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Let's Trade Options

  • #18,001
  • Mar 23, 2021 8:31am Mar 23, 2021 8:31am
Quoting The Fool
{quote}...not quite following you? options iv is implied volatility.
Implied probability as in the option has X% Implied Volatility what is the market pricing the probability of the underlying reaching the strike price by expiration date.

Think I found what I'm looking for here. Delta seems to be a good approximation of the probability which I probably should have known but you live and you learn!
  • #18,002
  • Mar 23, 2021 12:29pm Mar 23, 2021 12:29pm
Quoting BTCmailman
{quote} Implied probability as in the option has X% Implied Volatility what is the market pricing the probability of the underlying reaching the strike price by expiration date. Think I found what I'm looking for here. Delta seems to be a good approximation of the probability which I probably should have known but you live and you learn!
I would be careful using Delta as a measure of a strike price being hit by expiration. You have to be deep in the money to have 100% probability as shown by the Delta. Heck, Walmart 132 strike in three days only shows 0.79 and it's $2 in the money now! Might be best to use Delta just to get an idea of how much the option price is going to change for every $1 change of the underlying.

Plus, trading straight Puts/Calls, there is no need to hold until expiration or to wait for a high Delta to make a profit.....
  • #18,003
  • Mar 23, 2021 1:50pm Mar 23, 2021 1:50pm
Quoting moneymaker2
{quote} I would be careful using Delta as a measure of a strike price being hit by expiration. You have to be deep in the money to have 100% probability as shown by the Delta. Heck, Walmart 132 strike in three days only shows 0.79 and it's $2 in the money now! Might be best to use Delta just to get an idea of how much the option price is going to change for every $1 change of the underlying. Plus, trading straight Puts/Calls, there is no need to hold until expiration or to wait for a high Delta to make a profit.....
Yeah my formerly deep ITM calls on ODT are a testament to this after a 75% hit on the underlying. That's why my initial thought was to use IV, when I'm gambling I like to take the lines and put them into probabilities to help in my decision making (ie: a +400 underdog implies a 20% chance of them winning, if I think they have a better than 20% chance of winning then that's a bet I'll make)
  • #18,004
  • Mar 23, 2021 2:51pm Mar 23, 2021 2:51pm
Quoting The Fool
when I saw ^TNX spiking today, I sold some SPX call verts about a month out - SPX 4080/4120 Apr16 for $5.85 credit
...the above from 3/12.... sold for $5.85 worth about $2.25. What should I do?

Lots of options sellers get out at 50% of max profit....that would be about $2.90...so, I'm already there. It's definitely not worth it to wait til the last week to scrape the last 10% of maxP, unless of course you have unlimited buying power (not me).

....I have a sell close at $1, will be watching this week....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,005
  • Mar 23, 2021 3:06pm Mar 23, 2021 3:06pm
LOOKING for a bit of a bear run this week with a lot of T-Note auctions happening. Maybe see a repeat of the same scenario from week of Feb 22, when yields spiked and SPY dropped ~3%...at yesterday close bot this put fly for 20c....

Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,006
  • Mar 23, 2021 4:12pm Mar 23, 2021 4:12pm
Quoting The Fool
{quote} ...the above from 3/12.... sold for $5.85 worth about $2.25. What should I do? Lots of options sellers get out at 50% of max profit....that would be about $2.90...so, I'm already there. It's definitely not worth it to wait til the last week to scrape the last 10% of maxP, unless of course you have unlimited buying power (not me). ....I have a sell close at $1, will be watching this week....
Hi TF. I think I would be tempted to hang on a little longer. Looking at the weekly chart, SPX coming off a double top like it is still has some downward movement at least to the 5EMA (~3895) but probably the 10EMA (~3860)....heck, even the mid-BB is only ~3840. I'm thinking one of those (most likely the 10EMA/mid-BB area) will slow it down enough to take profits.

I use those EMAs and BB levels a lot to determine when to get out of short term moves as I've found that those areas tend to be pretty powerful, especially if the values coincide with one another on different timeframes.

Just my $0.02......
  • #18,007
  • Mar 24, 2021 2:59pm Mar 24, 2021 2:59pm
goto mo on the last hour to expiry SPX gambit - double verts....this one put on at SPX = 391x, 30 pts wide, and it went full profit - >$400 on an $85 risk..in 15 minutes.....just been paper-trading these, but look worthwhile

Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,008
  • Mar 24, 2021 3:06pm Mar 24, 2021 3:06pm
here she is after the bell, these are fun....

Attached Image (click to enlarge)
Click to Enlarge Name: spx-dblvert2.png Size: 131 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,009
  • Mar 24, 2021 8:50pm Mar 24, 2021 8:50pm
Nothing much going on, but I'll be looking at NCLH at the open tomorrow for both short term and long term Calls.....they are cheap and pressure on the CDC to allow some cruises by July 1 is getting pretty strong....
  • #18,010
  • Mar 25, 2021 8:41am Mar 25, 2021 8:41am
In the following:

NCLH Apr16 25 CALL @ $1.40
  • #18,011
  • Mar 25, 2021 12:42pm Mar 25, 2021 12:42pm
Quoting moneymaker2
In the following: NCLH Apr16 25 CALL @ $1.40
Out of the following:

NCLH Apr16 25 CALL @ $2.20 up from $1.40

Going to let it drift down a little and probably get into the 26 or 26.5 Call.....
  • #18,012
  • Mar 25, 2021 12:47pm Mar 25, 2021 12:47pm
In the following:

NCLH Apr16 26 CALL @ $1.39 average
  • #18,013
  • Edited 3:26pm Mar 25, 2021 2:43pm | Edited 3:26pm
I have NCLH bull vertical calls - way out Jan '22, $42.50/$45, which I bought idk 6 months ago for 20c.....risk 20c to make $2.50....it's nice to have something in the stack that's not SPX or SPY....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,014
  • Mar 25, 2021 8:20pm Mar 25, 2021 8:20pm
Quoting The Fool
I have NCLH bull vertical calls - way out Jan '22, $42.50/$45, which I bought idk 6 months ago for 20c.....risk 20c to make $2.50....it's nice to have something in the stack that's not SPX or SPY....
If the CDC gets off their butts and actually does their job and not just extend things, if they start limited cruises out of the US in July, I think you will be in profit long before January....

I know what you mean about diversifying. I went about 2 years and all I traded was the DIA and OEX and sometimes the SPY....and often those would go a week or two with no good trades, but now I can usually find at least one per week worth trading....and sometimes after a run up/down of the DOW, there are more than I can trade....
  • #18,015
  • Mar 25, 2021 10:52pm Mar 25, 2021 10:52pm
Quoting SyntaxError
MM I actually use this whole thing as a proxy for the stock with the options leverage .. strike is always > 80% of ticker price Its solid Direction and tops and bottoms all flow nicely from the volume profile I have spent years perfecting 1000 ways to skin this pussy cat for sure
SE

Since you use the options as a proxy the underlying, do you watch volume on the underlying or just volume for an option specific strike price?

If you do go by the option volume, does your volume show the option volume from all the exchanges or just one or two? I've never been able to find one place that has all the volumes and OI from all the exchanges in one place....
  • #18,016
  • Mar 26, 2021 8:58am Mar 26, 2021 8:58am
Quoting moneymaker2
In the following: NCLH Apr16 26 CALL @ $1.39 average
Out of the following:

NCLH Apr16 26 CALL @ $2.00 up from $1.39

Hit the 5EMA, so that was good enough for me to get out, especially since I have to cut the grass before it rains......
  • #18,017
  • Mar 26, 2021 2:57pm Mar 26, 2021 2:57pm
Wish list Bid on CCI puts....we will see what happens before the close...
  • #18,018
  • Mar 29, 2021 12:53am Mar 29, 2021 12:53am
Quoting The Fool
goto mo on the last hour to expiry SPX gambit - double verts....this one put on at SPX = 391x, 30 pts wide, and it went full profit - >$400 on an $85 risk..in 15 minutes.....just been paper-trading these, but look worthwhile
...I played one a these at the Friday last 1/2 hr. Since SPX had already run up a lot I just played the put side. Well, I lost $35. If I had played the calls also I would have made more than enough to both debits.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,019
  • Mar 29, 2021 3:40pm Mar 29, 2021 3:40pm
Quoting The Fool
{quote}...I played one a these at the Friday last 1/2 hr. Since SPX had already run up a lot I just played the put side. Well, I lost $35. If I had played the calls also I would have made more than enough to both debits.....
That sucks, but I know what you mean...heck, I got rid of WMT three days before it made it's move! The good thing is that every time something like this happens, we get a little bit smarter at what we do....
  • #18,020
  • Mar 29, 2021 3:42pm Mar 29, 2021 3:42pm
In the following:

CCI Apr16 170 PUT $1.50

Should be good for some spending money....
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