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Let's Trade Options

  • #16,081
  • Oct 23, 2018 6:40am Oct 23, 2018 6:40am
Futures gaining downwards momentum again, line in the sand now
  • #16,082
  • Oct 23, 2018 6:49am Oct 23, 2018 6:49am
AMZN earnings out on Wednesday, it has already dropped more that $300 this month alone if you take pre market price into consideration so how much further may it fall if earnings are bad but on the other hand if the earnings beat expectation the bounce could be biggest one move ever, I may purchase a way OTM call option cheap if I can find it. THIS IS HIGH RISK, a gamble but with some thought process behind it. Only risk what you can afford to lose.
  • #16,083
  • Oct 23, 2018 7:03am Oct 23, 2018 7:03am
Quoting Cecil Gee
AMZN earnings out on Wednesday, it has already dropped more that $300 this month alone if you take pre market price into consideration so how much further may it fall if earnings are bad but on the other hand if the earnings beat expectation the bounce could be biggest one move ever, I may purchase a way OTM call option cheap if I can find it. THIS IS HIGH RISK, a gamble but with some thought process behind it. Only risk what you can afford to lose.
to make clear, it obviously can drop much further but for a single month a 300$ fall already is quite considerable
  • #16,084
  • Oct 23, 2018 9:00am Oct 23, 2018 9:00am
Quoting Cecil Gee
looking to buy puts in the SPY now prolly 273 Fridays expiation
Finally got filled and closed on SPY 273 puts from yesterday with a healthy profit.

270.80
  • #16,085
  • Oct 23, 2018 9:07am Oct 23, 2018 9:07am
BUYING options when iv's are peaking - which they usually do right b4 earnings - a very risky gamble. You will need to get that big move to or beyond your otm strike to make anything, as iv's will crash (options values also) on the day after the ER.

The blue line is iv...
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #16,086
  • Oct 23, 2018 9:10am Oct 23, 2018 9:10am
Quoting Cecil Gee
AMZN earnings out on Wednesday, it has already dropped more that $300 this month alone if you take pre market price into consideration so how much further may it fall if earnings are bad but on the other hand if the earnings beat expectation the bounce could be biggest one move ever, I may purchase a way OTM call option cheap if I can find it. THIS IS HIGH RISK, a gamble but with some thought process behind it. Only risk what you can afford to lose.
AMZN dropping hard wit everything else looking for a call option $200 away from its current price 1,718 exp date 2nd Nov, pure speculation as explained on above post
  • #16,087
  • Oct 23, 2018 9:18am Oct 23, 2018 9:18am
Quoting The Fool
BUYING options when iv's are peaking - which they usually do right b4 earnings - a very risky gamble. You will need to get that big move to or beyond your otm strike to make anything, as iv's will crash (options values also) on the day after the ER. The blue line is iv... {image}
yes IV is high and so is the anticipation for a stock like AMZN, with amzn you can go way out because it has potential to move so 100 or even 200$ either way which shows on the premium gamma. With AMZN there is no need for it to go into money for you make money just the mere potential. Trick is not to be greedy and not to wait for doubles, triples etc as we are paying enough for the option anyways
  • #16,088
  • Oct 23, 2018 9:29am Oct 23, 2018 9:29am
Quoting Cecil Gee
{quote} yes IV is high and so is the anticipation for a stock like AMZN, with amzn you can go way out because it has potential to move so 100 or even 200$ either way which shows on the premium gamma. With AMZN there is no need for it to go into money for you make money just the mere potential. Trick is not to be greedy and not to wait for doubles, triples etc as we are paying enough for the option anyways
price for AMZN as i'm writing is 1721.53 and the option for 1900 call is bid 7.60 as 8.75 and changing fast, this is OCT26 exp day after its earnings I'm looking to get in just under 8 if I can, NOT in yet
  • #16,089
  • Oct 23, 2018 9:42am Oct 23, 2018 9:42am
nobody trades on fundies here so I won't bore you. But I'd expect volatility to persist until after the US midterm elections 11/8. Earnings will come in good though and I'd bet US stocks will rally into December. December rate hike is baked in to some extent but if UST rates spike after that then we could see more stock losses in January.

The S&P is m/l flat on the year now...a Santa rally could easily paint a V-bottom back to 2,900+

https://www.marketwatch.com/story/st...of2&yptr=yahoo
"If The Fool persists in his Folly he will become wise." - William Blake
  • #16,090
  • Oct 23, 2018 9:56am Oct 23, 2018 9:56am
Quoting moneymaker2
Well, if premarket futures <50 down, the following should make money: HD Nov2 182.5 @ $1.40 or better If the DJ opens lower, I'll hold off from the open to get in at a better price.
Well, with the market gapping, I got into the following HD strike instead:

HD Nov2 177.5 CALL @ $2.35
  • #16,091
  • Oct 23, 2018 10:12am Oct 23, 2018 10:12am
Trading the Dec rally premise above, I will demonstrate the power of spreads:

The Dec21/Dec31 $292/293 diagonal can be had for 1 cent. 1 cent debit could return > $1. The diagonals have a big downside risk, though, so I mitigate that with a Dec21 $294/295 call vertical...for 6c. So the trade risks 7c and can return as much as $1.25. If I'm wrong about December hey I'm just out 7c...

This trade I can put on and forget about until December, no stop loss needed. If the spoos rallies into early Dec back to mid-high $280's, I might start looking to take off some decent profits. The wider the time spread, the earlier you can start to see profits...if the underlying moves in your favor
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #16,092
  • Oct 23, 2018 10:13am Oct 23, 2018 10:13am
Quoting Cecil Gee
{quote} ….With AMZN there is no need for it to go into money for you make money just the mere potential. Trick is not to be greedy and not to wait for doubles, triples etc as we are paying enough for the option anyways
Well said. That is true for many stocks out there. like HD for example. I paid $2.35 when it was trading at ~$176.00-ish. It traded for $2.78 just a few seconds ago with the price around $176.40-ish. Still over a dollar out of the money, but money can be made if you don't have such hard % return criteria that it keeps you out of trades.

I've traded with guys that wouldn't get in a trade unless they could double their money. And they sat on the sidelines a lot....
  • #16,093
  • Oct 23, 2018 10:24am Oct 23, 2018 10:24am
Quoting Cecil Gee
{quote} price for AMZN as i'm writing is 1721.53 and the option for 1900 call is bid 7.60 as 8.75 and changing fast, this is OCT26 exp day after its earnings I'm looking to get in just under 8 if I can, NOT in yet
IN - 1900 call price below AMZN, - risky

Call Option for Amazon.com Inc.
AMZNJ26182190000
Last:

7.78

Change:

-9.32


-54.50%

  • #16,094
  • Oct 23, 2018 10:26am Oct 23, 2018 10:26am
Quoting moneymaker2
. I've traded with guys that wouldn't get in a trade unless they could double their money. And they sat on the sidelines a lot....
sidelines are great. Sometimes the best trade is no trade. And the best traders can wait for the best trades. I usually don't enter trades unless there is a defined risk:reward of 3:1 or better, usually I am looking at double that.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #16,095
  • Oct 23, 2018 10:27am Oct 23, 2018 10:27am
Quoting Cecil Gee
{quote} IN - 1900 call price below AMZN, - risky Call Option for Amazon.com Inc. AMZNJ26182190000 Last:7.78 Change:-9.32 -54.50%
dont know what happened there price is on far right

$7.78 if I make a few dollars on a bounce I will close out
  • #16,096
  • Oct 23, 2018 10:30am Oct 23, 2018 10:30am
Quoting moneymaker2
{quote} Well said. That is true for many stocks out there. like HD for example. I paid $2.35 when it was trading at ~$176.00-ish. It traded for $2.78 just a few seconds ago with the price around $176.40-ish. Still over a dollar out of the money, but money can be made if you don't have such hard % return criteria that it keeps you out of trades. I've traded with guys that wouldn't get in a trade unless they could double their money. And they sat on the sidelines a lot....
thats the trick when buying options, good trade
  • #16,097
  • Oct 23, 2018 10:33am Oct 23, 2018 10:33am
[quote=Cecil Gee;11617067]{quote} dont know what happened there price is on far right $7.78 if I make a few dollars on a bounce I will close out[/quote

Already a whole dollar up+ if I get to $12 or a little under I'll be out
  • #16,098
  • Oct 23, 2018 10:49am Oct 23, 2018 10:49am
Brazil elections coming this weekend and I will start cashing out some spreads. This Nov2/Nov16 call calendar cost a dime and I will look for 50c out
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #16,099
  • Oct 23, 2018 11:04am Oct 23, 2018 11:04am
Quoting The Fool
{quote}sidelines are great. Sometimes the best trade is no trade. And the best traders can wait for the best trades. I usually don't enter trades unless there is a defined risk:reward of 3:1 or better, usually I am looking at double that.
To make sure I understand, if you risk, say $5000 on a trade, you would not do it unless you expected $15K-$30K profit on the trade?
  • #16,100
  • Oct 23, 2018 11:17am Oct 23, 2018 11:17am
hi, im a new graduate and begin working as an FX option trader and still learning how to trade. I have some questions regarding FX option delta hedge.

1. Do we use premium adjusted delta or spot delta (standart delta) for hedging and FX option? lets say premium adjusted delata is 0.76 and spot delta is %80 for a 1 m EURUSD option. do i need to trade 760k or 800 k?

2. I am still studying on deltas formulas. I understand that premium adjusted delta is calculated by subtracring the current value of the opşton from the spot delta. Is it right? I mean I bought an opiton for 100k USD and after 1 week its premium is 200 k USD. Is premium adjusted delta is calculated by using 100k or 200 k?

thanks in advance.
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