Small/Mid Caps

One lesson that 2014 has taught me is that option strategies with a small account are difficult and even more so when overall Implied Volatility is near nill.

So while the market sorts itself out I have been focusing on small/mid cap short term movers. Last week was a very good week. AVEO, PBMD and NBS worked out very well. I took some losses on ISR and GIGA and scratched a couple of others but kept the losses small enough that the winners far outweighed the losses.

I don't have an account big enough to PDT so I have to be pretty selective and pay special attention to aftermarket plays where I might have a chance to hold over night.

Anyway I thought it might be useful to some of the smaller traders here or that might come along to see how one might be able to grow their account if they take the time to learn some basic technical skills and the discipline to stick to a plan. Or maybe I'll make a bunch of mistakes that people can learn from....hopefully it will at least be interesting.

NBS took profits on this within minutes of the initial news break last week was in and out in around 10 minutes. Fri it leveled off despite news that an interview with the CEO would be airing all weekend on FOX business. The interview seemed favorable enough that at least the price shouldn't try to drop...after hours volume was nearly non existent which I attribute to the holiday weekend. I put in a bid well below mark with several other bidders above me. Assuming it might sell off a bit as some people do not like to hold over night much less a 3 day weekend. With 2 minutes to close in EXT hours no one had budged in some time so I went ahead and hit the ask with a fill at 2.84 and was the last fill of the day.

The plan is that hopefully multiweek support in the 2.80 range will hold and the FOX pump will build up interest over the weekend and give me a gap up or early morning run for Tues. I'll watch the L2 feed for any solid push below 2.75 for an exit. But premarket action should be a good indication.

I don't know how much I really have to add to this, other than I think its awesome your doing it. But, I know we've talked about a lot of the things that make a trader successful or not. Most of our observations have been speculative, but since trading I've noticed having capital is one of the single most important things. I can have any method I want, but if I cant make big enough moves to cover my fees, and not have those moves be a small enough portion of my overall account to not psychologically destroy me in a trade, that psychological factor is the most detrimental part.

The catch is, now that we've seen a higher number of small cap runners the past few weeks, it may actually be an overall market pullback sign as traders are trying to shift gears as you noted in your first post due to lack of market volatility. If small cap shippers start to blow up, game over SPY.

You know a good study would be to back-test the percentage of small cap large gainers over time and see if any true correlation exists between excessive runs vs market tops.