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Let's Trade Options

  • #18,061
  • Jun 21, 2022 12:33pm Jun 21, 2022 12:33pm
this week's SPX income trade
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,062
  • Jun 22, 2022 1:54pm Jun 22, 2022 1:54pm
...Same idea with QQQ.....
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,063
  • Jun 24, 2022 12:20am Jun 24, 2022 12:20am
Quoting The Fool
this week's SPX income trade
WITH a nice gap up and run above 3850 this SPX call spread will make some money. In the double diagonal for $2 net debit, although I have loaded 2:1 and 3:2 in favor of calls. Put spread looks like it'll be DOA. Need to watch the calls from the open to see what can be taken. I have a close order at $3 & that'd be fine but will adjust before the open anyway. Also have same date QQQ calendar calls at $295 and $300 and a big green day could bring in some profit. A reversal will bugger me and I'll be lucky to avoid a loss on all the time spreads if that occurs. Weekly dojis are no good for these things and you'd be better off shooting for some smaller gains with IC's if the shit is going sideways.

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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,064
  • Jun 24, 2022 9:16am Jun 24, 2022 9:16am
SPX call diags came off at $1.80, >3x but 15c less than the double cost, although there were ~2x as many calls as puts spreads, so was a nice profit. QQQs came off at ~5x, I will watch the SPX put diags, maybe they will pick up something in a reversal. 2.2% gain on the week as-is so it worked out well on the Friday rally.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,065
  • Jun 25, 2022 8:48am Jun 25, 2022 8:48am
hedge short SPX call verts with SPY long
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,066
  • Jun 27, 2022 1:52am Jun 27, 2022 1:52am
SPX kitty for the week....
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,067
  • Jun 27, 2022 10:34pm Jun 27, 2022 10:34pm
Quoting The Fool
SPX kitty for the week.... {image}
SETUPS look like the below - I usually have several versions of these running across different accounts, all entered Mon or Tues to come off Friday the same week. The opposing diagonals are set up to have similar break-evens on the inside. That value changes as the greeks do their thing towards expiry, but that's ok. The idea is to lose little or no money on the inside. To guard the outside - that's where the biggest risk is - I will hedge with SPY long calls or puts, placed, 50-100 pts away from the outside breakeven, just want to buy only enough of those to mitigate most of the potential outside damage. If things work out really well, a nice finish for the SPX diagonal will also cough up nice profit for the SPY long guards also. Anyway, the outside ends of the diagonals are set up to be outside the expected maximum weekly move.

So these work very well when the spoos is moving well, as it has been for 2022. If vol falls back into the doldrums I'd do the same thing with calendars instead of diagonals. Might have to go further duration to keep up the diagonal game. That's be ok, trades could still come off every Fri. I like to get paid on Fridays....

I almost always take these off on Fridays. Occasionally let potential Monday winners run, but usually just grab the cash if it's there on Friday. Friday winner exits are a bit of drama though - my main failing is I have exited early, like when I grab a 4 bagger early and then it goes on to finish perfectly at over 10 bag in the last hour of the day. But 4 bag can also slip down to small gain in an hour or so on Friday, so....

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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,068
  • Edited 11:52pm Jun 28, 2022 11:36pm | Edited 11:52pm
AFTER setting up on Mon/Tues, I just check every night until Friday open. I always model at expiry day, because that's where I'm going. Always waiting til Friday morning and often until the last hour or so of Friday. On the examples shown, these are actual trades, I just want to check where the break evens are....for the diagonal shown, b/e is at around 3830 (the b/e of the opposing call diagonal is about 3815.
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A word re: SPY guards, the ones shown I got to late, paid too much, but they will do ok. For instance, if the put diagonal above gets run out (say SPX goes to 3520), well that loss could be about $4600. But the 3-lot Jul 1 SPY $371 long puts will be worth >$5k at SPX = 3520...so, the long puts negate the worst of the diagonal loss. If they want to assign your short put SPX itm, the long SPY would still cover that.

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Prolly worst thing that can happen for the kitty is you get a monster move early in the week. It's important to buy the long SPY guards and don't scrimp on them, either - they will save you some worry. Really, though, all you have to do in case of a big early move is wait it out, IF you are hedged correctly.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,069
  • Jun 29, 2022 12:01am Jun 29, 2022 12:01am
Even though the above are weekly setups, I will try to map them out 2 or 3 weeks in advance. For instance, I still think the spoos wants to bounce back to 4,000 or better. So, maybe we fall further this week, but I will be looking to buy SPY guards when they are cheap. So, for the call kitty next week, I have my eye on the Jul 8 SPY calls up around $390 or higher. I am looking to buy SPY guards @ 1:1 against the SPX numbers, IF (and ideally IF) I can get in those 100 pts inside the outside diagonal b/e. If I buy them and they turn out to be too distant, no prob, they were cheap, maybe they can be the outside wing of a wide fly, or whatevs.

I know, simple right? When I have these set up well, waiting for Friday is just like waiting for Christmas morning, I know I will get something, maybe a small gift, holy shit maybe a new F-16, but I also know I can't lose. Because I've been good.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,070
  • Jun 30, 2022 2:46am Jun 30, 2022 2:46am
https://www.yahoo.com/finance/news/e...190050894.html

Matthew Fox
Tue, June 28, 2022 at 12:00 PM

 

  1. New ETFs from NightShares seek to exploit a little-known phenomenon in the stock market.
  2. The "night effect" references the strategy of buying the S&P 500 at the close and selling it at the next day's open every single day.
  3. Backtests of the strategy have shown historical outsized performance in various research papers.

"A new ETF launch from NightShares seeks to exploit a little-known phenomenon in the stock market that has historically delivered outsized gains.

The NightShares 500 ETF seeks to replicate the strategy of buying the stock market at the 4 p.m. close, and then selling the position the next day at the stock market's 9:30 a.m. open. And then rinse and repeat, as the strategy doesn't hold exposure to the stock market during the bulk of its intraday trading hours.

A body of academic research has backed up the strategy, showing that most — if not all — of the stock market's gains over the past 30 years have been delivered during the overnight trading sessions rather than during the day. Data from Bruce Knuteson, a former quant trader at D.E. Shaw, showed that from 1991 through 2021, the S&P 500's overnight session delivered a cumulative return of more than 1,700%, while the intraday sessions delivered a negative cumulative return. The phenomenon was also observed in international markets and several individual stocks.

"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,071
  • Jul 6, 2022 12:09am Jul 6, 2022 12:09am
still lovin SPX time spreads. Diagonals are cool cuz they can go on for small debit, but SPY hedging the downside eats up what you save on the buy. Sweeter spot maybe the calendars and you can still hedge downside of those with cheap SPY verts. Go both ways and put them close enough together to eliminate the losing middle.

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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,072
  • Jul 6, 2022 12:25am Jul 6, 2022 12:25am
Quoting The Fool
still lovin SPX time spreads. Diagonals are cool cuz they can go on for small debit, but SPY hedging the downside eats up what you save on the buy. Sweeter spot maybe the calendars and you can still hedge downside of those with cheap SPY verts. Go both ways and put them close enough together to eliminate the losing middle. {image} {image}
Just rocking diagonals/calenders while vol is weirdly low…. Nice dude, Im all about the quiet winners

Why not just throw on backspreads for the junk units instead of verts? They are super cheap and most of the time you’ll get the units for free anyhow.

How you been my friend?
  • #18,073
  • Jul 6, 2022 12:47am Jul 6, 2022 12:47am
Quoting Wulfgar
{quote} Just rocking diagonals/calenders while vol is weirdly low…. Nice dude, Im all about the quiet winners Why not just throw on backspreads for the junk units instead of verts? They are super cheap and most of the time you’ll get the units for free anyhow. How you been my friend?
....HEEEEY MAN GOOD TO SEE YOU! I'm doing well after a long and harder than usual winter. Thinking about moving to SD County or hell maybe Spain as this PNW rain finally getting to me. Haven't been able to generate any interest here with the FF folks for these options setups. Which is too bad, but oh well. I will model the backspread combos some more, thanks for the tip. Hope you're doing well - where you hanging the quiver these days?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,074
  • Jul 6, 2022 1:04am Jul 6, 2022 1:04am
Quoting The Fool
{quote}....HEEEEY MAN GOOD TO SEE YOU! I'm doing well after a long and harder than usual winter. Thinking about moving to SD County or hell maybe Spain as this PNW rain finally getting to me. Haven't been able to generate any interest here with the FF folks for these options setups. Which is too bad, but oh well. I will model the backspread combos some more, thanks for the tip. Hope you're doing well - where you hanging the quiver these days?

Ya brother Im still doing the same ole same ole. Shorting rips in a downtrend like a good little soldier this year. Got my ass waxed pretty good on the bond collapse but nothing that cant be fixed.
If you move to SD Ill buy you a beer for sure. Im living here right now with possible plans to move to Miami. The hours are better for work, which just seems healthier.

Running double diagonals isn’t going to get the juices flowing for the FF folks unfortunately. They want you still porting huge 0DTE OTM YOLO units on a Webull account so you can buy lambos, titties, and chicken nuggies with your 50,000% winners.

Whats the time frame for your impending move to sunny socal? Also I dont blame you for wanting to go to Spain. Im scouting property on the regular with the Euro relentlessly pushing toward Parity and the entire continent on the verge of economic collapse.
  • #18,075
  • Jul 6, 2022 1:33am Jul 6, 2022 1:33am
I'm on the same page re: the deflating euro. I like it down in the Algarve or up north of Valencia. Bottom east of France really nice also but my French is poor.

I have a partner down in NE SD county, good girl hangin out with the aging folks on their rancheria, doesn't want to move. So I visit a lot, will let you know next time I'm down.

Miami a great place to visit - we usually go every winter for a week or two. Tough to pass the summer there though, unless you love to sweat.

What are you trading mostly these days? I have gotten pretty boring, just do the SPX/SPY pair mostly, usually some QQQ and some of the biggest names. All tax free in IRAs I have stacked up. Boring is good when it pays well....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,076
  • Jul 6, 2022 2:14am Jul 6, 2022 2:14am
Quoting The Fool
I'm on the same page re: the deflating euro. I like it down in the Algarve or up north of Valencia. Bottom east of France really nice also but my French is poor. I have a partner down in NE SD county, good girl hangin out with the aging folks on their rancheria, doesn't want to move. So I visit a lot, will let you know next time I'm down. Miami a great place to visit - we usually go every winter for a week or two. Tough to pass the summer there though, unless you love to sweat. What are you trading mostly these days? I have gotten pretty boring,...
Oh absolutely. I have my Italian citizenship and the Euro passport to go along with it, so its a nice little thing to keep in the pocket. Tbh I’d rather live in Spain than Italy, although Italy has been coming up with some ludicrous offers to get expats to bring their money there. So we shall see. If the Europe move happens it wont be for about 18 months.

Yeah absolutely. My folks live up in North Escondido, although Im closer to downtown.

I hear you about Miami. Luckily living in Hawaii for so long I dont mind heat all that much. But if it does get too brutal in July/August I’d definitely maybe head to Europe or go up to my little cabin in Vermont on lake Champlain and just hole up there.

I run a full portfolio still. Indices, stocks, futures, bonds. In this regime Ive quite literally just been copying Richard Dennis and doing some full on Breakout trend following. I luckily had done my homework on the sort of trading regime that an inflationary bear requires to be successful. Currencies have had a hell of a comeback too, especially the yen, after 15 years of stagnation.
Honestly, I have more cash at work in the markets than Ive had in a decade. Figure throwing it at trends is better than losing it to inflation while it sits in cash.

Smart about doing to low risk income generation trades dude. In IRAs that is the best way to do it
  • #18,077
  • Edited 5:13pm Jul 7, 2022 4:08pm | Edited 5:13pm
In the Jul8/11 SPX 3950/3975 diag calls for 15c on Tues, out at the close today for $1.20. Took off about half the spreads & left the other half on with all the hedges, which are mostly now SPY Jul8 $393 long calls, got into those cheap with Jul6/Jul8 SPY calendars.

No shame in exiting early, plus the call side of these is not usually worth waiting for the end to squeeze out the last $, as vol deflates on the rising issue.

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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,078
  • Jul 8, 2022 12:18am Jul 8, 2022 12:18am
I pick up things from the youtube gurus, like to find guys who are using ToS

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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,079
  • Jul 8, 2022 7:04am Jul 8, 2022 7:04am
Quoting The Fool
I pick up things from the youtube gurus, like to find guys who are using ToS https://www.youtube.com/watch?v=FItCfpLC78w&t=573s
Ive been working for quite sometime with a long time Goldman options market maker. He worked there for 16 years. Hes the guy that told me "Always have your backspreads, preferably weeklies, they are cheap lotto tickets that will make you rich"
  • #18,080
  • Jul 8, 2022 9:41am Jul 8, 2022 9:41am
Quoting Wulfgar
"Always have your backspreads, preferably weeklies, they are cheap lotto tickets that will make you rich"
Thanks again for mentioning them bro. I will be trading some soon - they seem to be a good way to trade earnings releases, in lieu of strangles.
"If The Fool persists in his Folly he will become wise." - William Blake
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