday, IBM stayed strong both days. I expect it to continue on Monday and possibly throughout the week. IBM insider buying jumped this week which could possibly indicate something big is in the works. Looking to day trade and possibly swing as well.
IBM in bearish patternFurther decrease of price into the falling channel and a breakdown price below the lower channel trend line will signify a bearish pattern. Best to await confirmation if the price goes into the falling channel.
Recent quarterly results have been very bad - missed target by 26%, declining revenue and no forward guidance provided either.
No potential of DMA support as price is now substantially below the major 3.
Hammer doji, which was within the downward channel did provide a price increase above the channel but failed to ignite a recovery: the increase was small, not backed up by a major volume increase and was followed the next day by a decrease back to the upper channel.
RSI is over sold.
019. PIGGISH PLAY - Short IBM's Mediocre EarningsIBM is so... so.
What I mean to say is that IBM is the epitome of mediocrity. The stock price ebbs and flows with the zeitgeist of the overall market. Seeing how this stock has paved its way into a well-established, clear downtrend, the play is rather straightforward given the in-line status update last night:
1) When you see yellow flames, they either:
i) diverge into green flames and move to the top trendline, or,
ii) diverge into orange flames --> red flames and down to the bottom trendline
2) Given their unsurprising mediocre report yesterday, I'd bet the farm that its the latter this time around
3) If using equity, enter on the open, set stops and limits according to the chart's annotations
4) If using puts, I recommend entering 120 strikes (10/30 expiration) and holding until ~105-110 for a solid premium flip
Today's market is primed for shorting the mediocre companies because of the fearful/bearish undertone established yesterday.
IBM is just the tip of the average iceberg, yet it will slip and slide just as well.
- So-So Pig
NYSE:IBM
SPCFD:SPX
NASDAQ:NDX
$IBM Still bullish after posting less than expected Earnings$IBM Still bullish after posting less than expected Earnings, the PEAD cone projection is showing bullish expectancy for the stock, Price is currently trading on the lower end close to the lower boundary of the projected cone.
Thoughts on IBMLooking at the 3d chart for IBM and it does not look too promising. They have reduced their buyback activity, which was one of the reasons the stock did so well for so long. RSI looking bleak and the implied volatility is starting to go up.
Unless something wild were to happen, I would expect this to see further downside.
Note: This is the 3d chart, so i am expecting it to chop in this range for a little bit longer before it continues down.
IBM to Long, Wedge BreakoutCondition:
1. Wedge Breakout
2. re-test trendline
3. SMA50 as support
Entry 126.5
Stop: 121.5
Target: 145; reward:risk=3:1
I am not a PRO trader. I need few months to practice trading strategies.
If you like this idea, please use SIM/Demo account to try it, until my trading plans get high winning rate.
IBM earnings 10/19 at 4:05pmFor Q3 earnings IBM is expected to report revenue of $17.6B with a non-GAAP profit of $2.58 / share. But that’s not the exciting part. Expect to hear more about IBM plans on a spinoff cloud strategy. CEO Arvin’s Krishna said that the company would be “laser focused on the $1 trillion hybrid cloud opportunity.” (Credit: Barron’s) My price target is $135. Good luck and happy trading friends...
IBM Earnings report will be published todayNYSE:IBM The American technology giant publishes its quarterly earnings report with a very optimistic forecast.
The report will be published after the market closes.
Earlier this month the company announced that it is splitting itself into two separate public companies, a move that could attract new investors due to the result expected - a cut in the share price.
In recent years, the company has been mentioned as irrelevant and unable to keep the technology development speed like other leading tech companies such as Apple and Samsung but, with more than 350,000 employees serving clients in 170 countries and a great roadmap for long term development projects, IBM is absolutely still is considered a tech giant.
Analysts expect a Gross margin of 48.4% for the quarter.
Over the last 2 years, IBM has beaten EPS estimates 100% of the time and has beaten revenue estimates 38% of the time.
Revenue in 2019: $77 billion
Quarterly Revenue Forecast: $2.58 billion
