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Let's Trade Options

  • #501
  • Jun 4, 2013 5:14am Jun 4, 2013 5:14am
Quoting Cecil Gee
I don't like to trade this early in the week but I do have a signal for GDX call option tricky areas just above 30.93 i'm a little late but gonna go for $32 call, i'm trying to get it for 12c but its trading at 13-14 at the moment. GDX Jun 2013 32.000 call (GDX130607C00032000) -OPR 0.13 {image} 0.06(85.71%) 10:47AM EDT GDX is trading at 30.29 Market Vectors Gold Miners ETF (GDX) -NYSEArca 30.29 {image} 0.79(2.69%) 11:15AM EDT - Nasdaq Real Time Price
Gold has fallen below $1400 this should have an affect on GDX, I DID ENTER FOR 12C, was expecting some retrace from yesterday, will look to see where it trades today. FOMC this week with NFP, i think
  • #502
  • Jun 4, 2013 5:17am Jun 4, 2013 5:17am
Quoting Cecil Gee
{quote} Gold has fallen below $1400 this should have an affect on GDX, I DID ENTER FOR 12C, was expecting some retrace from yesterday, will look to see where it trades today. FOMC this week with NFP, i think

NO fomc but all other data is due
  • #503
  • Jun 4, 2013 6:36am Jun 4, 2013 6:36am
Quoting Cecil Gee
{quote} Gold has fallen below $1400 this should have an affect on GDX, I DID ENTER FOR 12C, was expecting some retrace from yesterday, will look to see where it trades today. FOMC this week with NFP, i think
I'm gonna close this trade out, Gold is below 1400, so i'll take a 50% haircut on this dumb trade, will wait till later in the week
  • #504
  • Jun 4, 2013 8:54am Jun 4, 2013 8:54am
Quoting Cecil Gee
{quote} can't see EWJ reaching there even by weeks end, its daily range is small and the strikes 72c away, too much even though its 2c, imho. Good luck if take it. I think you made a good decision not wanting to take a trade until wednesday onwards, rules like that help with risk tolerance
a papertrade, EWJ up $0.40 at the open, and the $11.50 call sells for $0.06
"If The Fool persists in his Folly he will become wise." - William Blake
  • #505
  • Jun 4, 2013 9:00am Jun 4, 2013 9:00am
Quoting sisse
{quote} Sorry mate, try to find a reason for that trade but don't see it anywhere. What are you aiming for? On the EWJ looks better but what kind of strategy are you using and what are you aiming for? sisse
just a directional bet with some long odds. But TLT has dropped $10 in the last 30 days, so another $15 to go in 100 days or so is not so wild a call. long bond rates will continue to rise I bet, and TLT will fall, as I see it has today, so my far otm puts will increase in value
"If The Fool persists in his Folly he will become wise." - William Blake
  • #506
  • Jun 4, 2013 9:09am Jun 4, 2013 9:09am
Quoting Cecil Gee
{quote} I'm gonna close this trade out, Gold is below 1400, so i'll take a 50% haircut on this dumb trade, will wait till later in the week
Ranging gold pissin me off too, I am trying to get some profit out of an IAU straddle & gold can't string together 2 breakout days.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #507
  • Jun 4, 2013 12:14pm Jun 4, 2013 12:14pm
Quoting The Fool
{quote} just a directional bet with some long odds. But TLT has dropped $10 in the last 30 days, so another $15 to go in 100 days or so is not so wild a call. long bond rates will continue to rise I bet, and TLT will fall, as I see it has today, so my far otm puts will increase in value
Well everybody knows that it will go down in the next few months. The question is not that but how to profit from that move from a option perspective.

I'm not sure you are using options correctly in this case. Just out of common sense I can bet you that you won't make a penny with such otm puts. Not only the odds are severely against your trade but what is worst even if the directional move pans out at the end you will probably not make a penny ...option are excellent option for trading but I think they are not the best tool for such otm directional trade. I know it looks tempting and is very cheap but you may want to start thinking about volatility first and after directionality.

Wulf has posted some very interesting trades in the thread. I'm not looking in detail but why don't you look for a bear put spread instead. For a quick hint check for buying some itm puts around that strong R 118 and looking to generate the spread selling otm puts a bit higher of last breakout around 106. with that you can limit risk (you also limit reward) but you can profit from the move without overshooting with such otm trade...

Point is have a look if the trade and when the is worth it and look to use the power of options for what they are make for not for such far otm directional trade otherwise you will get better bang for the risk and cost trading CFDs instead ....in any case just my 2 cents...

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #508
  • Jun 4, 2013 12:27pm Jun 4, 2013 12:27pm
Quoting sisse
{quote} Well everybody knows that it will go down in the next few months. The question is not that but how to profit from that move from a option perspective. I'm not sure you are using options correctly in this case.
I appreciate your point of view, sisse, I am always open to constructive criticism and I am a relative noob options trader so there's lots of room for improvement in my mo. But I am limited as to how I may trade options in some of my accounts - which are IRA accounts - no margin trading allowed. I have made money on these types of trades before and of course I have lost all on them, too - in which case "all" was within defined risk parameters. I noticed the Sep '13 TLT $105 puts are up $0.11 today. As (and if) TLT continues to fall the $100 puts will gain, too, and I have until late Sept. for that to pan out. If there is a paradigm shift apparent in the Summer and bond yields are waning then I will cut my losses.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #509
  • Jun 4, 2013 1:28pm Jun 4, 2013 1:28pm
Quoting The Fool
{quote} ?.... IRA accounts - no margin trading allowed. .....s. I noticed the Sep '13 TLT $105 puts are up $0.11 today. As (and if) TLT continues to fall the $100 puts will gain, too, and I have until late Sept. for that to pan out. If there is a paradigm shift apparent in the Summer and bond yields are waning then I will cut my losses.
I see with the IRA no margin. That limits a lot your options.

In any case, back to TLT, the problem is the you are assuming we have a hard top and high "panic" volatility is around the corner and both are not true yet ... Point is I don't think we have reach the top in equities, neither I buy yet the rumor of end of QE "mañana". What if I told you that a bleak ECB outlook / poor NFP combo on Friday will put as back to the roof cleaning all the early "bears" in bonds market making a 100 TLT statistically "impossible" short term.

Look IMO, I'm more judging the timing and the intrinsic value of the play not the directionality. Point is this play is track by every single investor, trader and etc across the world. This play is major leagues and only big boys will define the outcome after they annihilate each other in the highs.

We as tiny ugly ducklings in this play have the luxury to wait for more "data" and to market to pan out a bit at least before we make the move. In simple words, the bonds momentum play will be trigger by the FED and the fed is not even in play this week so my 2 cents at least wait for NFP and equities losing floor before a sep/oct play ....you are not going to miss the move in options but you may get a lot better money for value on the trade....

Gl mate, I am closely tracking bond markets and I will keep an eye on your trade...

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #510
  • Jun 4, 2013 1:44pm Jun 4, 2013 1:44pm
Quoting sisse
{quote} In any case, back to TLT, the problem is the you are assuming we have a hard top and high "panic" volatility is around the corner and both are not true yet ... Point is I don't think we have reach the top in equities, neither I buy yet the rumor of end of QE "mañana". What if I told you that a bleak ECB outlook / poor NFP combo on Friday will put as back to the roof cleaning all the early "bears" in bonds market making a 100 TLT statistically "impossible" short term.
I do not have the assumption you note - actually, my take is that QE juice will continue to flow and that we will have continuing strength in stocks AND movement out of bonds with resultant bond yields rising, so TLT falling. In other words, more of the same.


I could be all wrong about that and a low NFP number on Friday could be toxic to my TLT trade. However, a low TLT number ironically could be interpreted as reassurance that the Fed will have to keep the QE feed trough in place. A NFP number that beats expectations would be worse, conversely. So, as far as NFP goes, I will be thinking about pulling the plug on my TLT puts if there is a high number, otherwise, will let it ride.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #511
  • Jun 4, 2013 2:06pm Jun 4, 2013 2:06pm
Quoting The Fool
{quote} I do not have the assumption you note - actually, my take is that QE juice will continue to flow and that we will have continuing strength in stocks AND movement out of bonds with resultant bond yields rising ???,
I am not sure about that. The play is via QE and rates more than Equities. I don't think equties will rally (short term) when the FED finally announce end of QE ... to make it simpler, fighting a CB is never a good idea and price wise let see how price is trading on Friday post NFP ... From a strictily TA point of view 116 is wide open and 120 marginally open...

Let see and GL

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #512
  • Jun 4, 2013 2:28pm Jun 4, 2013 2:28pm
The other weekly papertrade I had today was BAC $13.50 puts, bought at $0.12 when BAC was just above the cut at $13.60. Those are going for $0.27 now. EWJ calls went up a penny, will be laying off EWJ, looking for others with $0.50 cuts, high liquidity, and good movement.

Meanwhile, can anybody tell me what it will take to bust gold out of its chickensht $40 range?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #513
  • Jun 4, 2013 6:57pm Jun 4, 2013 6:57pm
Quoting sisse
{quote} Well everybody knows that it will go down in the next few months. The question is not that but how to profit from that move from a option perspective. I'm not sure you are using options correctly in this case. Just out of common sense I can bet you that you won't make a penny with such otm puts. Not only the odds are severely against your trade but what is worst even if the directional move pans out at the end you will probably not make a penny ...option are excellent option for trading but I think they are not the best tool for such otm...

Sisse

I too expressed caution to T.F. on this trade and suggested selling some otm puts against it (front month) collecting premium and reducing the cost of his sept puts, if it works then next month you can repeat the process until your long put is for free or very little in cost, anyway hope it works for T.F.
  • #514
  • Edited Jun 5, 2013 6:38am Jun 4, 2013 7:47pm | Edited Jun 5, 2013 6:38am
With a small down day today in the markets has put me back in the frame of looking for puts in equities/index/etf options only on weeklys looking for a explosive gamma trade, i'm eyeing spy 161 puts , aig $43 puts

spy closed at 163.56
aig closed at 44.10 , i'll only take the trades if i can get them cheap enough or may just wait an extra day.

FAZ/FAS are back in play but for them i need a extra day of price data, faz-long and fas/short

The one i'm really looking to trade is GDX again, if GDX can close or trade near the closing day tomorrow above $30.05 then i'll look to buy the $31 call for fridays expiration for i'm hoping between 5-9c
GDX closing price today
Market Vectors Gold Miners ETF (GDX)
-NYSEArca
29.84 http://l.yimg.com/os/mit/media/m/bas...nt-1093278.png 0.52(1.71%) 4:00PM EDT|After Hours : 29.83 http://l.yimg.com/os/mit/media/m/bas...nt-1093278.png 0.01 (0.03%) 6:43PM EDT

T.F> looked at BAC again, a close under 13.26 tomorrow should open the $13 put, if that is price 3-5c for fridays expiration then i'm buying.

i'm looking at financials again for puts depending how fas/faz close tomorrow

Need to see that GDX up to 30.05 otherwise i'll wait for a bear set up on the put side, rest of the above seems to be on schedule as the futures are negative 63 on the DOW, could all change with the ADP coming out shortly
  • #515
  • Jun 4, 2013 8:56pm Jun 4, 2013 8:56pm
Quoting sisse
{quote} Well everybody knows that it will go down in the next few months. The question is not that but how to profit from that move from a option perspective. I'm not sure you are using options correctly in this case. Just out of common sense I can bet you that you won't make a penny with such otm puts. Not only the odds are severely against your trade but what is worst even if the directional move pans out at the end you will probably not make a penny ...option are excellent option for trading but I think they are not the best tool for such otm...
Hey Sisse

Hope you are doing well brother. Ive found my niche of consistent profitability in trading options as opposed to spot FX. As I explained earlier in this thread I really consider options trading to be more "volatility" trading than anything. You reiterated that point in the quoted paragraph. Heading into this week we are seeing some excessive moves on the VIX due to the heavy docket of data and the Fed talk from last week. I do NOT expect it to last past friday and expect the ECB conference/NFP to be nothing out of the ordinary.

As such Im basically "walking Sparky across the highway" this week with my condors. Very low risk way to capture rapid drops in volatility as long as the outer boundaries are not breached my R:R stands at 4:1 or better for each condor I place in this environment. I also have a single 116 Call calender spread on TLT which is Vega positive and should serve to mitigate any losses I suffer on the condors should the less probable situation happen and a crisis rear its head heading into the summer months.


In reference to your advice for T.F. to do a bear put spread for his bearish bias on TLT.... Remember that a bear put spread is a debit spread and therefore in Vega positive... So he should only do a debit spread IF he expects volatility to INCREASE during the life of his trade.... Since he is playing sort of a macro view longer term options trade I feel the best directional position is a put ratio spread so that his offset units can neutralize his vega exposure completely.

The whole world is talking about yields going up right now and are getting short bonds.... everyone except the Fed.... Frankly Ill stay long bonds and short yields until they say otherwise.... ive learned the hard way " Dont fight central planning." I really dont think they are just going to drop QEand see if the US economy can ride its bike without training wheels until they are ABSOLUTELY sure it can.


Anyways its great to see you around

So hopefully Sparky makes it across the street without getting hit by a car this week...lol
  • #516
  • Jun 4, 2013 9:13pm Jun 4, 2013 9:13pm
Quoting Cecil Gee
{quote} Sisse I too expressed caution to T.F. on this trade and suggested selling some otm puts against it (front month) collecting premium and reducing the cost of his sept puts, if it works then next month you can repeat the process until your long put is for free or very little in cost, anyway hope it works for T.F.
I am glad you peeps are lookin out for me - thanks to all. Anyway duh I was duh wrong in my assumptions duh re: selling naked puts out of my largest IRA account and can do so just have to be duh cash secured with full proceeds of the sale + 20% of the underlying market value minus the otm amount OR full proceeds + 10% of the strike price. Well, now that I know this I am going to sell a kidney so that I can start selling naked weekly nobrainer puts nonstop. I'll be able to buy back my kidney in the first month.

Anyway is that a raw margin deal or what, m/l standard?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #517
  • Jun 4, 2013 9:30pm Jun 4, 2013 9:30pm
Quoting The Fool
{quote} I am glad you peeps are lookin out for me - thanks to all. Anyway duh I was duh wrong in my assumptions duh re: selling naked puts out of my largest IRA account and can do so just have to be duh cash secured with full proceeds of the sale + 20% of the underlying market value minus the otm amount OR full proceeds + 10% of the strike price. Well, now that I know this I am going to sell a kidney so that I can start selling naked weekly nobrainer puts nonstop. I'll be able to buy back my kidney in the first month. Anyway is that a raw margin...
neked selling , oooh can be scarey stuff. Most decent brokers won't allow you to do that stuff unless your an experienced option trader plus there criterias to be met before your allowed clearance to do it well at least thats how it use to be
  • #518
  • Jun 4, 2013 9:33pm Jun 4, 2013 9:33pm
Quoting Cecil Gee
{quote} neked selling , oooh can be scarey stuff. Most decent brokers won't allow you to do that stuff unless your an experienced option trader plus there criterias to be met before your allowed clearance to do it well at least thats how it use to be
naw they waved me through on looks alone.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #519
  • Jun 4, 2013 9:35pm Jun 4, 2013 9:35pm
Quoting The Fool
{quote} naw they waved me through on looks alone.
you must have looks of a super model
  • #520
  • Jun 4, 2013 9:49pm Jun 4, 2013 9:49pm
Quoting Cecil Gee
{quote} you must have looks of a super model
what, you don't like selling naked puts CG? Look at those juicy DUST front month $56 puts still worth $1.50 at $20 otm and gold stuck in a tight range....
"If The Fool persists in his Folly he will become wise." - William Blake
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