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Let's Trade Options

  • #18,081
  • Jul 8, 2022 9:52am Jul 8, 2022 9:52am
Quoting The Fool
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
...all the call diags cashed out at $1.70 net. I'll lose most/all of the put side debit - about $0.90, but I was in calls about 3:2, so I'll eke out a 2% week....SPY Jul08 $393 calls I will watch a while
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,082
  • Jul 8, 2022 10:44am Jul 8, 2022 10:44am
Quoting The Fool
{quote}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.
Yeah, I almost use em exclusively for downside risk. put backspreads are cheap insurance for a crash. There are probably better ways to be protective to the long side of spooz tbh
  • #18,083
  • Jul 10, 2022 12:08am Jul 10, 2022 12:08am
Time spread trading needs some sharp shooting, I need to work on my aim. Where is the outside of a one week or two week spread? 2 sigma is too far. Study in ToS is "Cone of Expiring Probability", @ 95%.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,084
  • Jul 10, 2022 12:26am Jul 10, 2022 12:26am
One sigma for a one week spread maybe better, but keep in mind the best finish on the diagonal will be about 20-30 pts shy of the short strike (depending on how wide the spread is, etc)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,085
  • Jul 10, 2022 3:09am Jul 10, 2022 3:09am
something like below...to be reassessed b4 Monday open.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,086
  • Edited 3:33am Jul 10, 2022 3:23am | Edited 3:33am
to hedge, back spread SPY calls need to be a little more DTE
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,087
  • Jul 11, 2022 11:01pm Jul 11, 2022 11:01pm
Quoting The Fool
something like below...to be reassessed b4 Monday open.
CALL SIDE, SPX Jul 15/18 3975/4000, went on for a $0.70 credit, and I plowed 1/2 the credit into a SPY hedge, Jul 18 $393/395 backspread calls. That was early, and SPX fell further, but it's ok, pretty much a free, no-risk bullish setup. If the spoos falls all night, I will roll down the 2:1 backspread and make a bull call vert out of it.

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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,088
  • Jul 11, 2022 11:16pm Jul 11, 2022 11:16pm
I didn't get anything on the put side. I usually try to go both ways the same day, but, if I set up something risk-free like the above, I don't mind being patient...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,089
  • Jul 13, 2022 8:06pm Jul 13, 2022 8:06pm
watching, as the spoos grinds down, the front short leg of the call diagonal above is getting down towards 10c, where I'll buy it back and keep 60c net credit, then prolly plow that into margin for the same trade another week out. Lately this $2.50-wide call diag has been going on for 50-70c credit if you get in the Wed-Fri of the preceding week. Getting into the call diags for a good credit means you can fund SPY hedges for a no-risk, no-net-cost trade....or do both sides of the double diag for low/no cost, as the skew in the puts has made it harder to set up a reasonable spread for credit.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,090
  • Jul 13, 2022 9:29pm Jul 13, 2022 9:29pm
Quoting The Fool
watching, as the spoos grinds down, the front short leg of the call diagonal above is getting down towards 10c, where I'll buy it back and keep 60c net credit, then prolly plow that into margin for the same trade another week out. Lately this $2.50-wide call diag has been going on for 50-70c credit if you get in the Wed-Fri of the preceding week. Getting into the call diags for a good credit means you can fund SPY hedges for a no-risk, no-net-cost trade....or do both sides of the double diag for low/no cost, as the skew in the puts has made it harder...

Gotta think that premium sellers will have the upper hand until the Fed and GDP print at EOM. What's really gonna gap us up, or down?

Biden was right about the CPI print, oil was $20 higher, and a ton of other commodities were much higher too. Plus mortgage rates were peaking then and have come down quite a bit.

If the fed freaks out and raises 100bps, they are going to have big-time foot in mouth when July shows up at 6%....
  • #18,091
  • Jul 14, 2022 12:49am Jul 14, 2022 12:49am
Quoting Wulfgar
{up, or down? ......they are going to have big-time foot in mouth ....}
Tough sledding for the Fed, whatever happens, what they get for being too loose for too long. Maybe they'll come out looking good compared to the rest of the CBs of the world, who knows? Anyway, it kind of seems like anything they might do is already "baked in", and yield seekers are settling in to a rising rate trading world. But you're right, the other shoes are probably waiting to drop and the next FOMC scheduled in the heart of Q2 earnings seems like ticking time bomb.... If the bulk of earnings have come in low and then the Fed shoots off the 100 bps bazooka, I'd hope to be positioned short. I am actively building positions to be there with the big banknote net, first week of August...

Up or down, right, I'll take some of both. I'm not much of an options trader, really - I never learned to sell premium as a dominant MO for income generation. But I am always selling some - spreading - to lower or eliminate cost basis and risk. My goals are always to set up positions where 1) it's not possible to lose much, or any $; 2) cost of the position is minimized, and 3) position profit potential is high or potentially "unlimited". I never learned how to do those by selling premium.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,092
  • Jul 14, 2022 9:26am Jul 14, 2022 9:26am
BOUGHT back nickel short legs of this week's SPX/SPY call spreads, will watch pa and sit tight, maybe look for a 1-day play & a Friday or Monday bounce.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,093
  • Jul 14, 2022 10:49am Jul 14, 2022 10:49am
IF we can retrace well above 3,800, I will sell the 3,975 Jul 18 calls against the 4,000 long calls that are stranded there - looking for anything over 50c.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,094
  • Jul 14, 2022 1:34pm Jul 14, 2022 1:34pm
Quoting The Fool
{quote} Tough sledding for the Fed, whatever happens, what they get for being too loose for too long. Maybe they'll come out looking good compared to the rest of the CBs of the world, who knows? Anyway, it kind of seems like anything they might do is already "baked in", and yield seekers are settling in to a rising rate trading world. But you're right, the other shoes are probably waiting to drop and the next FOMC scheduled in the heart of Q2 earnings seems like ticking time bomb.... If the bulk of earnings have come in low and then the Fed shoots...

Yeah man, its just the leads and lags that are so difficult when dealing with this kind of leverage. Powell wants to be Volcker, but he is inheriting a world with $200T more in debt than Volcker did. its like being a crane operator, the larger the crane the smaller the adjustment to move the boom. Powell is pumping rates without abandon and the resulting disaster is most definitely a bazooka. That, coupled with a strong dollar, he's driving a skyscraper crane whereas volcker was in a Fisher-Price toy. At least 100x the destructive power of the Carter-Reagan era.

All that being said Im long as I have ever been since we were scooping lows in 2009. Oil was $30 higher a month ago, and many commodities(aluminum, chicken, wheat, lumber, etc) are 30-40% off their YTD highs. At some point, that sinks in. Now the fear is the fed overcorrects, and with all the foreign debt pressure(EM bonds dropping 10bps a week), the stage is set for an unholy rally as liquidity in then poured back into the eurodollar system after its been starved, and she laps it up like the hungry whore she is.

As far as the options plays go... its pretty straight forward... Im selling long dated puts at a price I would feel comfortable owning the stock(many blue chips have attractive levels, as do metals specifically)... using a 2:1 ratio I then buy a call ATM or slightly OTM so the entire position gives me a net credit. So basically I get a very large window of forgiveness. If we go to expiration above the puts, then Im out for the net credit or free, if they are ITM I just accumulate the stock. Once price goes above the long calls Im 100% long synthetic stock.

Yeah its a hell of an aggressive contrarian trading methodology, but at this point of extreme sentiment sometimes it pays to lean into the risk.

At
  • #18,095
  • Jul 14, 2022 2:34pm Jul 14, 2022 2:34pm
huge gorilla in the room the financial press tends to ignore is the war in Ukraine. A cease fire or termination there will rally equities back above 4,100.

I like the trading style, makes sense to combine stock options trading with accumulation/liquidation of the actual underlying....my accounts just too small for it, as of yet.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,096
  • Jul 14, 2022 7:44pm Jul 14, 2022 7:44pm
Hi The Fool, it's been 9 years since this thread started. Seems like it is still going strong. Just curious, have you made any money from options trading? If yes, can roughly state how much?
  • #18,097
  • Jul 14, 2022 7:45pm Jul 14, 2022 7:45pm
Quoting The Fool
huge gorilla in the room the financial press tends to ignore is the war in Ukraine. A cease fire or termination there will rally equities back above 4,100. I like the trading style, makes sense to combine stock options trading with accumulation/liquidation of the actual underlying....my accounts just too small for it, as of yet.

That's true, any sort of negotiated settlement and spooz is up 10% overnight. Lots are forgetting about that.
  • #18,098
  • Jul 14, 2022 9:27pm Jul 14, 2022 9:27pm
Quoting lengendff
Hi The Fool, it's been 9 years since this thread started. Seems like it is still going strong. Just curious, have you made any money from options trading? If yes, can roughly state how much?
...I am shooting for a minimum 1% return per week, as a % of total account equity. I usually get that or more, but sure, sometimes I miss, get little to nothing, and even lose some money. Best week I have had this year is +$16k, worst is -$2.3k. I'd say an average week these days is around +$5k.

My goal is to get combined accounts up to large enough size to reliably bring in $10k per week from active trading. (So, per fancy math, that'd be a $1MM options trading account.) I don't know if I ever will get there. Pretty regularly, when I have a big week or month, I'll plow some equity into dividend stocks or bonds, etc. It's good to be diversified. I had real estate that I sold last year. Next time (if ever) the bottom falls out of that again, I'd probably buy raw land and develop it.

I always have weekly trades running in and out, but I also always have positions I am building like a funky tinker toy contraption, and some of those take several (2-4 typically) months. Those are what really pay well so they don't really reflect "weekly income". I am trading out of IRAs only, plow everything back into the IRAs. I have other income and don't need to trade for a living.

Trading options has been good the last couple years, but I remember pretty well when it was sucky, little premium to be found, pretty much just go long calls funded by short puts was the play. More interesting now, also more dangerous. Good luck stranger, and take everything people on the internet tell you with a grain of salt.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,099
  • Jul 14, 2022 10:00pm Jul 14, 2022 10:00pm
Quoting The Fool
IF we can retrace well above 3,800, I will sell the 3,975 Jul 18 calls against the 4,000 long calls that are stranded there - looking for anything over 50c.
Crossed fingers for a gap up overnight. All I've made this week is the $0.65 credit on the call diags, and about 1/3 of that went into the call backspread hedges. I bought back the short leg of the Jul 18 SPY $393/395 backspread for a nickel, left with Jul18 $395 long calls. Need a big green Friday candle to eke out the weekly target....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,100
  • Jul 14, 2022 10:07pm Jul 14, 2022 10:07pm
Who knows, maybe I can make out like this guy:

https://www.nydailynews.com/news/nat...icle-1.1532305
"If The Fool persists in his Folly he will become wise." - William Blake
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