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Let's Trade Options

  • #17,861
  • Feb 11, 2021 6:39pm Feb 11, 2021 6:39pm
Here's a decent vid on back spreads, guy sounds like he might have been inside the CME, Chicago accent a little, anyway he explains a simple idea about delta's in these spreads.

Inserted Video
"If The Fool persists in his Folly he will become wise." - William Blake
  • #17,862
  • Feb 11, 2021 8:08pm Feb 11, 2021 8:08pm
Quoting The Fool
Here's a decent vid on back spreads, guy sounds like he might have been inside the CME, Chicago accent a little, anyway he explains a simple idea about delta's in these spreads. https://www.youtube.com/watch?v=N9rFFqvcD5o
This works well for yen dollar pair.
Practice makes a person perfect
  • #17,863
  • Feb 11, 2021 10:03pm Feb 11, 2021 10:03pm
Quoting simnz
{quote} This works well for yen dollar pair.
COOL - Hey if you are trading ratio spreads and want to share any set-ups, feel free.

I am not going to trade fx options but I can tell you, these are a very safe strategy for equity earnings set-ups. "Safe" need not mean "low profit" - these can pay very well if you catch a big swing past the long options strikes. Rising iv's really make them work the best...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #17,864
  • Feb 12, 2021 12:28am Feb 12, 2021 12:28am
possible to set up risk-free 2-way back spreads into earnings that have infinite profit possibility.....

IF there is a very good iv rush up into the ER date and IF you close the spreads b4 the iv's crash

INTC modeled below with 2:3 back spreads and a 20% iv rise (from today) into the ER (doubtful INTC could get all of that

Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #17,865
  • Feb 12, 2021 6:15am Feb 12, 2021 6:15am
Quoting The Fool
{quote} COOL - Hey if you are trading ratio spreads and want to share any set-ups, feel free. I am not going to trade fx options but I can tell you, these are a very safe strategy for equity earnings set-ups. "Safe" need not mean "low profit" - these can pay very well if you catch a big swing past the long options strikes. Rising iv's really make them work the best...
I fully agree with you. Unfortunately, because of my spine health issues, I am able to devote only a limited time for educating people. Unable to help those needing hand-holding. Just putting ideas on two of my threads mainly for my elderly learners.

https://www.forexfactory.com/thread/...8#post13403068
https://www.forexfactory.com/thread/...r-traders-with

Good luck to you.
Practice makes a person perfect
  • #17,866
  • Edited 7:13am Feb 12, 2021 6:59am | Edited 7:13am
Quoting moneymaker2
I'll be looking at the following in the morning (depending on futures): KWEB Feb19 105 PUT @ $3.65 or better. Might wait until right before the close for this one.... VSAT Mar19 50 PUT @ $0.95 or better. Might have to get this one at the open.... All depends on what premarket is doing.
In the following:

VSAT Mar19 50 PUT @ $0.85

Still waiting on KWEB.....
  • #17,867
  • Feb 12, 2021 7:03am Feb 12, 2021 7:03am
Quoting The Fool
{quote} ok Money maybe we can work together on some story stock trades, maybe not, we'll see. What I'd need to do nice call back spreads: stock is about 3-4 weeks past its last earnings release date; it's looking to put on a nice steady bull run 10% or better until the next ER; it has very liquid options; it's not over-priced - i.e., it's trading at say $100 or less. You can buy long calls and I can buy back spreads and we can compare notes. (Although I am gonna need to hold for 2-6 weeks typically, maybe not your style, so comparison might not...
Sounds like a plan, just give me some names to look at...
  • #17,868
  • Feb 12, 2021 7:15am Feb 12, 2021 7:15am
In the following:

KWEB Feb19 105 PUT @ $3.40
  • #17,869
  • Feb 15, 2021 8:50pm Feb 15, 2021 8:50pm
bread n butter
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #17,870
  • Feb 18, 2021 9:29am Feb 18, 2021 9:29am
Quoting moneymaker2
In the following: KWEB Feb19 105 PUT @ $3.40
Out of the following:

KWEB Feb19 105 PUT @ $5.85 up from $3.40
  • #17,871
  • Feb 19, 2021 6:09pm Feb 19, 2021 6:09pm
All of my trades posted now are based on the Daily chart, but I am going to do a few trades off Weekly and Monthly charts using my same indicators, just adjusted for those different time frames (and will annotate if a longer term chart is used when I post). I would expect them to follow the same pattern as though they were a Daily chart, but there are more chances for interference for the longer time frames (earnings, sector news, world events, etc.) so it will be interesting to see the outcome. I expect to be able to put any chart traded up without the time frame noted on it and them all to do what is expected. The good thing about the longer term charts is the size of the moves on the higher time frames should make some of the options pretty cheap.

We will see.....
  • #17,872
  • Feb 22, 2021 7:32am Feb 22, 2021 7:32am
In the following:

KAR Mar19 12.5 CALL @ $0.45
  • #17,873
  • Feb 22, 2021 1:38pm Feb 22, 2021 1:38pm
In the following:

AAL Mar12 19.5 PUT @ $0.84 average

Didn't expect it, but was hit before lunch, so a nice little surprise. Sometimes those Hail Mary bids get picked up, so always worth a shot...
  • #17,874
  • Feb 23, 2021 12:33pm Feb 23, 2021 12:33pm
Quoting moneymaker2
In the following: AAL Mar12 19.5 PUT @ $0.84 average Didn't expect it, but was hit before lunch, so a nice little surprise. Sometimes those Hail Mary bids get picked up, so always worth a shot...
Out of the following:

AAL Mar12 19.5 PUT @ $1.20 up from $0.84. Didn't expect a drop like that the first 30 minutes, but I'll take it!

In the following:

AAL Mar19 21 PUT @ $1.65

NOTE: This trade is off the weekly chart....
  • #17,875
  • Feb 23, 2021 12:36pm Feb 23, 2021 12:36pm
Quoting moneymaker2
In the following: KAR Mar19 12.5 CALL @ $0.45
This should be KAR Mar19 15 CALL @ $0.45 rather than 12.5 CALL.....
  • #17,876
  • Feb 23, 2021 12:39pm Feb 23, 2021 12:39pm
Quoting moneymaker2
{quote} In the following: VSAT Mar19 50 PUT @ $0.85 Still waiting on KWEB.....
Out of the following:

VSAT Mar19 50 PUT @ $2.10 up from $0.85
  • #17,877
  • Feb 23, 2021 1:07pm Feb 23, 2021 1:07pm
OK MM2

VSAT Mar19 50 PUT @ $0.85
KWEB Feb19 105 PUT @ $3.40

What was your thinking on both those plays?

Volatility expansion or some other measure?

I trade a simple but profitable US options strategy of volume driven setup, long calls, high delta, 1% risk on premium and 34 days + to expiry

Ta

SE
  • #17,878
  • Feb 23, 2021 3:08pm Feb 23, 2021 3:08pm
Quoting SyntaxError
OK MM2 VSAT Mar19 50 PUT @ $0.85 KWEB Feb19 105 PUT @ $3.40 What was your thinking on both those plays? Volatility expansion or some other measure? I trade a simple but profitable US options strategy of volume driven setup, long calls, high delta, 1% risk on premium and 34 days + to expiry Ta SE
Hi SE,

I trade extreme overbought/oversold situations exclusively, and base my candidates 100% off technical analysis.

I don't really pay attention to volatility or time decay or any of the other Greeks as they are already priced into the option and I only hold them a short period. I try to be in and out of a trade in something less than 4 days if trading off the daily chart.

To narrow down the candidates, I check when earnings are out and any major news and then check option prices for near-the-money strike prices. If they are affordable and the spread isn't too wide and volume is good, that's what I go with. Since I trade a fair amount of contracts, I also try to keep the option price less than about $4, though sometimes I'll pay more for a good move.

MM2
  • #17,879
  • Feb 23, 2021 3:59pm Feb 23, 2021 3:59pm
Thanks

One of my issues is sorting through the myriad of candidates

Scanning is OK via DBMS but the sheer number of actionable with volume tickers each day is enormous ... 1000 +

Then drilling down into the strike and series

WIP
  • #17,880
  • Feb 23, 2021 6:17pm Feb 23, 2021 6:17pm
Be careful, it is easy to get information overload which will lead to analysis paralysis, where majority of the time is trying to wrap you head around what to do next. I try to limit my stress, so I never use intraday charts for options. I also never scan daily.

Once per quarter, I get on stockfetcher and get a list of all the stocks over $50, optionable, with a 20-day average volume >500,000 shares. Then I chart them and cull out the ones that aren't moving much (movement in stock price means money in options) and the ones where there is very little volume in the options, and by the time I boil it down, I have about 350-400 stocks that I watch. I may add some periodically if they are movers and shakers, but that's it. If one of those out of that list isn't ready for a trade, I just wait until there is one. Makes life a lot simpler...for me, anyway.

Then it is just looking at the chart and doing your due diligence on the ones that are ready to move. And some that are ready, you have to pass on if option price and strike aren't aligned. Sometimes I go a few days without a trade, but there are usually a few ready to move every day, just have to see if they are good deals or not.

You mentioned you limit your trades to 1% risk on premium....what did you mean by that? 1% of your account balance? That would mean on a $50K account, you could only have bought one contract of the KWEB...is that right?

MM2
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