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Let's Trade Options

  • #15,561
  • May 13, 2018 4:12pm May 13, 2018 4:12pm
Quoting WGChina
To learn from you
You've come to the right place, bro. I know everything.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,562
  • May 14, 2018 4:33pm May 14, 2018 4:33pm
Quoting The Fool
{quote} the $272 callie worth about 43c now, with SPY @ $272.20 - I sold for 36c when it was around $272.65...now watch it pin $272 to close? No regrets, though - it's a real challenge to hold out for more when you have a sure 10+ bag in hand...
Hi ,any new idea for a dirrecional trade in any stock option?thanks
  • #15,563
  • May 14, 2018 4:45pm May 14, 2018 4:45pm
Quoting The Fool
...watching ^TNX tho, bumping up to 3.0% again, credit volatility & the impending (hawkish?) Fed could steepen the path for equities....
...pinned 3.0% on the day, WATCHING for new highs toward 3.1+ in the coming week....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,564
  • May 14, 2018 5:41pm May 14, 2018 5:41pm
Quoting Pedroall
Hi ,any new idea for a dirrecional trade in any stock option?thanks
...as I have noted here, I am watching UST rates. There are no more long bond auctions until 6/12, but a fair amount of shorter term notes until then. What I would like to see is the 10-yr rate slide up and US equities grind up also. If that happens over the next few weeks, we will see a good spot to short the S&P. I'd like to be in from a late May top around 2,800 and catch a >10% June swoon back down towards 2,500.

Meanwhile, I am still in bullish SPY call spreads for the remaining weeks of May.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,565
  • May 15, 2018 1:27am May 15, 2018 1:27am
Quoting The Fool
{quote} ...as I have noted here, I am watching UST rates.
many cheap put spreads available in TLT
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,566
  • May 15, 2018 4:47am May 15, 2018 4:47am
Quoting The Fool
{quote} ...as I have noted here, I am watching UST rates. There are no more long bond auctions until 6/12, but a fair amount of shorter term notes until then. What I would like to see is the 10-yr rate slide up and US equities grind up also. If that happens over the next few weeks, we will see a good spot to short the S&P. I'd like to be in from a late May top around 2,800 and catch a >10% June swoon back down towards 2,500. Meanwhile, I am still in bullish SPY call spreads for the remaining weeks of May.
thanks .
  • #15,567
  • May 15, 2018 5:46am May 15, 2018 5:46am
Quoting Pedroall
thanks .
De nada, amigo. You should give options spreads a try, though, Pedro. Sure, it's sexy to just buy puts or calls when you are trading directionally. When that works out, it's great. When you're wrong, though, the losses can be large. You can help to minimize your losses by trading spreads. Most traders don't last long enough to gain the knowledge and skills to succeed because their losses weigh them down and they give up. Keeping losses small allows you to stay in the game and come back to trade another day, even when you have been wrong.

I still trade directionally, but I do so using spreads. I'll give you some examples.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,568
  • May 15, 2018 6:01am May 15, 2018 6:01am
Let's say I think the S&P is going to start sliding and fall right into the June FOMC. My chart reading crystal ball says SPY will fall to $255 by the Jun 18 expiry. I can buy Jun18 puts now to catch that move. I could chose to buy Jun18 $265 puts and maybe make $1000/contract (less comms) if SPY really falls that far by expiry. The $265 puts are trading around $1.50 now. The P/L chart is advanced to Jun15, a day before expiry. Break even is at $264.75 and profit at $255 is $845 on the $150 risked. My account is small, so I just want to risk the $150 with one contract.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,569
  • May 15, 2018 6:12am May 15, 2018 6:12am
Quoting The Fool
{quote}De nada, amigo. You should give options spreads a try, though, Pedro. Sure, it's sexy to just buy puts or calls when you are trading directionally. When that works out, it's great. When you're wrong, though, the losses can be large. You can help to minimize your losses by trading spreads. Most traders don't last long enough to gain the knowledge and skills to succeed because their losses weigh them down and they give up. Keeping losses small allows you to stay in the game and come back to trade another day, even when you have been wrong....
spread control your risk and also limit your profits.
IWM
Buy 5 k of puts that expire at least in 12 month.
I would sell naked call with my mental stoploss ABOVE the high of the most recent engulfing
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  • #15,570
  • Edited 6:42am May 15, 2018 6:18am | Edited 6:42am
Compare to a calendar spread with the same target: SPY $255 on 6/18. Hey, that's what my crystal ball said, so, no worries. In the calendar spread, I sell a front put for a credit and buy a back put for a debit. This means I can buy each contract for 4 centavos. So, as shown, I can risk about the same as your one contract at $150 and have 25 contracts in play (for $145). B/E on 6/15 is at about $263, max profit at $255 is $2,015 on $145 risked.
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,571
  • May 15, 2018 6:26am May 15, 2018 6:26am
Quoting The Fool
Compare to a calendar spread with the same target: SPY $255 on 6/18. Hey, that's what my crystal ball said, so, no worries. In the calendar spread, I sell a front put for a credit and buy a back put for a debit. This means I can but each contract for 4 centavos. So, as shown, I can risk about the same as your one contract at $150 and have 25 contracts in play (for $145). B/E is on 6/15 is at about $263, max profit at $255 is $2,015 on $145 risked. {image}
sound good.i will need to be retrained to learn all that spread names and combinaciones.
may ask what % is your capital up or down since your last time of sending fund to that account?
  • #15,572
  • May 15, 2018 6:33am May 15, 2018 6:33am
Quoting Pedroall
{quote} spread control your risk and also limit your profits.
Verdad. There's always a trade-off. I like less risk.

Another thing about the calendar: if you didn't quite make $255 on the front put expiry day, you could let those expire worthless and see if your back puts go into profit on their expiry. P/L shows the long puts on Jun18, in which case the 25 puts are worth >$2,900 @ $255. If you were lucky and the spoos crashed over the weekend to $250, 25 x Jun18 $255 puts would be worth > $12,400. Compare to $1,345 for your single Jun18 $265 put.

Another advantage of spreading is it allows you to trade greater numbers of contracts, which opens many doors to other possibilities....
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,573
  • May 15, 2018 6:38am May 15, 2018 6:38am
Quoting Pedroall
{quote} sound good.i will need to be retrained to learn all that spread names and combinaciones. may ask what % is your capital up or down since your last time of sending fund to that account?
across all accounts I am up from 25% to 45% so far in 2018. I mostly trade in retirement accounts, so I am making contributions usually at the same time each year, at the maximum amount allowable, if possible.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,574
  • May 15, 2018 6:43am May 15, 2018 6:43am
Quoting The Fool
{quote}Verdad. There's always a trade-off. I like less risk. Another thing about the calendar: if you didn't quite make $255 on the front put expiry day, you could let those expire worthless and see if your back puts go into profit on their expiry. P/L shows the long puts on Jun18, in which case the 25 puts are worth >$2,900 @ $255. If you were lucky and the spoos crashed over the weekend to $250, 25 x Jun18 $255 puts would be worth > $12,400. Compare to $1,345 for your single Jun18 $265 put. Another advantage of spreading is it allows you to trade...
OK BUT WHAT TRIGGER YOUR TRADES?
Any price chart example ?
  • #15,575
  • May 15, 2018 6:49am May 15, 2018 6:49am
Quoting Pedroall
OK BUT WHAT TRIGGER YOUR TRADES? Any price chart example ?
I am trying to forecast where price will be at a certain point in time. But I am also trying to forecast how the implied volatilities of the options traded will change over the same time period. I can show how I do that but there's not much to see on a chart. Later, though. It's 0445 here, birds are starting to sing, I gotta get up and make breakfast and head to work. Have a nice day.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,576
  • May 15, 2018 8:00am May 15, 2018 8:00am
pretty good move up in ^TNX, 3.05%, these rate moves will snuff out the bull fire in US equities
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,577
  • May 16, 2018 6:23pm May 16, 2018 6:23pm
all I got this week is May18/21 SPY $275 callies, in for a nickel I think, might have to cash some out tomorrow if SPY can grind up another $1-2...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,578
  • May 17, 2018 9:12am May 17, 2018 9:12am
Tough slog uphill for equities with rates and usd rising but that plays into hand of range capturing strats - calendars n diagnals n flys
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,579
  • May 18, 2018 5:37pm May 18, 2018 5:37pm
Quoting The Fool
all I got this week is May18/21 SPY $275 callies, in for a nickel I think, might have to cash some out tomorrow if SPY can grind up another $1-2...
....gonna take nickel loss looks like, unless SPY rallies hard Monday. Small losses, no problem....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,580
  • May 18, 2018 5:56pm May 18, 2018 5:56pm
This week was my best Nadex week ever. I withdrew a good chunk of it and going to up my game in Robinhood for longer term strats. Which for me longer term is anything beyond a day. haha.

Going to start building out some credit spreads, IC's and IB's, cal spreads, and what not on the index etf's.
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