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Let's Trade Options

  • #17,981
  • Mar 16, 2021 3:11pm Mar 16, 2021 3:11pm
Quoting The Fool
LOL, according to Yahoo finance the GME 1-yr target is $14.64....
and according to Wall Street Bets the 3 day target is $100k... Just hoping for somewhere in the middle there.
  • #17,982
  • Mar 17, 2021 10:49am Mar 17, 2021 10:49am
Quoting moneymaker2
..... I've added to the following: WM Mar19 120 PUT @ $0.70 bringing the average down to $0.795
Out of the following:

WM Mar19 120 PUT @ $1.06 average, up from $0.795

I think it is headed down towards the mid-BB (~ 118.30) but the TV is screaming about tornadoes and hail the size of tennis balls and dogs and cats living together and all, so I figured I better get out now while I still have power and internet....
  • #17,983
  • Mar 17, 2021 7:40pm Mar 17, 2021 7:40pm
No bad weather materialized, so that was good. But looking at all the stocks I look at, none will be in play tomorrow, using my criteria, anyway.

YUM Puts might be worthwhile right before the close tomorrow or maybe on Friday, but it still has some time before the charts start yelling at me....
  • #17,984
  • Edited 8:22pm Mar 17, 2021 8:08pm | Edited 8:22pm
MM a small amount selling pressure in YUM but no major signs of weakness

It is not coming down any time soon

HTH
  • #17,985
  • Edited 12:50pm Mar 18, 2021 9:35am | Edited 12:50pm
Quoting SyntaxError
MM a small amount selling pressure in YUM but no major signs of weakness It is not coming down any time soon HTH
SE

I guess it depends on your definition of "coming down". You can make good money with the stock price only changing a few dollars with options, I do it all the time.

This morning, the Mar26 110 PUT traded for $1.55 (COULD have traded for $1.20 (active Ask Price) but didn't). So we will use the baseline of $1.55. My chart has the right shapes and such, but the indicators aren't quite right yet. But just looking at the chart now, it appears the first stop for the stock over the next week will be the 5EMA (~$108.60), with the final being closer to the 10EMA (~$107.25). So, from yesterday's close, that is just under a $4 drop, which isn't a lot for a $100 stock. BUT, the drop would be good for about $1 change in the option price (more if it dropped quickly), which would be your profit. So, if you have 10 contracts, that would be $1000 profit on a $1550 trade, or about a 64% return in a week. Not a bad return.

So a lot of times major selling pressure or huge weakness isn't necessary for the charts to show what is going to happen short term. Huge moves are certainly welcome, but money can be made with smaller moves all the time.....
  • #17,986
  • Mar 18, 2021 1:15pm Mar 18, 2021 1:15pm
Quoting The Fool
when I saw ^TNX spiking today, I sold some SPX call verts about a month out - SPX 4080/4110 Apr16 for $5.85 credit
...gravy day for a trade like this, the spread is worth about $4 now. I will hang on to this for a while, bail if it dips below $1.50 soon.

I try to put on these SPX credit spreads regularly, at least once a month at this duration (i.e., a month or more) but I also do some for a week or less. I trade SPY spreads in and around them to hedge, and those make some money, too. The SPX/SPY trade is all I really need. I just rarely put any real money on anything else anymore. This means I am just watching overall market conditions, the bond market, fundies, sentiment, etc. I don't need to get bogged down too much in details about individual names.

My goal is to get accounts up to a size where I can comfortably net $10 a month of SPX/SPY trades. At the size I trade, that would be the green light for bailing on the day job. Although not sure that is what I'd do - I like my work. I'm only trading in tax-advantaged IRA accounts & I don't need to touch the money for at least another 10 years.

I usually trade these SPX credit spreads one end at a time. If we could get a nice dip, I might look at selling $3-wide bull puts down in the 3,500's. I always try to max out the margin - if I'm $3 wide on Apr16 bear calls, I need to be $3 wide on Apr16 bull puts, even if it's only for an extra buck....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #17,987
  • Mar 18, 2021 1:29pm Mar 18, 2021 1:29pm
Good job, TF. Bailing on the day job has it's advantages, but you really have to go into retirement with a plan of sorts, or you will wind up completing all your projects pretty quickly and just piddle around and get bored or take on things that wind up taking up all your time. Retirement is actually a lot harder to manage than having a day job!!!

But WAYYYYYYY more enjoyable!!....
  • #17,988
  • Mar 18, 2021 1:34pm Mar 18, 2021 1:34pm
Quoting moneymaker2
{quote} SE I guess it depends on your definition of "coming down". You can make good money with the stock price only changing a few dollars with options, I do it all the time. This morning, the Mar26 110 PUT traded for $1.55 (COULD have traded for $1.20 (active Ask Price) but didn't). So we will use the baseline of $1.55. My chart has the right shapes and such, but the indicators aren't quite right yet. But just looking at the chart now, it appears the first stop for the stock over the next week will be the 5EMA (~$108.60), with the final being...
Well, YUM pushed the 5EMA down to ~108.20 during it's drop today, and the stock reached a low of $108.27, so I consider that target being hit. Although it traded at $2.45, the current Bid at close stands at $2.30.

The chart still isn't optimal, but just looking at it, i would expect price to reach the 10EMA (~107.00 now) in the next day or two.

Sometimes the stock makes it's move up or down before my indicators signal it is time to get in.....this might be one of those times...
  • #17,989
  • Mar 18, 2021 1:36pm Mar 18, 2021 1:36pm
Quoting moneymaker2
Good job, TF. Bailing on the day job has it's advantages, but you really have to go into retirement with a plan of sorts, !....
...I have a very nice guvmint job and I do consulting on the side. I actually like working and I could see working until I'm well into my 70's - another 10-15 years.

I travelled and bummed around a lot when I was in my 20's so I kind of got that out of my system. The main thing I'd like to do now is set up a nice winter home...winters in the PacNW are pretty glum. Not sure where yet. No not FL.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #17,990
  • Mar 18, 2021 1:50pm Mar 18, 2021 1:50pm
Quoting The Fool
{quote}...I have a very nice guvmint job and I do consulting on the side. I actually like working and I could see working until I'm well into my 70's - another 10-15 years. I travelled and bummed around a lot when I was in my 20's so I kind of got that out of my system. The main thing I'd like to do now is set up a nice winter home...winters in the PacNW are pretty glum. Not sure where yet. No not FL.....
Might want to look at Arkansas or Tennessee....still have some mountainous terrain and nice landscapes and winters aren't too bad is most areas, so you can still do outdoor stuff if you are so inclined. Just remember, leaving the PacNW and heading southeast starts getting you into tornado stomping grounds....
  • #17,991
  • Mar 18, 2021 4:34pm Mar 18, 2021 4:34pm
Quoting moneymaker2
{quote} Might want to look at Arkansas or Tennessee........
I grew up down there. Winter home = think warm and sunny. Hard to beat soCal in winter but re is too $$$$. Winter spots in the US are probably out. I still need to check out Australia, possibly Canaries....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #17,992
  • Mar 19, 2021 8:38am Mar 19, 2021 8:38am
Quoting moneymaker2
{quote} Well, YUM pushed the 5EMA down to ~108.20 during it's drop today, and the stock reached a low of $108.27, so I consider that target being hit. Although it traded at $2.45, the current Bid at close stands at $2.30. The chart still isn't optimal, but just looking at it, i would expect price to reach the 10EMA (~107.00 now) in the next day or two. Sometimes the stock makes it's move up or down before my indicators signal it is time to get in.....this might be one of those times...
Well, watching YUM at the open, the stock dropped to $107.56, and just traded at $2.70 for the Mar26 110 PUT as it began approaching it again. That would be a $1.15 profit (74% profit) in 2 days.....not bad at all.

Two days ago, the high of the stock was $111.58 and today the low (so far) is $111.56. So a $4 drop in the stock price yielded over $1 profit for the option. So it doesn't take a large drop in the stock to make money.

I believe the stock price will slowly makes it's way down to the 10EMA (~107.15 now) as the day progresses....

This is one of the rare times the stock makes its move before the indicators start screaming to get in, but the chart still shows what it is going to do....
  • #17,993
  • Mar 19, 2021 8:59am Mar 19, 2021 8:59am
Quoting SyntaxError
MM a small amount selling pressure in YUM but no major signs of weakness It is not coming down any time soon HTH
SE

Well, it came down enough for a short term, profitable trade. And that is the type trade that will make you a rich man!

I've found that when the charts indicate something is going to happen short term in extreme overbought/oversold conditions (I know you don't agree with those terms, but it helps other traders understand what I'm talking about), 99.9% of the time it does.....
  • #17,994
  • Mar 19, 2021 3:40pm Mar 19, 2021 3:40pm
lot of people scalp 0dte SPY and SPX options. Youtube channels have lots of proponents. Not really my thing but I have been watching. Most of this is scalping options in the last 15-30 active trading minutes of an expiry day. Screen shot is of SPY Mar19 $390 puts - went from 11c to >65c in the last minutes of the day, as SPY sold off....
Attached Image (click to enlarge)
Click to Enlarge Name: 390put.png Size: 90 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #17,995
  • Mar 19, 2021 3:51pm Mar 19, 2021 3:51pm
Quoting The Fool
Most of this is scalping options in the last 15-30 active trading minutes of an expiry day. ...
...ALSO lots of selling SPX naked or verticals in the last hour. The SPX 3940 call dropped from $1.80 to a nickel in the last hour...
Attached Image (click to enlarge)
Click to Enlarge Name: SPX3940.png Size: 156 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #17,996
  • Mar 19, 2021 7:13pm Mar 19, 2021 7:13pm
SPY, SPX, DIA, NDX, OEX and several other less fun ones will all trade 15 minutes after the market closes. But some of it is not for the faint of heart by a long shot! I used to trade OEX all the time and it was nothing to go from $3 at the close to up over $100 and back down to $1 then back up to around $3 again all in that first 1-3 minutes after the bell, then nothing the other 10 or so minutes. If you wanted a GTC order filled during that time, you better be able to choose your exchange, because if you were stuck on PHLX or BOX or someplace like that, all you could do is watch the action from the sidelines. To get around that just close At Market, as Market Orders typically go to the larger exchanges. You better be quick and have no hesitation when you see movement on Level II or you can wind up actually losing money and then have the underlying return back to market close value as though nothing happened!

Definitely some excitement if you get bored sometimes....especially on Triple Witching Day!!
  • #17,997
  • Mar 20, 2021 4:45am Mar 20, 2021 4:45am
Quoting skyf
{quote} What i mean is when i buy EU call at Avaoptions at a cost of $500, immediately after entry the -P/L(which changes as price changes) is usually less than $500 and i wonder if when the price -P/L will be -500 can pre-known as well as price for 0$.
If you are using their desktop app, go to risk manager and youl be able to see you detaled exposure to changes in undderlying price. Of course these changes represent values as per the current greek values. Which change as theta changes.
  • #17,998
  • Mar 21, 2021 12:19pm Mar 21, 2021 12:19pm
Monday SPY...
Attached Image (click to enlarge)
Click to Enlarge Name: MONDAY-COMBO.png Size: 122 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #17,999
  • Mar 22, 2021 12:15pm Mar 22, 2021 12:15pm
Bought 1 X DXY 12/3/21 95 Call for $0.60
Bought 1 x DXY 3/4/22 100 Call for $0.32

Maybe I'm missing something here but the IV on these seems insanely low at around ~6%. We were at $100 less than a year ago - I believe a stronger USD is coming and with the whole world short USD it could be a face melting rally.

Attached Image (click to enlarge)
Click to Enlarge Name: df0820928c339a304503e1af7d43e274.png Size: 141 KB


It's been a while since I've taken a statistics course, is there an easy way to calculate implied probability from option IV?
  • #18,000
  • Mar 22, 2021 11:31pm Mar 22, 2021 11:31pm
Quoting BTCmailman
It's been a while since I've taken a statistics course, is there an easy way to calculate implied probability from option IV?
...not quite following you? options iv is implied volatility.
"If The Fool persists in his Folly he will become wise." - William Blake
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