Let's Trade Options

let it run, at least to midweek, but it looks like SPY will blow past $280

dull Monday helping my near term trades

Will CPI be a binary data point for equities?

blah CPI, equity futures jump...

grind up the week and hit a wall pre-FOMC.....a trap to catch a drop off that next week could pay well

I filled a Mar16/19 $284 call calendar for a nickel

...trying to fill Mar26 SPY put fly $277/275/273 for 20c

...didn't fill. Most of my better trades are traps set for a market slide into and after the March FOMC.

Added some more near the open today, including a Mar23 DIA put fly, $237/240/243 for 20c and a Mar 29 DIA bull put vert $242/241 for 15c

Just closed FXE $118.5 call 3/23 I picked up last friday when FXE dipped to $118. My 2nd weekly options trade. I've been doing Nadex for years but wanted something a little longer term and I'm loving that Robinhood now has options on their platform. zero commission trades. I had been just building swing and position trades on robinhood with 3x etf's on the SP. But now that options are available there, I'll probably start ramping up my options trades there instead of Nadex.

Hey JR, glad to see you and by all means post some trades so I can have somebody to talk to. I make money trading weeklies with DIA and SPY and a few of the other very liquid names. I also do set ups for company quarterly earnings and I have swing trade setups that go out 3-4 months sometimes. I opened a NADEX account a few weeks ago but I have not even had time to look at the platform - how do you like it?

I love Nadex. I do both binaries and spreads and employ a variety of strategies depending on setups, news, etc. I like binaries because you can make good money with little movement with ITM/ATM and can get decent money at a lower cost with OTM. I typically use binaries on reversion to the mean or central pivot on the London and NY Open times for currencies. I'll also strangle the news on FOMC, NFP, Oil inventories. I'll occasionally do a binary Iron Butterfly for the dead zone leading into news. One of my favorite trades is the Sydney open with an ITM/ATM and try and wing it off to get a butterfly going. I only do the 2hr, dailies, and occasional weekly. I avoid the 20 min. and 5 min. binaries. Being able to trade around the clock is huge for me, since my cycle analysis methods can find good entries when the US markets are closed.

With spreads, I typically go direction if the premium isn't too much or price is relatively close to the spread floor/ceiling. I might hedge off with an opposite spread if price is too far in the box. I've done premium collection with spreads a few times, but you really have to be on your toes because the r:r can be whack unless you set up an Iron Condor and manage it properly.

The options (pun alert!) are vast when it comes to coming up with strategies to meet all sorts of end result conditions. I"ve had trades on where I had 3 or 4 profitable conditions to 2 loss conditions and even price moved against me, the worst case scenario would be b/e or even slight profit. I try and avoid getting sucked into those because it does tie up margin to get the position going and is far from KISS but doing so can really help limit risk.

What I don't like about nadex is that it's an exchange geared towards intraday trading. Also, the bid/ask can get up there and for spreads, the premium can get up there, too. Which, as I mentioned, can be its own opportunity for premium collection as long as you manage the risk properly.

Last night I went long EURUSD with a slightly OTM binary and a GBPUSD spread. Both paid out great compared to what I would have made doing spot forex for the same amount of risk.

That sounds pretty cool. I was gonna ask you if you have a binary thread or anything but I see you do not. If you want to talk about those trades here, feel free - I will be getting into it slowly but as you can see it's not crowded in here at all.

How'd the SP and DIA trades turn out? I've got SPXS and SPXU shares out there that did well. I'll look to supplement with options this week if I see a setup.

I actually talk quite a bit about my nadex trades in my journal: https://www.forexfactory.com/showthr...2#post10873722

I'd love to talk more about them here as well since options traders here at ff are a rare bird indeed. There are pretty much 3 trades I look for on a daily basis. London/Frankfurt open and reversion back to the central pivot for an OTM binary and if the setup is there I'll look to capture movement with a spread. Then during the Sydney open in the evening, I'll look for an ATM/ITM binary to finish ITM regardless of how much it moves.

Here's last night's EUR/USD OTM @ 1.2280 aiming for the central pivot area: http://content.screencast.com/users/...0Mar.%2019.gif $42 per contract buy in and cashed out early at $90 per netting $90-$42= $48 per.

Here's the GBP/USD spread. The yellow box is the spread. 1.3920 was my entry for $106 per and my exit was the x outside the box. Since price was outside the spread, max profit was achieved so I cashed it in for $232 netting $232-$106=$126 per. 1.3870 was my s/l area.
http://content.screencast.com/users/JR97_4x/folders/Default/media/189131a3-3990-441a-998d-bdac281c0ba0/703%20Mar.%2019.gif

Here's the last AUD/USD trade I did last week. Price pulled back to a high so I went with an ITM @ .7884 since it was the nearest strike for $70 per. ie Risking $70 to make $30 per. With those, I watch carefully and will take the $30-$35 loss rather than lose the full $70. I also try and let ITM go to expiration. This was a 2hr binary with an 1hr left to expiry. 30 min chart with entry: http://content.screencast.com/users/...0Mar.%2014.gif

5 min. chart just prior to expiration: http://content.screencast.com/users/...0Mar.%2014.gif On the 5 min. chart I plotted the available strikes and probably could have gotten 1 strike OTM for lower risk better profit, but with the Australian session, the movement just isn't always there, so I typically go for ATM/ITM where I just need price to finish 1 tick in my favor versus needing movement and price to stay in my favor.

Pretty simple trades for the most part and they're there pretty much daily. I've got a slack channel which is basically a trading room where there's a couple of us banter about nadex throughout the day/night as trades come up. pm me an email address if you're interested in that.

@JR: Which SPY & DIA trades? The DIA trades I described just above are running to Mar23 - DIA just has straight weeklies and no sub-weeklies like SPY. I trade a lot of SPY spreads and I don't list nearly all of them here. I just post enough here to keep things going and see if anyone is interested.

I'll pm you re: your Slack...

I don't think a Mar ffr hike is priced in at all yet and we could see big moves down in US indices if they do it. MaxP net on the DIA put vert is 85c on the 15c risk. I would be happy to start banking 50c net though.

If FOMC stays off the hike for Mar then what else? - BTFD and I have been trying to fill cheap SPY and DIA call spreads to cover that

trying to fill a DIA Mar29 put fly @ $237/240/243 for 16c. The iv's up for the Mar23 and the same spread is > $0.50

straight rate hike vol pop: UVXY Mar23 $18.5/19.0 for 6c

I'll bet the spoos sells off again b4 the FOMC so I am legging into UVXY Mar23 long $18 calls @ 36c

I have Mar 21/23 SPY put calendar @ $260 - in for 12c on 2/16 - just to catch the iv rise off the Mar FOMC....working, it's worth 20c today even so far otm...$260 looks far & I will close for a double today or tomorrow if I can...

...I need a hard dump in the last 90m

19:00 GMT is typically a reversal area. So you might get lucky. Price is rising hard into it right now.