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Let's Trade Options

  • #1,361
  • Oct 21, 2013 12:57pm Oct 21, 2013 12:57pm
sittin here near close thought about closing my Nov SDS long puts. But I can't convince myself that we won't see new S&P highs in the near term, absent any crises to be played, so I think I will hold em and ride thru the delayed NFP call.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,362
  • Oct 21, 2013 1:04pm Oct 21, 2013 1:04pm
Quoting Boy Wonder
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.
good call, quick easy money, traded at >$371 I see AH, you should more than double your bet by tomorrow
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,363
  • Oct 21, 2013 1:18pm Oct 21, 2013 1:18pm
Quoting The Fool
{quote} good call, quick easy money, traded at >$371 I see AH, you should more than double your bet by tomorrow
wow, $390+ AH now, will you buy me something...?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,364
  • Oct 21, 2013 1:53pm Oct 21, 2013 1:53pm
Quoting The Fool
{quote} wow, $390+ AH now, will you buy me something...?
Yeah, erm, but I sold the call; I didn't buy it. The way things look at the moment I'm going to be rolling on Friday. That's the way the cookie crumbles.
I have no clue what I'm talking about.
  • #1,365
  • Oct 21, 2013 2:18pm Oct 21, 2013 2:18pm
Quoting Boy Wonder
{quote} Yeah, erm, but I sold the call; I didn't buy it. The way things look at the moment I'm going to be rolling on Friday. That's the way the cookie crumbles.
aw, nuts...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,366
  • Oct 21, 2013 2:57pm Oct 21, 2013 2:57pm
I have a question just for curiosity. I know almost nothing about binary options. Isn't the risk-reward ratio fairly positive when the expiration is relatively far away? So, if this is true, why can't someone just "hedge" with a call and put for opposite targets, with identical expiration times, and walk away with some kind of net profit every time?
For instance, if a particular option would win $100, and lose $20 on both call and put, can't we just do both with same expiration time, and walk away with $80?
Please excuse my ignorance, and thanks in advance for the answer
Too close for pips, switching to points.
  • #1,367
  • Oct 21, 2013 3:40pm Oct 21, 2013 3:40pm
Quoting The Fool
{quote} aw, nuts...
Quite. Greed got the better of me - shoulda gone further out. Be interesting to see for how long they hold it up here. Round numbers can act as magnets, so any trading through 390 could easily target 400.
I have no clue what I'm talking about.
  • #1,368
  • Oct 21, 2013 3:41pm Oct 21, 2013 3:41pm
Quoting Thepipster
I have a question just for curiosity. I know almost nothing about binary options. Isn't the risk-reward ratio fairly positive when the expiration is relatively far away? So, if this is true, why can't someone just "hedge" with a call and put for opposite targets, with identical expiration times, and walk away with some kind of net profit every time? For instance, if a particular option would win $100, and lose $20 on both call and put, can't we just do both with same expiration time, and walk away with $80? Please excuse my ignorance, and thanks...
I've never traded binaries. Can't help you, sorry.
I have no clue what I'm talking about.
  • #1,369
  • Oct 21, 2013 4:03pm Oct 21, 2013 4:03pm
Quoting Boy Wonder
{quote} I've never traded binaries. Can't help you, sorry.
Is the basic idea applicable to options in general?
Too close for pips, switching to points.
  • #1,370
  • Oct 21, 2013 4:09pm Oct 21, 2013 4:09pm
Quoting Thepipster
So, if this is true, why can't someone just "hedge" with a call and put for opposite targets, with identical expiration times, and walk away with some kind of net profit every time?
I've not traded binaries, but I'm sure the pricing structure is not gameable as you suggest, otherwise of course the binary options dealers would have been put out of business long ago. I suggest you explore how binary options are priced and you will discover your answer.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,371
  • Oct 21, 2013 4:14pm Oct 21, 2013 4:14pm
Quoting Boy Wonder
{quote} Quite. Greed got the better of me - shoulda gone further out. Be interesting to see for how long they hold it up here. Round numbers can act as magnets, so any trading through 390 could easily target 400.
I wouldn't bet on a large pullback in the near term, not as far as $375..... I'm looking for another earnings season weekly options candidate - any ideas?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,372
  • Oct 21, 2013 4:21pm Oct 21, 2013 4:21pm
Quoting The Fool
{quote} I've not traded binaries, but I'm sure the pricing structure is not gameable as you suggest, otherwise of course the binary options dealers would have been put out of business long ago. I suggest you explore how binary options are priced and you will discover your answer.
I don't even know the difference between binary and regular options, so you can't even do this with regular options?
Too close for pips, switching to points.
  • #1,373
  • Oct 21, 2013 4:29pm Oct 21, 2013 4:29pm
Quoting Thepipster
{quote} I don't even know the difference between binary and regular options, so you can't even do this with regular options?
I hate to break it to you, but there's no free lunch to be found in options trading. What you're hinting at though, is a non-directional trade setup, where one is looking to profit on either end of a setup, and, if the volatility of the underlying is sufficient, then the latter can be a lucrative and well-controlled way to trade. I'm looking over the earnings calendar right now, looking for a straddle or a strangle to play in hopes of something that moves huge such as what NFLX did today....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,374
  • Oct 21, 2013 4:31pm Oct 21, 2013 4:31pm
Quoting The Fool
{quote} I wouldn't bet on a large pullback in the near term, not as far as $375..... I'm looking for another earnings season weekly options candidate - any ideas?
I think there will be at most a push to 400 before it either consolidates (eg bull flags *at best*) or fails. But then I figured it was already overbaked going into earnings, so WTFDIK. It's a classic squeeze to be sure, to be sure, and this just is the icing on the cake with a big fat cherry on top. What's going to be interesting is how long they will hold it up here. I should be able to roll up and out. As always, there are many options. I could add a short put etc etc.

As for other candidates, I think you prefer buying don't you? ORCL looks interesting. Earnings Dec 16. Just pushed up out of a bull flag today...good solid business by many accounts, gone nowhere this year. CAT as well, looks ready to break out. Earnings Wed. Oh and there's a great stock called NFLX that you might want to get long tomorrow at the open at $400 - a real bargain at 400+ PE

Generally I don't do stocks as they use too much capital and are too capricious..and you can't get in and out round the clock.
I have no clue what I'm talking about.
  • #1,375
  • Oct 21, 2013 4:44pm Oct 21, 2013 4:44pm
Quoting The Fool
{quote} I hate to break it to you, but there's no free lunch to be found in options trading. What you're hinting at though, is a non-directional trade setup, where one is looking to profit on either end of a setup, and, if the volatility of the underlying is sufficient, then the latter can be a lucrative and well-controlled way to trade. I'm looking over the earnings calendar right now, looking for a straddle or a strangle to play in hopes of something that moves huge such as what NFLX did today....
that's ok, if you'll bear with my craziness for one more question, than I'm outta here: What happens if you do a buy put and call, and sell put and call all with the same expiration, and same basic targets (if that makes any sense).
Too close for pips, switching to points.
  • #1,376
  • Oct 21, 2013 4:54pm Oct 21, 2013 4:54pm
Quoting Thepipster
{quote} that's ok, if you'll bear with my craziness for one more question, than I'm outta here: What happens if you do a buy put and call, and sell put and call all with the same expiration, and same basic targets (if that makes any sense).
I don't understand what you are proposing. If you're asking, what happens if you buy a put and call with the same strike price and expiration, and sell the same, then, no, that clearly doesn't make any sense - it's like asking what happens if I buy GOOG at 1000 and sell GOOG at 1000 - so you'll need to elaborate.
I have no clue what I'm talking about.
  • #1,377
  • Oct 21, 2013 4:59pm Oct 21, 2013 4:59pm
Quoting Boy Wonder
{quote} I don't understand what you are proposing. If you're asking, what happens if you buy a put and call with the same strike price and expiration, and sell the same, then, no, that clearly doesn't make any sense - it's like asking what happens if I buy GOOG at 1000 and sell GOOG at 1000 - so you'll need to elaborate.
Ok, so, buy GOOG at 1000 with bet on price being higher than 1005 by 12:00, and sell GOOG with bet on price being lower than 995 by 12:00...and have both a buy and sell betting price will stay within 995-1005 range. Does all of this cancel out? Or is a payout higher than a loss?
Too close for pips, switching to points.
  • #1,378
  • Oct 21, 2013 5:05pm Oct 21, 2013 5:05pm
Quoting Thepipster
{quote} Ok, so, buy GOOG at 1000 with bet on price being higher than 1005 by 12:00, and sell GOOG with bet on price being lower than 995 by 12:00...and have both a buy and sell betting price will stay within 995-1005 range. Does all of this cancel out? Or is a payout higher than a loss?
Is this to be done with binaries? As in
Inserted Video
I have no clue what I'm talking about.
  • #1,379
  • Oct 21, 2013 5:22pm Oct 21, 2013 5:22pm
Quoting Thepipster
{quote} that's ok, if you'll bear with my craziness for one more question, than I'm outta here: What happens if you do a buy put and call, and sell put and call all with the same expiration, and same basic targets (if that makes any sense).
buy a put, buy a call at same strike with same expiration, that's a straddle. FCX earnings are tomorrow, lets look at that:
FCX 10/25 $35 call @ $0.67 and $35 put @ $0.64, net cost of the straddle inc. comm's is ~ $1.35. Let's say FCX goes to $36.50 tomorrow based on strong earnings: The calls would increase in value to >$1.50 and the puts would drop <$0.20, but you sell all for a healthy net gain. Anyway, I might do that. Or not.

But you can answer your own questions, just jump through the hoops, use some of the free pricing calculators that are available and play out your proposed trades under various outcomes in the underlying and you can see for yourself "what if"....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,380
  • Oct 22, 2013 9:03am Oct 22, 2013 9:03am
Quoting Boy Wonder
{quote} I think there will be at most a push to 400 before it either consolidates (eg bull flags *at best*) or fails. But then I figured it was already overbaked going into earnings, so WTFDIK. It's a classic squeeze to be sure, to be sure, and this just is the icing on the cake with a big fat cherry on top. What's going to be interesting is how long they will hold it up here. I should be able to roll up and out. As always, there are many options.
Well, NFLX ranging back <$340, you're a genius after all.
"If The Fool persists in his Folly he will become wise." - William Blake
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