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Let's Trade Options

  • #15,481
  • Apr 18, 2018 5:20pm Apr 18, 2018 5:20pm
What platform/broker are you using? How do you determine whether an Iron Butterfly is the right strat compared to a condor or albatross or any of the other winged creatures? I did a bunch of nadex spread condors on the major indices and oil last night/this morning. Oil was a bust, but the indices paid off handsomely.
  • #15,482
  • Apr 18, 2018 5:36pm Apr 18, 2018 5:36pm
hi guys
does any one have an experience with ransquak website for analysis??
  • #15,483
  • Apr 19, 2018 12:42am Apr 19, 2018 12:42am
Quoting shenouda
hi guys does any one have an experience with ransquak website for analysis??
NOT ME
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,484
  • Apr 19, 2018 12:59am Apr 19, 2018 12:59am
Quoting JR97
What platform/broker are you using? How do you determine whether an Iron Butterfly is the right strat compared to a condor or albatross or any of the other winged creatures? I did a bunch of nadex spread condors on the major indices and oil last night/this morning. Oil was a bust, but the indices paid off handsomely.
I have multiple accounts with 4 different brokers but I look at trades only on thinkorswim. You ask a good question and to really do it justice i would need to spend a lot more time on an answer than I have right now.

What i can do is try to narrate what I am thinking as I enter another fly or calendar or diagonal or vertical. I trade those constantly so I will find a good one to talk thru start to finish.

I'll tell you what, though - and this is not meant to be flippant - the best way to trade is what makes you the most money with the least risk. And what that way is is not one way - it depends on the trader. Trading spreads is something you have to grow into because they all have some quirks and you have to learn how to trade them in real time. One guy trading calendar X will have a different outcome than another guy in the exact same trade. And if you are making tons of cash trading calendars then that might be THE right way to trade.

Anyway, more later...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,485
  • Apr 19, 2018 12:57pm Apr 19, 2018 12:57pm
Quoting The Fool
30c risk looks like it can net $1.40 or so with a good finish Friday...I'm hangin in and NFLX is gapping north. Realistically, if I start to see net 95c on Thurs I will have to grab cash
...gambled on letting this NFLX call fly run and losing in the sell-off Wed-Thurs. Maybe catch a break tomorrow, we'll see. Flys really pay off the best in their last day or so b4 expiry, so sometimes it's worthwhile to let them run to the end. Otoh, I was looking at a net 3x and thought about grabbing cash many times. Greed the downfall of many well-laid plans....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,486
  • Apr 19, 2018 1:55pm Apr 19, 2018 1:55pm
I spent 20c on a SPY call calendar @ $271, Apr20/23 - I want to see some btfd action in the last hour
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,487
  • Apr 19, 2018 1:57pm Apr 19, 2018 1:57pm
Quoting The Fool
I spent 20c on a SPY call calendar @ $271, Apr20/23 - I want to see some btfd action in the last hour
In the case of this calendar JR, I am not interested in the payoff Friday but I want to set up for the long calls next Monday - so the calendar is just a way to reduce the cost of the Monday long calls

many options trades I enter are just stepping stone trades that I use to work into scenarios 2-3 steps away....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,488
  • Apr 19, 2018 9:53pm Apr 19, 2018 9:53pm
I don't trade cash much but the pound might have a chance of giving back some of what it has clawed back since the brexit vote... the Sep $128/127 bull vert puts in FXB might be had for a dime...the Jan $120/125/130 put fly would cost 40c maybe but has wide ranging profit zone that peaks out >10x with a perfect expiry. Options are too thin, though
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,489
  • Apr 20, 2018 12:04am Apr 20, 2018 12:04am
Quoting The Fool
I don't trade cash much but the pound might have a chance of giving back some of what it has clawed back since the brexit vote... the Sep $128/127 bull vert puts in FXB might be had for a dime...the Jan $120/125/130 put fly would cost 40c maybe but has wide ranging profit zone that peaks out >10x with a perfect expiry. Options are too thin, though
I've done FXE and FXB options. They were very thin. Tried to do FXA and no liquidity at all.
  • #15,490
  • Apr 20, 2018 12:28am Apr 20, 2018 12:28am
Quoting JR97
How do you determine whether an Iron Butterfly is the right strat compared to a condor or albatross or any of the other winged creatures?
http://www.optionsstrategynetwork.co...-and-crude-oil

"Whenever you make trading decisions, understanding the relationships of the options and why one option or spread is better than another, can help you get better value. As a market-maker who understood the relationship of options through conversions, reversals, butterflies, boxes and implied volatility plays, I was able to get an extra advantage when making trading decisions. These relationships are not that complicated, but by understanding them a trader can certainly save themselves plenty of money setting up their positions."

i was never a market maker but I try to think like one. I don't have the order flow to really do it but maybe someday. Anyway, if you have enough going on, you can slice and dice your moving parts to capitalize on conditions as they morph. So, it's necessary to learn what different spreads are and when they make sense, but beyond that you can learn that various spreads can be converted into other spreads, and when you learn that, it's natural to try to anticipate those future moves. Options trading becomes a very fluid way to trade when you have the skills....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,491
  • Apr 20, 2018 12:45am Apr 20, 2018 12:45am
a general answer to your question, "which is the best spread?" is: whichever has the best r:r...

...can I really fill this UVXY call fly for 2c? Most prolly not, but it may also be worth it to try to fill it cheap as dirt....we could see a June equity swoon off the next FOMC ffr hike.

The fly converts to a bull call vertical - if you are lucky and get in the fly cheap...then UVXY continues to crash...wait for the options to cheapen, sell the far wing and buy same number near the front wing and you could end up with a cheap vertical

...there are many variations on this type of conversion....
Attached Image (click to enlarge)
Click to Enlarge Name: 2018-04-19_2238uvxy.png Size: 80 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,492
  • Apr 20, 2018 12:59am Apr 20, 2018 12:59am
Quoting JR97
I've done FXE and FXB options. They were very thin. Tried to do FXA and no liquidity at all.
I almost always resist the urge to trade the thin shit....I do ok just trading the most liquid names - SPY, QQQ, DIA, etc....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,493
  • Apr 20, 2018 1:51am Apr 20, 2018 1:51am
Hi the fool
I've been reading you for a few weeks.
I have a question: in your opinion what is the minimum deposit to be able to trade options in your way?
TY
  • #15,494
  • Apr 20, 2018 7:51am Apr 20, 2018 7:51am
Quoting aldusit
Hi the fool I've been reading you for a few weeks. I have a question: in your opinion what is the minimum deposit to be able to trade options in your way? TY
well you need a margin account to trade anything that is net short, like diagonals or selling condors. The typical min deposit for a margin account is $2k

But you can trade options with less if you stick to things that don't require margin, like calendars, flys, long calls/puts, bull verticals, etc

Always nice to trade well-capitalized though. You can put on trades in good numbers and scale out. If you have lots of equity you can trade options in combo with shares - I used to do that.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,495
  • Apr 20, 2018 9:50am Apr 20, 2018 9:50am
Quoting The Fool
aThe fly converts to a bull call vertical - if you are lucky and get in the fly cheap...then UVXY continues to crash...wait for the options to cheapen, sell the far wing and buy same number near the front wing and you could end up with a cheap vertical ...there are many variations on this type of conversion.... {image}
ooooh. I"m gonna see if I can do that with nadex spreads. I typically do directional verticals and try to get as close to the floor/ceiling. Otherwise I have to go with a larger spread and hedge it off. Keeps the risk in check just the same but requires more capital and expands the "dead" zone where premium is against me. But I like the idea of converting something like a fly or maybe even a condor into a vertical. Since nadex spreads are basically pre-built vertical, I could go for the high premium payoff condors, and then flip a wing when one side is at max profit and let the b/e or small loss wing mirror the market.

Last night/this morning I put on a vertical straddle on the USD/CAN news and it paid off great, but I'm thinking I could have been collecting premium with a condor going into the news, then when price hit the b/e on a wing, flipped it and banked twice. hmmmm.....
  • #15,496
  • Apr 20, 2018 9:58am Apr 20, 2018 9:58am
ust 10yr bond at a 5+ year high today...is the noise of the day in the fin press....but increasing yields is what it takes to kill the btfd beast, which has been unstoppable the last many years....the credit vs. equity battle shoots off volatility sparks....that's what we like....
Attached Image (click to enlarge)
Click to Enlarge Name: 2018-04-20_0752tnx.png Size: 79 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,497
  • Apr 20, 2018 10:02am Apr 20, 2018 10:02am
Quoting The Fool
bot the Apr 20 NFLX $335/340/345 call fly for 30c
...a week later, NFLX cut me a break, ran to $336+ today, call fly hit my $1.25 tp, honestly I though it was gonna be a scratch...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,498
  • Apr 20, 2018 10:05am Apr 20, 2018 10:05am
Quoting The Fool
ust 10yr bond at a 5+ year high today...
...banks sHould be lovin it but XLF DEAD MONEY
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,499
  • Apr 20, 2018 10:23am Apr 20, 2018 10:23am
Quoting The Fool
..banks sHould be lovin it but XLF DEAD MONEY
...for kicks bot some Apr20 $28 calls for 2c
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,500
  • Apr 20, 2018 10:57am Apr 20, 2018 10:57am
looking at FB flys similar to what I played for NFLX
"If The Fool persists in his Folly he will become wise." - William Blake
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