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  • #21
  • Jul 3, 2016 6:52pm Jul 3, 2016 6:52pm
Quoting ZebraSquirl
An example of the kind of shit I won't play: PEP ... . PEP, an underlying with "three-star liquidity," announces earnings on 7/7 before market open. Its IVR is 34 (low), and its IV is 17 (low). A July 15th 1 SD short strangle (a 102/109) only yields a .54 ($54) credit up front, which is tremendously crappy for a $100+ underlying ... . A three-wide iron condor would yield even less. So, pass ... .
Compare: HOG July 15th 47.5/60 short strangle (IVR 100 (high); IV 63 (high) with a max profit of $207/contract for an underlying priced at 1/2 of what PEP is ... .

Not that I'm going to play this ... . The reason why HOG's IVR/IV is so high is because of rumors of a takeover (say it ain't so, Harley ... ).

(Additionally, because of the way HOG's strikes are, I couldn't quite finesse a "perfect" 1SD short strangle out of it, so, to a certain degree, apples and oranges ... ). Nevertheless, you get the general idea of what makes a premium selling play "rich"; it isn't the price of the underlying (although it can help), it's the "highness" of the implied volatility ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #22
  • Jul 3, 2016 6:55pm Jul 3, 2016 6:55pm
Quoting ZebraSquirl
{quote} Compare: HOG July 15th 47.5/60 short strangle (IVR 100 (high); IV 63 (high) with a max profit of $207/contract for an underlying priced at 1/2 of what PEP is ... . Not that I'm going to play this ... . The reason why HOG's IVR/IV is so high is because of rumors of a takeover (say it ain't so, Harley ... ). (Additionally, because of the way HOG's strikes are, I couldn't quite finesse a "perfect" 1SD short strangle out of it, so, to a certain degree, apples and oranges ... ). Nevertheless, you get the general idea of what makes a...
Additionally, for these earnings plays, you're looking for historically high volatility to contract to post-announcement low volatility, and you can't get a decent contraction unless you have a decent volatility expansion in the first instance ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #23
  • Jul 3, 2016 7:19pm Jul 3, 2016 7:19pm
Rather than reinventing the wheel on describing what I do with mechanical rolling, here are some good posts written by my TradingView Doppleganger or "Twin Separated at Birth," NaughtyPines.

There are five posts in total, all of which should be linked to this one:

https://www.tradingview.com/chart/SP...ONDORS-PART-V/
Fireworks are fun ... as long as you don't blow your fingers off.
  • #24
  • Jul 4, 2016 7:26pm Jul 4, 2016 7:26pm
Yep, that was a massive VIX plunge last week. Biggest in a long time, since 1990!

http://www.cnbc.com/2016/07/04/vix-t...week-move.html

Anyone going long systematically on VXX or UVXY is a fool.
  • #25
  • Jul 5, 2016 9:23am Jul 5, 2016 9:23am
Earnings ... is ... ON! (Trying to get psyched up for it ... . These aren't always my favorite thing to do).

I churned through everything that was going to be announced today after market or before market tomorrow (I didn't bother looking at the ADR's, since those don't always go "on schedule"). In any event, I found one (whoo-hoo!) -- WBA (the rest are too small of underlyings or just don't have sufficiently liquid options). Here are the metrics for the undefined and defined risk setups:

WBA July 15 76.5/90 short strangle
POP%: 76%
Max Profit: $106/contract
Max Loss/Buying Power Effect: Undefined/$1031/contract

WBA July 15th 74/78/89/93 iron condor
POP%: 67%
Max Profit: $104/contract
Max Loss/Buying Power Effect: $296/contract

Notes: Look to put this on shortly before today's NY close and shoot for 50% max profit and then redeploy the capital elsewhere. With the iron condor, I had to "force" the 1.00+ credit by bringing in the wings closer, which lowers the POP% somewhat heftily. Always a trade off between POP%, max profit, and defined vs. undefined with these fellas ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #26
  • Jul 5, 2016 11:12am Jul 5, 2016 11:12am
Quoting ZebraSquirl
Earnings ... is ... ON! (Trying to get psyched up for it ... . These aren't always my favorite thing to do). I churned through everything that was going to be announced today after market or before market tomorrow (I didn't bother looking at the ADR's, since those don't always go "on schedule"). In any event, I found one (whoo-hoo!) -- WBA (the rest are too small of underlyings or just don't have sufficiently liquid options). Here are the metrics for the undefined and defined risk setups: WBA July 15 76.5/90 short strangle POP%: 76% Max Profit:...
Oh, snap. Vol pulling off in this underlying post-open. Will be lucky to get a 1.00 fill at this point, so I may settle for something south of .95 ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #27
  • Jul 5, 2016 11:15am Jul 5, 2016 11:15am
"Buh-read and buttah" trade:

Attached Image (click to enlarge)
Click to Enlarge Name: SPY AUG 19 IC.jpg Size: 131 KB


Per usual, look to take it off at 50% max. May have to piddle with a fill; it'll move .10-.20 across the mid easy ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #28
  • Jul 5, 2016 11:55am Jul 5, 2016 11:55am
Quoting ZebraSquirl
"Buh-read and buttah" trade: {image} Per usual, look to take it off at 50% max. May have to piddle with a fill; it'll move .10-.20 across the mid easy ... .
Filled for 3.30 ... . Set up a GTC order to close at 50% max ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #29
  • Jul 5, 2016 5:00pm Jul 5, 2016 5:00pm
Quoting ZebraSquirl
{quote} Oh, snap. Vol pulling off in this underlying post-open. Will be lucky to get a 1.00 fill at this point, so I may settle for something south of .95 ... .
No fill on the WBA. Wasn't going to chase on this first earnings play of the season ... . Better stuff lies ahead.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #30
  • Jul 6, 2016 12:51pm Jul 6, 2016 12:51pm
Hi guys,

Quick question. I'm starting out as a junior broker. Would like to know what exams I will need to take to trade options. I currently don't have any qualifications.

Many thanks,
  • #31
  • Jul 7, 2016 5:35pm Jul 7, 2016 5:35pm
Quoting elpaulo44
Hi guys, Quick question. I'm starting out as a junior broker. Would like to know what exams I will need to take to trade options. I currently don't have any qualifications. Many thanks,
Unfortunately, I am wayyy not qualified to answer that question ... . There are probably some SEC regs on the subject is my guess. Since I don't trade on any one's behalf -- no exams, licensure, things of that nature ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #32
  • Jul 7, 2016 5:42pm Jul 7, 2016 5:42pm
The toughest thing to do is hand sit or wait for setups to move toward expiration without fiddling with them too much ... . Getting overly aggressive attempting to defend a side of an oppositional setup (iron condor or short strangle) by repeatedly rolling a side toward current price can result in your setup getting "too tight" into current price. Sometimes it's best to wait for the untested side to approach worthless (which is what you want with a credit spread) and then roll it toward current price, assuming there's enough time left in the setup to make it worthwhile.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #33
  • Jul 7, 2016 5:43pm Jul 7, 2016 5:43pm
Quoting ZebraSquirl
{quote} Unfortunately, I am wayyy not qualified to answer that question ... . There are probably some SEC regs on the subject is my guess. Since I don't trade on any one's behalf -- no exams, licensure, things of that nature ... .
Of course, I'm assuming that you'll be working in the US. I know absolutely zero about other jurisdictions' requirements ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #34
  • Jul 8, 2016 7:59pm Jul 8, 2016 7:59pm
Did a bit of call side defense dancing today, rolling up the short put wings of my NDX and SPX iron condors "a touch" (usually to the 85% probability out of the money strike for the expiry) .. .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #35
  • Jul 8, 2016 8:02pm Jul 8, 2016 8:02pm
Quoting elpaulo44
Hi guys, Quick question. I'm starting out as a junior broker. Would like to know what exams I will need to take to trade options. I currently don't have any qualifications. Many thanks,
I actually went on to research what it would take here in the US ... . In addition to a fairly diverse skill set, FINRA Series 7 is required. Sounds like work ... . https://en.wikipedia.org/wiki/Series_7_exam
Fireworks are fun ... as long as you don't blow your fingers off.
  • #36
  • Jul 9, 2016 9:47pm Jul 9, 2016 9:47pm
IWM/RUT premium selling in August clearly superior to SPY/SPX (IV: 19.0%/19.6% vs. 14.3%/13.9%).

Since the RUT Aug 19 1090/1100/1230/1240 delta neutral iron condor offers nearly 1/3rd the width of the wings in credit, I'll be going with a RUT play for my index premium selling play of the week.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #37
  • Jul 9, 2016 9:47pm Jul 9, 2016 9:47pm
Always know your setup's scratch point: total credits received minus total debits paid minus fees/commissions paid.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #38
  • Jul 10, 2016 8:51pm Jul 10, 2016 8:51pm
First post ever.
Thanks for this thread ZebraSquirl.

The abbreviations can be killing for a beginner. Also i wonder if there is a mobile App (i.e forum runner etc) that work with Forexfactory. This will make it easier kind off.
  • #39
  • Jul 11, 2016 4:07pm Jul 11, 2016 4:07pm
Quoting zonedeal
First post ever. Thanks for this thread ZebraSquirl. The abbreviations can be killing for a beginner. Also i wonder if there is a mobile App (i.e forum runner etc) that work with Forexfactory. This will make it easier kind off.
Not sure about a mobile app ... . Naturally you can always use the browser on your phone; not ideal, I know.

Sorry about the "lingo." Options has it own language and can be somewhat intimidating. Here's more stuff than you'd probably want to know: https://www.tastytrade.com/tt/glossary

I try to keep "options shorthand" to a minimum (e.g., referring to an "iron condor" as an "IC"). The rest of the stuff is usually just symbols for the instruments I trade. Here are the most frequently mentioned ones:

SPY -- the SPY exchange-traded fund (ETF) that mimics the S&P.
SPX -- the S&P index, for which you can buy/sell options.
IWM -- the ETF that mimics the Russell 2000.
RUT -- the Russell 2000 index, for which you can buy/sell options.
QQQ -- the ETF that mimics the Nasdaq.
NDX -- the Nasdaq index, for which you can buy/sell options.
DIA -- the ETF that mimics the Dow Jones.
FXE -- the Euro proxy ETF.
GLD -- a gold ETF.
SLV -- a silver ETF.
USO -- an oil ETF.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #40
  • Jul 11, 2016 4:11pm Jul 11, 2016 4:11pm
Today's Trades:

Trade Management: Rolled NDX Aug 5th 4250/4275 short put vertical to 4350/4375 for a 1.37 credit. (This is the put wing of an NDX iron condor, which I am rolling in toward current price to defend the call side, which has been breached.)

New Trade: Sold RUT Aug 19 1110/1120/1230/1240 iron condor for a 3.23 credit. Will look to take the setup off as a unit at 50% max.
Fireworks are fun ... as long as you don't blow your fingers off.
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