Let's Trade Options

Primary task for Friday is to manage the call diagonals. /ES rising overnight and it looks like there could be a battle at 4,000, which is what I expect and desire.

The P/L looks like below, but it is misleading and does not capture the scenario you are going to try to exploit. Actual profit will be closer to the "theoretical" (ie, the upper) price line. I'm embarrassed to say that I only realized this fairly recently, after taking off diagonals for $4 that were worth $20 at the close.

You always take these down to the wire. (well, you run em down til the short options come off near worthless anyway.) There is some gamma risk that comes into play when the short strike and closing price are right together, but that doesn't happen too often. Might happen tomorrow, we'll see. Remember these are euro-style options, cash settled, no assignment risk, so you can run them down to the wire with no worry even if the short side goes itm.

Anyway....

shown is the 11/10 SPX call chain for today, as it looked after expiry. This is why you hold til just before expiry - everything otm goes to $0, or close to it.


...if you want to get an idea of what your spread is worth, look at the price of the long strike, on that option's day for a similar dte, at a comparative otm or itm spread. So, today SPX closed at about 3,960, so I can look at the 11/11 3,985 calls, which would be a comparable $25-wide spread @ 1 dte....

...the 11/11 calls were worth about $18.50 at expiry. This is what I will do to manage the trade Friday. It's a fluid situation in the last hour so I usually carve out 1-2 hrs b4 the close on Fridays to work the time spreads & just focus on that. I mean, if they are close.....they don't always pan out of course....if everything is pretty far otm it will be better to take them off earlier to get whatever value they might have.....

I didn't expect spoos would pop to 4,000 this week, but I thought there was a slim chance. When a big round number like that is in play, I will put something on it, because it acts as a magnet, for the same reason big rounds get played in futures, forex, etc....

RUTs all off for $6 net, could be my safety play

Nice brother, I just moved to the Florida Keys. Needed better trading hours now tat Im managing some sizable assets. It sort of sucks right now since I dont know anyone and Ive gotten nailed by 2 hurricanes already lol. But the latin culture is great and the food is absolutely out of this world.

Man Im the most bullish dude on the face of the planet over the next 6 months. Loads of economic market internals showing that inflation has peaked, the fed overreached after the bond markets had already tightened plenty, the economy is grinding to a halt, the big boys(the ones that cant turn on a computer and read FT) have loads of cash where the only thing they can do with it is to buy deeply discounted high beta assets to generate positive alpha.

Powell is trying to control the market, he's about to learn that is'nt how it works. I loaded up on ES sub 3550, along with a basket of low leverage stocks/etfs, went long various bonds from the lows(I think they rally together as long as policy is restrictive), and went short the dollar at 113. Its been a hell of a week for me so far after a pretty meh year tbh.

Poltical gridlock would be nice. And youre right about the war, a negotiated settlement gaps up global indices 10%, but more of this attrition through winter is a definite headwind outside the US.

Im waiting to put on a dirty beta hedge via some long puts, but I gotta get a trigger first that this manic buying is nearing an end.

Wild times my friend, I miss San Diego every day. Enjoy it in Jan and Feb!

....CLASSIC, now looking to thread the needle in the last 90 min, dance around the gamma boogers...

...boy that's a nice place to winter. Used to be a guy here on FF, goosebone - he had a bakery in KW, maybe still does. Tell him I said hi if you pop in for a muffin..........https://www.forexfactory.com/goosebone

Looks like best I can do to cash out today is about $10-$11, so I have a $10 btc on it. Not bad for a spread that cost -$0.20 to put on.

....I usually chicken out near the end if I am riding the line, where the gammas go to 0.03-0.06 and start to bite. I have the other 11/15 call spreads though, so there's some consolation there. The 4050/4100 verts went on for $1.35, will cash them out now for $6.50 or so.....

well, that was a fun ride. Diags came off @ $9, I don't know if I coulda done much better there. 11/15 verts came off at $7.50. Even the 11/15 4200 long calls made a nickel. Looking like about +19% week. Wish I could get em week in week out. Scan shows the chain at the last minutes, gammas go to 0.05 and .06 if you're riding the line, complicates things.

i trade options on a daily timeframe basis thru nadex. below are this weeks settlement emails. if anyone needs any assistance in this regard feel free to reach out.

-happy trading

no offense but I don't want to open the thread to binary options discussion.

Looking at some super bull trades into T'giving week; the rest of Nov should be data slack, set up for some up trending

The goal of the above is to fund the call vert w/ IC, for a run to >4,150 by T'giving Friday.

Yup, pretty sure its time for call backspreads to shine

I put on a bunch of SPY June 2x-350P/1x400C bffs with -450C on friday for a 1.50 credit.

Its sort of a give up trade, but if the bears can retake 350 after a successful macro double bottom and the fundamental background being primed for a massive rally... then they deserve it

also just doing backspreads every week... cheap lotto tickets.... they finally paid off last week

SPX combo for the week. After huge moves last week, I expect some sideways for a while. Hope not to be caught in the middle.

....not looking great. I bought back the short 4200 calls from the Nov 18/23 calendars for a nickel. Bought those for &1.90 net debit (+0.79/-2.69) so now I have Nov23 4200 long calls @ $1.95 debit. Will look to sell the Nov22 4200 calls against those for a dollar or more.....tough sledding in doji country.....

yep, stuck in the middle, so I will start rolling some of the spreads in order to mitigate any losses. Will roll the Nov 18 3800 puts out to Nov 21, to make a Nov 21/22 3800 put calendar - can do that for about a dollar credit, would like to get more....

I continue with the SPX combos & they pay well when catch a run, not so well in doji times.

I leg in to the funding sides but can't do so in the IRAs - the E* broker tells me they can't give me the typical margin cut when I leg in to the condors, per FINRA. I can't find said rule in FINRA. It bites a little, but something to be said for and against legging in anyway. In fact, sometimes it works better to enter the whole combo at once. Just gitter done and then sit back and watch.

The set-up just above never got the put calendar/vert. Just the bull put verts which was a little worrisome, until today. The short call verts came off for 35c yesterday and that really helped today. I sold 1/2 of the Dec7 bull vert calls for $6.50 net out today near the close, holding the rest and Dec2/5 calendar calls. Waited on today's breakout for 2+ weeks and lost a little money doing that, but looks to be worth the wait....unrealized gain on everything just today was about 13%, we'll see if I can hang on to all that and more.

I am leaning bullish until Xmas, expect some downside runs in Q1-Q2 2023.

+++ adjusting the trades above early Thurs, likely roll up the Dec5 3900/3875 bull puts (not Dec2 as is shown) to Dec5 3950/3925 for additional $1 net credit, m/l, will then spend all of that on some Dec2/5 3940 put calendars and also maybe some Dec7 3900/3800 bear vert puts. I am bullish but I always roll bidirectional, want to give myself a chance either end, always.