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Let's Trade Options

  • #18,781
  • May 12, 2023 9:15am May 12, 2023 9:15am
Quoting ForexStats
{quote} It's a great environment for options selling!
YEP, except iv's have cratered. Anyway, cool data, thanks for sharing.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,782
  • May 13, 2023 1:47pm May 13, 2023 1:47pm
Quoting ForexStats
{quote} It's a great environment for options selling!
I've been regularly selling SPX ICs to fund debit spreads, but the SPX iv's have dropped way low & it's not attractive anymore. You have to go way out in duration. Just a few months ago I was getting the same credit from 2-week spreads that comes from 7-8 weekers now. I wouldn't mind low vol if it came with some trending you could tap. But that's not happening either. Trading the indices has become a dead issue.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,783
  • May 13, 2023 2:57pm May 13, 2023 2:57pm
Quoting The Fool
{quote} Trading the indices has become a dead issue.
Well, not really. You just have to get creative.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,784
  • May 13, 2023 4:21pm May 13, 2023 4:21pm
Quoting The Fool
{quote}I've been regularly selling SPX ICs to fund debit spreads, but the SPX iv's have dropped way low & it's not attractive anymore. You have to go way out in duration. Just a few months ago I was getting the same credit from 2-week spreads that comes from 7-8 weekers now. I wouldn't mind low vol if it came with some trending you could tap. But that's not happening either. Trading the indices has become a dead issue.
Reading between the lines, it sounds like you think SPX IV is fairly priced now?
  • #18,785
  • May 16, 2023 11:44am May 16, 2023 11:44am
Quoting ForexStats
{quote} Reading between the lines, it sounds like you think SPX IV is fairly priced now?
Honestly, Idk what "fairly priced" means.

But iv's have cratered - look at the trade I considered for a second just now - selling the SPX vert calls @ about 13 delta the short leg, 27 dte, $25 wide, gets me maybe $2.80....a month ago I was doing similar trades only 2-3 weeks out for double the credit. Why cause why is the iv's, <10%, snoozeville. That's way down from the 20%+ I used to see all the time not too long ago.

There's something fucked up with the SPY/SPX - it can't break out of a narrow range. Some suspect the heavy volume in 0dte options trading in (especially) SPY and SPX is the culprit.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,786
  • May 16, 2023 2:41pm May 16, 2023 2:41pm
what I have in SPX for debt ceiling discorama, I actually think McCarthy will play hardball with JB, and markets will get spooked down tomorrow...
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,787
  • May 16, 2023 3:21pm May 16, 2023 3:21pm
Quoting The Fool
{quote}Honestly, Idk what "fairly priced" means.
Simply put, I'd say fairly priced is an area where you don't see an opportunity to buy or sell. I wouldn't look at it from a valuation perspective or anything of that nature as historically valuation models have performed poorly.
Quoting The Fool
But iv's have cratered - look at the trade I considered for a second just now - selling the SPX vert calls @ about 13 delta the short leg, 27 dte, $25 wide, gets me maybe $2.80....a month ago I was doing similar trades only 2-3 weeks out for double the credit. Why cause why is the iv's, <10%, snoozeville. That's way down from the 20%+ I used to see all the time not too long ago. There's something fucked up with the SPY/SPX - it can't break out of a narrow range. Some suspect the heavy volume in 0dte options trading in (especially) SPY and SPX is...
Is there any real evidence options are doing it? Option positioning has been known to repress or exaggerate market movement. Currently the GEX is consistent with moves being suppressed, but not overly so.

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  • #18,788
  • May 16, 2023 3:27pm May 16, 2023 3:27pm
Stats, have a look at the Spot Gamma guy's vids on youtube, he has several that deal with it. The general idea is that the huge volume in 0dte SPY and SPX options eats up a related huge amount of SPY shares buy/sell action by MMs who are tasked with managing the index options & futures order flow. Might be plausible but is above my head.
https://www.youtube.com/@spotgamma/videos
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,789
  • May 16, 2023 6:20pm May 16, 2023 6:20pm
Compressing down to a 50-pt range now......
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,790
  • May 16, 2023 11:54pm May 16, 2023 11:54pm
Quoting Zebi
XOM reported record earnings and profits not cause oil price is surging but because of gouging and buybacks so i'll have to short some stock and buy puts and if i have any money leftover sell call LOL.....price should be near a 100 by next earnings {image}

i sold my puts already and lightened up some on stock shorts....love a spectacular drop at highs because of record earnings LOL...always happens that way amazing we'll see 100 in just a couple weeks

I have this irrational fear of losing money being long options cause of time decay...where can i read up on stuff....i dont want the theory or the math just how to best pick a strike price using good ole stock price analvsis thanks the fool
short trump and go long the deepstate
  • #18,791
  • May 17, 2023 12:48pm May 17, 2023 12:48pm
Quoting The Fool
Compressing down to a 50-pt range now...... {image}
A compressed spring ready to bounce or a cobra ready to strike.
  • #18,792
  • May 17, 2023 1:32pm May 17, 2023 1:32pm
Quoting Zebi
{quote} I have this irrational fear of losing money being long options cause of time decay...where can i read up on stuff...
...it's not irrational, amigo, that's just the reality of trading options. A couple tips:

1) sell options so that time decay is your friend. I generally sell call or put spreads for credit;
2) If you are trading directionally, use spreads to capture directional moves. In spreads, you are buying and selling options, so your cost basis is reduced. You may still lose money, but not so much as by just having your long puts or calls expire worthless.

I generally use #1 to fund other trades @ #2....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,793
  • Edited 1:49pm May 17, 2023 1:34pm | Edited 1:49pm
Quoting clemmo17
{quote} A compressed spring ready to bounce or a cobra ready to strike.
ok breakout today let's see if it stays strong to the close and continues Thurs-Fri. I have been taking off NDX and RUT call spreads for decent credit, skittish about any moves after being mesmerized by the flatline market for months....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,794
  • May 17, 2023 7:39pm May 17, 2023 7:39pm
I don't have any faith that bulls can run the ball, but a logical target for opex Friday is big round 4,200....I will try to hold on....
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,795
  • May 18, 2023 9:35am May 18, 2023 9:35am
Quoting The Fool
I don't have any faith that bulls can run the ball, but a logical target for opex Friday is big round 4,200....I will try to hold on.... {image}
...watching the May19 SPY call walls - 420 or 410 - I'm with the bulls, holding on for monthly opex show, will shoot for $8.00 net out on the SPX 4220 calendars above
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,796
  • May 18, 2023 6:25pm May 18, 2023 6:25pm
Quoting The Fool
{quote}...watching the May19 SPY call walls - 420 or 410 - I'm with the bulls, holding on for monthly opex show, will shoot for $8.00 net out on the SPX 4220 calendars above
SPX call calendars sitting close to $6 net, I'd like to run the gamma play, a little worried JPow will talk down the bulls early Friday, we'll see.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,797
  • May 18, 2023 11:13pm May 18, 2023 11:13pm
Spitballing the pullback. McCarthy has to get his debt deal out the Congress door, and his fractious conference is full of wingnuts. I could see a fast drop to 4,000 if he can't get it done before June 2.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,798
  • May 19, 2023 9:46am May 19, 2023 9:46am
Quoting The Fool
{quote}SPX call calendars sitting close to $6 net, I'd like to run the gamma play, a little worried JPow will talk down the bulls early Friday, we'll see.....
....took off all but couple @ $6 net out. Idk what Jay is gonna say his minions have not already said, but we'll see. Closing this calendar at near perfect finish, would be a mistake to wait for the max end play except I will on 2 lots. My PTJ style sign on the wall (one of a collection): "You don't have to be a hero." Amen.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,799
  • May 19, 2023 10:21am May 19, 2023 10:21am
“Inflation far above the objective” seems pretty clear to me. Not sure if that’s what he actually said. And now Yellen is warning about banks. They’re clearly trying to jaw things down. Whether the market will GAF is another matter.
  • #18,800
  • May 19, 2023 10:41am May 19, 2023 10:41am
Yeah it's likely only going to have limited effect in the face of a gathering FOMO tide. I expect another level up for the spoos and and then sideways m/l into the June FOMC. Up level range 4300-4400.

The bigger risk near-term is the threat of a debt ceiling deal breakdown. Even if there is a "deal", it still has to get past the whacky GOP conference in the House. This opex 420 SPY wall was met, could be all she wrote for the bulls.
"If The Fool persists in his Folly he will become wise." - William Blake
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