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Let's Trade Options

  • #6,241
  • Edited 10:01am Dec 12, 2014 9:45am | Edited 10:01am
Quoting StrayDog
... Looking to maybe do a 1 SD short strangle on BBY - which is trading around $36.70 now - that would be 31/43 Jan....
That was 2 days ago, BBY IVR was 56, and now it is 82 ... Price didn't change, BBY still around $36.70, m/l.
Thinking of adding to position, because VIX is to blame for vol expansion, strangle is worth 30% more now... will wait and see.

Add-on
Looks like VIX wants to go above current daily high

Add-on 2
Just breached over $20.67... interesting day
Hope is dangerous in this game.
  • #6,242
  • Dec 12, 2014 10:02am Dec 12, 2014 10:02am
This EEM ditm Jan/Feb $37 call calendar started out when EEM traded around $41, several weeks ago, bought for $120, could be sold for $240 now, Max P is $615 if EEM sat on $37 at the Jan expiry
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,243
  • Dec 12, 2014 10:04am Dec 12, 2014 10:04am
Quoting StrayDog
Looks like VIX wants to go above current daily high Add-on 2 Just breached over $20.67... interesting day
yeah I was dumb to try to fade that, luckily it was only a 5-lot trade, likely a total loss...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,244
  • Dec 12, 2014 10:19am Dec 12, 2014 10:19am
Quoting The Fool
This EEM ditm Jan/Feb $37 call calendar started out when EEM traded around $41, several weeks ago, bought for $120, could be sold for $240 now, Max P is $615 if EEM sat on $37 at the Jan expiry {image}
I have never thought of deep ITM calendars... I am not sure that I understand the mechanics behind those, i.e. how they make money.

Let me try
I assume that you won't do it way deep, because of the short leg, so b/e of short leg alone must be above current price, in this case more than $4.00, like on the pic above (41 - 37 = 4). So, price of the u/l drops, short leg lose majority of value, IF it settles at $37 - party time, short leg obviously worth close to zero, long leg still have plenty of juice because of time value...

What is POP on deep ITM call calendar in compare with ATM? Any edge there?
Hope is dangerous in this game.
  • #6,245
  • Dec 12, 2014 10:24am Dec 12, 2014 10:24am
Quoting StrayDog
If QQQ could get up at least to $103.50, to try to fill a gap, I would consider long weekly puts on it, for today expiration, strikes 103 or 102.50 Add-on I bought few contracts of QQQ Dec12 103 puts for $0.22 debit. And gap is filled, this could be bought for $0.14... but never mind the price, the mofo must go down after the gap is filled, or this lotto ticket ain't gonna make profit...
I rushed to get in, I admit that this gamma scalping is something where I rarely hit the right entry.

I closed 2/3 of position at @ $0.32, when QQQ was somewhere between $103.00 and $103.10... leaving remaining 1/3... wanted to have that remaining part for free, with no risk, "free ride". It is not for free, but close enough.
Hope is dangerous in this game.
  • #6,246
  • Dec 12, 2014 10:29am Dec 12, 2014 10:29am
Quoting StrayDog
{quote} I have never thought of deep ITM calendars... I am not sure that I understand the mechanics behind those, i.e. how they make money?
It's a directional bet, I will say more later. I did get filled on UNG $22/$21 Apr/Jul for $0.35 credit. The Jul $21 put OI now is 19!
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,247
  • Dec 12, 2014 12:33pm Dec 12, 2014 12:33pm
Considerable time, considerable time. Considerable time. Idk, inflation numbers print negative today, oil crashing, diddlydeflation everywhere else in the world, I am more leaning to a dovish FOMC now. So, to walk that walk, maybe I should sell some SPY put spreads? I could see US indices consolidating early next week pre-FOMC. Then JY lets the doves fly. And Santa Claus rally rips a bullish reversal. That's my prediddlydiction considerable time. ....considerable time....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,248
  • Dec 12, 2014 12:45pm Dec 12, 2014 12:45pm
Well certainly a better time to sell premium when VIX is $20+ than when is at its usual boring values of $12-$14...

In efficient market, like we have on AAPL options, you can clearly see every possible IV move... That is the stock where you can easily add to position, and I would do that with bigger account.

About FOMC - yeah dovish one could help, but I am thinking that it would just postpone inevitable correction... I just hate this mofo Nasdaq. QQQ can't go under $103 in RTH, not even with VIX above $20. And there is absolutely nothing fundamentally "cheap" there. Well, that changes also, what is cheap and what is not, and by what metric... P/E means close to nothing now, especially in tech. Ah, just blah, blah, blah...

For how long will the FOMC clear the dark clouds... Oh, wait, don't tell me, for "considerable time"...
Hope is dangerous in this game.
  • #6,249
  • Dec 12, 2014 12:53pm Dec 12, 2014 12:53pm
Quoting StrayDog
Ah, just blah, blah, blah... For how long will the FOMC clear the dark clouds... Oh, wait, don't tell me, for "considerable time"...
I could easily talk myself back into a bearish FOMC call. Looking at Jan SPY options, deltas skew towards SPY being lower...I might have to sell some put spreads...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,250
  • Dec 12, 2014 1:03pm Dec 12, 2014 1:03pm
Yeah, I am basically sitting on my hands, waiting to see what is coming. As you said before, another meeting with press conference is in March if I remember that correctly, so if something really happens this time, it can determine market movement until then? Or maybe not. This guessing game is really a pain in the ass, I am becoming a fan of neutral positions.
Hope is dangerous in this game.
  • #6,251
  • Dec 12, 2014 1:11pm Dec 12, 2014 1:11pm
Quoting StrayDog
I am becoming a fan of neutral positions.
I am thinking of double diagonals, something to capitalize on the FOMC binary event. I think we will consolidate Mon-Tues though, so I will look to do more then, I am out of time today....

Have a good weekend, amigo.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,252
  • Edited 1:44pm Dec 12, 2014 1:16pm | Edited 1:44pm
[quote=The Fool;7941525] I am thinking of double diagonals, something to capitalize on the FOMC binary event. I think we will consolidate Mon-Tues though, so I will look to do more then, I am out of time today.... Have a good weekend, amigo.[/quote]

Thanks, you too my friend.
We will have lovely weather tomorrow in my city, like +15 Celsius so, looking to be somewhere outdoor...
Hope is dangerous in this game.
  • #6,253
  • Dec 12, 2014 4:38pm Dec 12, 2014 4:38pm
Was looking over week's results, saw this, surprised - it's the VXX bear put vertical I said was a mistake. Even tho VXX was well up, this trade made some money on the day, now I will have to figure out why, but glad to see some help & if I had seen it during market hrs I would have gladly taken that $35-$40 loss....
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,254
  • Dec 12, 2014 4:48pm Dec 12, 2014 4:48pm
http://www.marketwatch.com/story/4-r...?siteid=yhoof2

data in chart may be a little old, but I have been trying to find this info...
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,255
  • Dec 12, 2014 9:23pm Dec 12, 2014 9:23pm
PBR. Brazilian drama never ends. They had postponed Q3 earnings from idk like a month ago until today, then postponed again now, until Jan 15 (need confirm date). They did release some data, showing 7% increase in revenue yoy, and an indication that they did not foresee the need to raise capital for the entire coming year. So, PBR was up a little AH, but I'd like to see what happens Monday, whether IV will move up, sp move, etc. PBR may trade a tight range now until the new ER date, or it may drift up on vain hope, but I don't think it has any more room to fall, although anything can happen. A $7 stock now, maybe not worth the trouble, but it was trading at >$20 just a couple months ago, before the general elections. Still lots of options action...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,256
  • Dec 12, 2014 10:20pm Dec 12, 2014 10:20pm
Quoting StrayDog
{quote} I have never thought of deep ITM calendars... I am not sure that I understand the mechanics behind those, i.e. how they make money.
there are some advantages to putting ditm options in your spreads

http://www.optiontradingpedia.com/fr...put_spread.htm
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,257
  • Dec 12, 2014 11:51pm Dec 12, 2014 11:51pm
Quoting The Fool
Considerable time, considerable time. Considerable time. Idk, inflation numbers print negative today, oil crashing, diddlydeflation everywhere else in the world, I am more leaning to a dovish FOMC now. So, to walk that walk, maybe I should sell some SPY put spreads? I could see US indices consolidating early next week pre-FOMC. Then JY lets the doves fly. And Santa Claus rally rips a bullish reversal. That's my prediddlydiction considerable time. ....considerable time....
The Fed is up shit creek, they're not gonna intimate any rate hike moves. Hell, I'm surprised Bullard has not been on CNBC to announce QE4. Look at the UST's, look at the 30y bonds - see that "flash crash" spike low in the ^TYX on 10/15 - that's when Bullard came out saying sure, they could bring more punch, tanker trucks of it - or was it Dudley? Fuck I can't keep track of em. And the indices made an epic reversal that ripped my face off. 5000 days SPX close above its 5d SMA, etc, etc. Well, we're almost back there again with the rates. Thanks to oil crashing. The Fed is gonna come out in the middle of a deflationary shitstorm and say, "Yup, everything looks good, be raising that funds rate pretty soon, no more punch for you!?!?" Seriously? Bullshit. JY is gonna dress up like domina Santa Claus and drive her sleigh right up Wall Street handing out considerable time to all good traders.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,258
  • Dec 13, 2014 12:42pm Dec 13, 2014 12:42pm
Market selloff the last week has messed with my ER setup calendar ideas, I am looking at different possibilities. FCX ER's 1/20...
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,259
  • Dec 13, 2014 10:36pm Dec 13, 2014 10:36pm
hyper dovish Fed will be too weak to act.

http://www.valuewalk.com/2014/12/ala...market-bubble/

"The only reason this bond bubble exists isn`t due to the lower price of oil, it is directly a result of too much cheap liquidity in the financial system and ridiculously low interest rates by central banks. Well the US economy by recent data points with 321,000 jobs created in a month, 0.4% monthly wage inflation, third quarter GDP revised up to 3.9%, Retail Sales Report up 0.7 % and lower gasoline prices adding additional stimulus to the US economy means the Fed will have to raise rates in bunches for 2015, and it is increasingly alarming that the bond market is as unprepared as a market can be going into this rising rate environment for 2015."
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,260
  • Dec 14, 2014 7:13pm Dec 14, 2014 7:13pm
Time to make the donuts. Just looking around at early futures trade. /CL down more, was $56.25 low. But /ES and Nikkei up. And why not? Why shouldn't falling oil price be good for business? Unless you're an oil company, of course. Why should solar stocks crash with oil? I'd expect more of a correlation between NG and solar, I should look at that. /NG are up early, good news for me as I have many long dated UNG bull spreads that will make money if natgas bounces into a cold winter.

So, FOMC week, could be epic. I have to see what I want to do to get ready....
"If The Fool persists in his Folly he will become wise." - William Blake
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