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Let's Trade Options

  • #1,341
  • Oct 13, 2013 12:17am Oct 13, 2013 12:17am
Hi

I am interested in trading options and in this thread.

Someone kindly let me know where to start from. I know very little about options, but believe me I will learn very quickly. I am a CPA but my knowledge of derivatives is theoretical, limited and old. Consider me a layman.

Thanks

ps. I promise to behave on this thread. ...................... so far so good.
The Thief of Wall Street
  • #1,342
  • Oct 13, 2013 12:57am Oct 13, 2013 12:57am
Quoting Chicky
Hi I am interested in trading options and in this thread. Someone kindly let me know where to start from.
Hi Chicky, you're welcome here. I invite you to scroll back through the thread to find references to some of the books that I and others have found helpful. There's also lots of free educational info on the CBOE website:

http://www.cboe.com/

Be prepared to spend some time and effort. The hardest thing to understand about options is how they are valued, so I would recommend keeping in focus an effort to understand options pricing and options greeks as you go along, and that will sink in over time.

Otherwise, just like any kind of trading it is always helpful to jump right in and papertrade. If you don't have an account somewhere that will allow papertrading options then I recommend TD Ameritrade so you can use the Think or Swim platform there. But, really, you can learn alot just jotting down trades and following the options values on Yahoo finance. You can try out some of the trading strategies you read about in books and online and see how they work for you. Post your trades here if you dare and I will tell you what I think of them.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,343
  • Oct 13, 2013 1:37am Oct 13, 2013 1:37am
http://www.businessinsider.com/bianc...stocks-2013-10

...so, I kind of think we will see a DC deal by Oct opex and an equity rally, a rise in S&P to 1730 +/-, ...and then a fall back by early November.

I will watch SDS on Monday: a $34/$38 Nov long strangle prices at ~ $1.10 Friday close - the ideal scenario there would be to get a good dip in SDS to $34.50 and sell the puts then wait for the S&P pullback to sell the calls
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,344
  • Oct 13, 2013 8:03am Oct 13, 2013 8:03am
Quoting The Fool
{quote} I wouldn't play TLT without covering my ass on both ends. If the debt limit "deadline" comes and goes w/o some happy talk out of DC the ^TNX could go back towards 3.0 and TLT could be at <$102 before Halloween.
Possible but this is where the markets get caught in a catch-22: where to run to when the problem is the US itself; there isn't anywhere (unless you count....gold? Now there's a thought mwah ha ha!!!). Therefore they run to treasuries even when the problem is the US gov itself. If they run to gold, so much the better, I'm long that bastard too (and bleeding..not one of my better trades lol).

If I short the puts I'll start hedging on price movement below the 50DMA and/or Thursday's low. But (at least in the beginning) this will be small beer: just one contract.
I have no clue what I'm talking about.
  • #1,345
  • Oct 13, 2013 8:08am Oct 13, 2013 8:08am
Quoting Chicky
Hi I am interested in trading options and in this thread. Someone kindly let me know where to start from. I know very little about options, but believe me I will learn very quickly. I am a CPA but my knowledge of derivatives is theoretical, limited and old. Consider me a layman. Thanks ps. I promise to behave on this thread. ...................... so far so good.
Hello Chicky. You need to get yourself a good book on options for newbies; pretty sure you can find one easily on amazon etc. When it comes down to it you're faced with either buying them or selling them. I sell them. Many others buy them. It's your choice, you can experiment and make money either way but of course remember it's all highly leveraged stuff. But then, probably still a darn sight less leveraged than most forex trading.
I have no clue what I'm talking about.
  • #1,346
  • Oct 13, 2013 8:14am Oct 13, 2013 8:14am
Quoting The Fool
http://finance.yahoo.com/news/big-sl...203506941.html "....a new report from Société Générale's asset allocation team — which calls for a 15% correction in the stock market in the first quarter of next year, followed by a multi-year journey back to where the index sits today..." But it's all based on the presumption that the Fed will taper in Q1 '14 and that 10y rates will be above 3.0.....
I follow Hussman a bit, and I have the following quote for ye, which more than corroborates SG's view:

Quote
Suffice it to say that our estimates using both earnings and non-earnings based measures suggest a likely total return for the S&P 500 over the coming decade of less than 2.9% annually, essentially driven by dividend income, and implying an S&P 500 that is roughly unchanged a decade from now – though undoubtedly comprising a volatile set of market cycles on that course to nowhere.

http://www.hussmanfunds.com/wmc/wmc130923.htm

I think that many asset managers probably feel the same way but are drawn into playing the market in the hope and (perhaps deluded) belief that they can and will get out in time before the rug is pulled from beneath the market.
I have no clue what I'm talking about.
  • #1,347
  • Oct 13, 2013 11:36am Oct 13, 2013 11:36am
Quoting Chicky
Hi I am interested in trading options and in this thread. Someone kindly let me know where to start from. I know very little about options, but believe me I will learn very quickly. I am a CPA but my knowledge of derivatives is theoretical, limited and old. Consider me a layman. Thanks ps. I promise to behave on this thread. ...................... so far so good.
I have to know that optiosn provide much more trading opportunities that you can ever imagine. Start with a book about the options basics. What you have to learn is how to interpret the options Greeks. If you know the Greeks you know the options. I could recommend you to turn more attention to volatility trading and income strategies with equity and index options. You can trade the price also, but it's not worth it.
  • #1,348
  • Oct 13, 2013 12:48pm Oct 13, 2013 12:48pm
Quoting srmfx
{quote} I have to know that optiosn provide much more trading opportunities that you can ever imagine.
Hello srmfx & please feel welcome here anytime - I hope you will tell us about any of your options trades, before or after the fact.

Bulgaria, huh? - boy I have always thought that would be an interesting place to visit....

Inserted Video
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,349
  • Oct 13, 2013 2:22pm Oct 13, 2013 2:22pm
Quoting The Fool
{quote} Hello srmfx & please feel welcome here anytime - I hope you will tell us about any of your options trades, before or after the fact. Bulgaria, huh? - boy I have always thought that would be an interesting place to visit.... http://www.youtube.com/watch?v=-_gm0j1H1kc
I trade mostly FX options-vanilla and binaries. Prefer to trade volatility rather than price. Friday took 10 pips before Canada employment data qith a long strangle. Closed november vix 18 call@260 (bought @125). Still hold december 20 call. Vix calls bought for seasonal vol increase and expected political selloff of indices
  • #1,350
  • Oct 14, 2013 1:14pm Oct 14, 2013 1:14pm
Quoting The Fool
I will watch SDS on Monday: a $34/$38 Nov long strangle prices at ~ $1.10 Friday close - the ideal scenario there would be to get a good dip in SDS to $34.50 and sell the puts then wait for the S&P pullback to sell the calls
...bought the put leg, $0.19 for Nov 16 $33.00 SDS puts, when SDS @ about $33.40, will watch the S&P now for an entry on the calls...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,351
  • Oct 14, 2013 1:38pm Oct 14, 2013 1:38pm
Quoting The Fool
{quote} I wouldn't play TLT without covering my ass on both ends. If the debt limit "deadline" comes and goes w/o some happy talk out of DC the ^TNX could go back towards 3.0 and TLT could be at <$102 before Halloween.
also watching here, nice dip in TLT today, not sure I could call a bottom at $104.50, but bet we can get +/- $3 either way in the next 30 days

also looking for good (10%+) moves in NUGT/DUST in near term....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,352
  • Oct 14, 2013 3:19pm Oct 14, 2013 3:19pm
Quoting The Fool
{quote} "The S&P BMI Emerging Markets Low Volatility Index measures performance of the 200 least volatile emerging markets stocks. The index benchmarks low volatility or low variance strategies. Constituents are weighted relative to the inverse of their corresponding volatility, with the least volatile emerging market stocks receiving the highest weights." ....ok, i guess i see some potential there....let us see your hourly charts when you have them.....
Its best on a 5 or 10 min chart for intraday as it only ticks during market hours. I get it through iq feed.
Attached Image (click to enlarge)
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  • #1,353
  • Oct 17, 2013 4:21pm Oct 17, 2013 4:21pm
Quoting The Fool
{quote} ...bought the put leg, $0.19 for Nov 16 $33.00 SDS puts, when SDS @ about $33.40, will watch the S&P now for an entry on the calls...
still watching for a long call entry, the puts are up to $0.31 at close
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,354
  • Oct 17, 2013 4:22pm Oct 17, 2013 4:22pm
Quoting The Fool
{quote} I have to play both sides given the event-risk scenario in play: if the logjam breaks in D.C. and the threat of default goes away we could easily be at new S&P highs again this month...
...new S&P high today, everybody's a genius in a bull market....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,355
  • Oct 18, 2013 11:39am Oct 18, 2013 11:39am
Yeah no genius here. I got out of short TLT 105.5 puts that went pear-shaped literally minutes after I sold them; I sold some more at 104.5 on the drop and closed them all out for pennies yesterday.
But I'm having to roll over a bucketload of short ES calls. Bad mistake there. I think hedgies are short up to their eyeballs (but only found this out a couple of days ago to my immense chagrin) so we could be up here for a month or more before "they" pull the plug. It's possible we go sideways, 1700-1750, for a month, who knows, certainly not I.
Probably the likes of GS on the bid with their immense firepower, bastards LOL.
I have no clue what I'm talking about.
  • #1,356
  • Oct 18, 2013 2:09pm Oct 18, 2013 2:09pm
Quoting Boy Wonder
Yeah no genius here. LOL.
Don't worry, you'll be sage on your next right call. What do you want to sell? How about the Nov 16 $12 VXX puts?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,357
  • Oct 18, 2013 2:34pm Oct 18, 2013 2:34pm
Quoting The Fool
{quote} Don't worry, you'll be sage on your next right call. What do you want to sell? How about the Nov 16 $12 VXX puts?
I would never sell VXX puts. I have had brief dalliances with VIX trading in the past and to be frank, they were not successful. It's a bit like trading NG. I'm pretty sure some people out there must be able to make it work. But I'm not one of them.
I have no clue what I'm talking about.
  • #1,358
  • Oct 18, 2013 3:26pm Oct 18, 2013 3:26pm
Quoting Boy Wonder
{quote} I would never sell VXX puts. I have had brief dalliances with VIX trading in the past and to be frank, they were not successful. It's a bit like trading NG. I'm pretty sure some people out there must be able to make it work. But I'm not one of them.
I have a hard time too being anything other than short VIX now. Selling any spike would be my preference.

But I am mostly flat now and not quite in tune with any near term event risk scenarios.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,359
  • Oct 21, 2013 10:41am Oct 21, 2013 10:41am
I think we get a spike tomorrow that takes us to 1750 or thereabouts, which will probably mark the top of this latest leg up. However, at a guess it could and probably will go sideways for a couple of weeks before and movement south.
Not saying that it's "the" top though. Far from it and in any case that's impossible to say right now.
I have no clue what I'm talking about.
  • #1,360
  • Oct 21, 2013 1:25pm Oct 21, 2013 1:25pm
I probably shouldn't have done this but my inner gambler got the better of me...STO NFLX OCT25 375C for 11.90. IV is through the roof. Earnings tonight after market close. Everyone likes a flutter eh.
I have no clue what I'm talking about.
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