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Let's Trade Options

  • #281
  • May 26, 2013 3:20pm May 26, 2013 3:20pm
Quoting The Fool
{quote} AWESOME djambazo you sound like a pro. gamma scalping I am def into but not quite well-capitalized for yet. Long underlying with long puts out a ways I have played before, not enough to say ALWAYS but I ain't arguing. I am looking at FB for that maybe.... {image}
was just looking at the FB trade using the free options calculator at CBOE

http://www.cboe.com/framed/IVolframe...ity%20Services

Sep '13 $26 puts maybe?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #282
  • May 26, 2013 3:38pm May 26, 2013 3:38pm
couple of ways you can trick this one

-wait for flat price pullback to 25-6 area to pick up more resting offers and buy 10-15 delta puts, also of course watch the VIX 5min-15 min charts to see if you are possibly overpaying for these puts as they do have enough vega risk in them, and so sometimes even if you are correct on the general direction, having overplayed significantly might eat into your profits
-buy put spreads, cheap way to bet, very risk conservative, but limited upside, great thing about is that it limits the the price of the bearish strategy
-sell 1x2 put spreads, this is a bit cowboy like but very very lucrative, since you sell 1 very juicy 40-ATM put and buy 2 25 delta puts, or even lower
in this scenario your risk a kinda high but if you have been patient and correctly guessed the downside, you will be rewarded handsomely, should the underlying tank, see i said "sell" an option which is pretty scary in wording but in fact you can also limit your risk by just implementing a reverse stop loss order and cover....we all take losses, your worst enemy here is if price goes down slowly, then the put u sold will burn a hole in your pocket, but if flat price moves away very quickly from your beefy puts, an interesting thing happens...the two puts u purchased have NOW become juicy puts of which you are long, and price has moved away from your short option, which becomes a shitty option which does not lose you alot of money, vs the bombastic profit potential of the two options that are now sought after by everybody and their mother...and yes to answer your question I used to work as an option market maker for 3 years, trading then entire energy complex
Thank you Malcolm, Belekas, Jim, raczekfx and Ryanmcd !
  • #283
  • May 26, 2013 3:42pm May 26, 2013 3:42pm
Ya FB looks ripe for a hard fall....

IV is starting to creep up a bit from the lows

Id like to see a pullback on the underlying to 24.75 or so and play some sept 13 22/26 Bear put spreads and pay about $1.85 for them... would net about a 30 delta trade and risk about .50 to make $2.00
Put up some risk graphs TF... I think in this case the debit spread makes a bit more sense than the long Put
  • #284
  • May 26, 2013 3:46pm May 26, 2013 3:46pm
Quoting djambazov84
your worst enemy here is if price goes down slowly, then the put u sold will burn a hole in your pocket, but if flat price moves away very quickly from your beefy puts, an interesting thing happens...the two puts u purchased have NOW become juicy puts of which you are long, and price has moved away from your short option, which becomes a shitty option which does not lose you alot of money, vs the bombastic profit potential of the two options that are now sought after by everybody and their mother...and yes to answer your question I used to work...
exactly, the slow downmove is the problem I saw running through scenarios with the calculator, so FB maybe not the best stock, prolly not susceptible to a big fast drop, so I will be looking at others

cool, not surprising you have experience in the biz, sounds like you do/did. Many thanks for dropping knowledge here.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #285
  • May 26, 2013 3:47pm May 26, 2013 3:47pm
Quoting Wulfgar
Ya FB looks ripe for a hard fall.... IV is starting to creep up a bit from the lows Id like to see a pullback on the underlying to 24.75 or so and play some sept 13 22/26 Bear put spreads and pay about $1.85 for them... would net about a 30 delta trade and risk about .50 to make $2.00Put up some risk graphs TF... I think in this case the debit spread makes a bit more sense than the long Put

i love September options, always historically cheap after a sluggish summer, also they tend the get bid when institutions are rolling out of their front month expiring options because of the large erosion, by purchasing either july/sep or aug/sep calendar rolls
Thank you Malcolm, Belekas, Jim, raczekfx and Ryanmcd !
  • #286
  • May 26, 2013 3:48pm May 26, 2013 3:48pm
Quoting Wulfgar
Ya FB looks ripe for a hard fall....
well you prolly have a better feel for it, I have not been watching FB really.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #287
  • May 26, 2013 3:51pm May 26, 2013 3:51pm
Quoting The Fool
{quote} exactly, the slow downmove is the problem I saw running through scenarios with the calculator, so FB maybe not the best stock, prolly not susceptible to a big fast drop, so I will be looking at others cool, not surprising you have experience in the biz, sounds like you do/did. Many thanks for dropping knowledge here.
Ratio spreads are easy to create to make them vega neutral so you dont have to worry too much about the speed of the inherent move...

the vertical debit spread I put up there is going to be slightly vega positive... but give you some decent vega exposure protection compared to just a long put
  • #288
  • May 26, 2013 3:53pm May 26, 2013 3:53pm
Quoting djambazov84
{quote} i love September options, always historically cheap after a sluggish summer, also they tend the get bid when institutions are rolling out of their front month expiring options because of the large erosion, by purchasing either july/sep or aug/sep calendar rolls

Ya with summer coming up Im positioning for some range trades and looking to take advantage of the typical drop in IV

Got a IWM Iron condor built on Friday... I guess price "could" just blast str8 up through those capitulation highs after the bernanke speech.... But odds are we go sideways for awhile and base for another leg up...
  • #289
  • May 26, 2013 3:54pm May 26, 2013 3:54pm
Quoting Wulfgar
{quote}Ratio spreads are easy to create to make them vega neutral so you dont have to worry too much about the speed of the inherent move... the vertical debit spread I put up there is going to be slightly vega positive... but give you some decent vega exposure protection compared to just a long put
I am checking that out - thanks buddy
"If The Fool persists in his Folly he will become wise." - William Blake
  • #290
  • May 26, 2013 3:54pm May 26, 2013 3:54pm
Quoting The Fool
{quote} well you prolly have a better feel for it, I have not been watching FB really.

I watch it a bit.... it melted down through a pretty rugged level at the 26.40 without much of a fight.... pretty much open space till 22
  • #291
  • May 26, 2013 3:58pm May 26, 2013 3:58pm
sun coming out, gonna go hack at some golf balls, later..
"If The Fool persists in his Folly he will become wise." - William Blake
  • #292
  • May 26, 2013 7:49pm May 26, 2013 7:49pm
NIKKEI opens down 3% 420 points lower
  • #293
  • May 26, 2013 8:04pm May 26, 2013 8:04pm
Quoting Cecil Gee
NIKKEI opens down 3% 420 points lower
How will the Dow react on tuesday after the bank hol
  • #294
  • May 26, 2013 8:06pm May 26, 2013 8:06pm
Quoting Cecil Gee
{quote} i can see an accelerated fall on tuesday when markets open, what should of happened today. lets wait and see
may just come true, not the first time they have done this
  • #295
  • May 26, 2013 8:08pm May 26, 2013 8:08pm
Quoting Cecil Gee
NIKKEI opens down 3% 420 points lower
NIKKEI accelerates to 4%
  • #296
  • May 26, 2013 8:10pm May 26, 2013 8:10pm
Quoting Cecil Gee
NIKKEI opens down 3% 420 points lower
I still think Nikkei strength/yen weakness will ride again this Summer. Volatile ranging could make for some lucrative trading. Will be watching EWJ, YCS, also need to find volatile Japan-depenedent individual stocks...like TM - down $12 last week
"If The Fool persists in his Folly he will become wise." - William Blake
  • #297
  • May 26, 2013 8:10pm May 26, 2013 8:10pm
Quoting Wulfgar
{quote} I watch it a bit.... it melted down through a pretty rugged level at the 26.40 without much of a fight.... pretty much open space till 22
I would buy FB if it comes down to $5, its true value imo
  • #298
  • May 26, 2013 8:13pm May 26, 2013 8:13pm
Quoting The Fool
{quote} I still think Nikkei strength/yen weakness will ride again this Summer. Volatile ranging could make for some lucrative trading. Will be watching EWJ, YCS, also need to find volatile Japan-depenedent individual stocks...like TM - down $12 last week
never traded japan stocks, like to find corresponding etf's with options
  • #299
  • May 26, 2013 8:18pm May 26, 2013 8:18pm
Quoting Wulfgar
Threw on a trade on Spot short on Ninja @ 103.58 earlier locked in my trade before the FOMC minutes and it spiked me out to the tick Good One Wulfgar ... smh
goodness... kicking myself in the ass on this one....

looking for a move back to 102.15 area on spot to get short

I did get filled on a dec 13 94/104 ratio call spread on FXY though @ 95 on the underlying... gunning for 100 on that one... its nicely in profit right now and the nikkei collapsing def helps

eyes on JGB yields... that market has been a monster lately... BOJ is struggling to keep control despite their posturing
  • #300
  • May 26, 2013 8:21pm May 26, 2013 8:21pm
Quoting The Fool
{quote} I still think Nikkei strength/yen weakness will ride again this Summer. Volatile ranging could make for some lucrative trading. Will be watching EWJ, YCS, also need to find volatile Japan-depenedent individual stocks...like TM - down $12 last week
I got eyes on EWJ around 10.05/ 10.15... beast of an area
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