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  • #1,521
  • Nov 13, 2013 2:10pm Nov 13, 2013 2:10pm
alright.
im still in my previous calls in crude which are waaay out of the money, so I am not sweating them very much and I may even buy them back at $10 or $20 just to free up margin if need be.
still have on the 1825 and 1660 emini strangle
about an hour ago I entered into a new strangle
sold jan crude 100 calls for $370
sold jan crude 87.50 puts for $330
I sold an even # of calls and puts and took in $700 per strangle (minus commissions and fees)
I will most likely roll one of these positions. If it works out like I think it will, I will roll the puts around $550-$600 per option, and then re-write 50-100% more puts at a further strike.....possible an $85 or $84. This is obviously assuming the market goes against one of my positions hard and fast enough to force my hand.
so if I had 30 calls at $100 and 30 puts at $87.50........I would end up with the 30 on one side and then between 45-60 on the other side further away.
obviously my feel for this plays heavily into my decision making process, and oftentimes I scrap my original ideas based on what the market feels like to me. I agree that crude has more room to go down....but I didn't want to be totally naked with the Iran stuff, the fed crap, dollar, etc etc. there is plenty keeping crude up right now, and it did just fall a boatload, so at some point we will consolidate and I have a feeling that point might be now.
I do this mathematically more than directionally, and I have been doing this for a living for years. point is I have taken my lumps and logged countless chart time. I have a pretty steady hand when it comes to absorbing a loss and rolling, which is key in the success of this. I don't advise anybody just jump in and do what I do without demo-ing it first. I have proprietary calculations and a model which I have developed over many many years of trial and error, and it is still evolving, but it is very profitable. There are large equity swings when writing options, keep this in mind, especially commodity instruments.
  • #1,522
  • Nov 13, 2013 2:17pm Nov 13, 2013 2:17pm
In terms of how the equity can look "mid-option writing cycle", I have used an old story over the years to help clients understand why the swings must be tolerated. there's an old Italian saying that says, "You don't want them to see how you make the sausage....because it is a disgusting process, intestines, grinding raw meat, just gross. Just show them the nice sweet sausage and gravy in the deli window on Sunday!"
I always say this applies because when writing options, you have to be aggressive and nimble, rolling out fearlessly sometimes. Always remember 2 paramount things when doing this.
1)time decay is your friend, expiration day WILL come
2)the market CANNOT be in 2 places at once!
mid cycle you will sometimes experience very little drawdown, but more often than not, you will be forced to roll when using a strategy designed to make double digit returns. so if I have to take a loss for the greater good, for safety reasons, I do it.
I don't always roll to double up on positions, sometimes I will just write the exact # of puts or calls that I just took a beating on, because the drop or run can continue and you need to be careful.
also important to not be scared to write calls into a rising market, and to write puts in a falling market. the volatility is your friend as much as it can be your enemy.
  • #1,523
  • Nov 13, 2013 2:27pm Nov 13, 2013 2:27pm
this also may be a decent time to look at soybean calls for jan. I bought back mine after the report cam out last Friday at breakeven, and it has run a lot since then. I may tinker with it, but I have a lot of eminis and crude on right this second, and I usually don't go heavy into a 3rd trade at once for logistic reasons. I am not a CTA and I don't do block orders, so it takes me a few minutes to electronically get into and out of trades for all the clients I have, so for safety reasons I try to keep it at 2....but that is not set in stone.
a word about CTAs by the way......
there are a bunch of decent option writing CTAs out there that charge a 2/20 management/performance fee structure etc.. I have used almost all of them for my clients. I have found that most are just lazy and live off the management fee. Don't get me wrong they can and do make money, and I don't say this about ALL of them, but it escapes me sometimes how I can trade the same stuff and make more money than a CTA with 50 million under management, when I have less that 10% of that under management! I don't think it is because I am that much better, I just think they don't want to take risk, and be bothered managing the risk, so they can keep large management fees coming in. I have had a free education over the last bunch of years watching CTAs trade my clients money live, so I have added that to my experience.
this is all about managing risk, picking your spots, and being equally aggressive and modest. admit you're wrong and get the hell out of the way.
  • #1,524
  • Nov 13, 2013 2:37pm Nov 13, 2013 2:37pm
Quoting pipple
alright. about an hour ago I entered into a new strangle sold jan crude 100 calls for $370 sold jan crude 87.50 puts for $330 I sold an even # of calls and puts and took in $700 per strangle (minus commissions and fees) I will most likely roll one of these positions. If it works out like I think it will, I will roll the puts around $550-$600 per option, and then re-write 50-100% more puts at a further strike.....possible an $85 or $84.
cool, I'd like to see how you manage that strangle - keep us posted. I'd guess we will see wti consolidate $94 +/- $3 for a while, then drop with USD strength coming on in Jan and beyond, but I could be exactly wrong about that, which is why I don't often trade oil. One wild card waiting to drop is the Iranian supply coming back online. An extra MMbbl/day hitting the market will shake things up. Oil just too multidimensional for my small brain most of the time it seems, so I look for simpler trades.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,525
  • Nov 13, 2013 2:43pm Nov 13, 2013 2:43pm
hope nobody thinks I am posting too much....I just found this thread by accident and was pretty happy I did. Trading gets lonely sometimes, haha. It would be nice to have a thread to communicate with people what I am doing. I am pretty sure I can give some free information to traders out there trying to make it, and hopefully stop some from making mistakes.
Im sure there are blogs and such out there where I could have been doing this before, but I just never looked. years ago I posted some FX trades on FF, but I never followed up with it. I still trade fx futures out of the same accounts for my clients that I do my options work in, but I don't do it every day, maybe once or twice a week when I see something quick that I like. FX is a beast, and I do waaaay better writing options than I ever did trading the euro!
the 100s are already trading down to $320, and the 87.50s at $370. very volatile markets. S&P up 10.
don't get married to any option trades.
I just did my main January strangle because I usually get into them during expiration week of the previous month (December in this case) when you get to about 16-18 days till exp in crude it gets hard to write anything over $5-$6 away for any substantial premium, so I would rather get in earlier, and take a quick beating being forced to roll than later, you end up with a wider strangle that way as well.
any feedback or questions are more than welcome. I hope someone can learn something from all that.
  • #1,526
  • Nov 13, 2013 2:43pm Nov 13, 2013 2:43pm
Quoting pipple
there are a bunch of decent option writing CTAs out there that charge a 2/20 management/performance fee structure etc
what a racket, huh? Most hedge funds don't even beat the market % return. Get $500MM AUM, don't lose any money if you're good, and take home $10MM a year on your 2%.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,527
  • Nov 13, 2013 2:45pm Nov 13, 2013 2:45pm
Quoting The Fool
{quote} cool, I'd like to see how you manage that strangle - keep us posted. I'd guess we will see wti consolidate $94 +/- $3 for a while, then drop with USD strength coming on in Jan and beyond, but I could be exactly wrong about that, which is why I don't often trade oil. One wild card waiting to drop is the Iranian supply coming back online. An extra MMbbl/day hitting the market will shake things up. Oil just too multidimensional for my small brain most of the time it seems, so I look for simpler trades.
oil really isn't that hard to trade Fool. it is a lot like the emini S&P. there are A LOT of strikes, and very liquid....which allows for many different options when you have to adjust the account. PLUS the margin is small, less than $2500 for a strangle most times. you gotta like that. Im telling you there is money in it, just be nimble.
  • #1,528
  • Nov 13, 2013 2:48pm Nov 13, 2013 2:48pm
Quoting The Fool
{quote} what a racket, huh? Most hedge funds don't even beat the market % return. Get $500MM AUM, don't lose any money if you're good, and take home $10MM a year on your 2%.
yeah no kidding. after almost 15 years with a commodity license I have noticed most CTAs will have a very strong first 3 years or so, which attracts large AUM.....then, its like kissing your sister for them.
the shame of it is theres more money in option writing than that, and I think they give it a bad name. most of them average around 10-15% per year, and you should make more than that.
I cant get over the fees, that's why I took most of my clients money out and handle it myself. don't get me wrong I still use a few, but only a select few. they are untrustable as a whole.
  • #1,529
  • Nov 13, 2013 3:12pm Nov 13, 2013 3:12pm
Quoting pipple
{quote} oil really isn't that hard to trade Fool. it is a lot like the emini S&P. there are A LOT of strikes, and very liquid....which allows for many different options when you have to adjust the account. PLUS the margin is small, less than $2500 for a strangle most times. you gotta like that. Im telling you there is money in it, just be nimble.
yup it's a great instrument to trade, I used to scalp the futures. oil futures options are great, too. Now I am mostly trading out of tax sheltered accounts I have set up, mostly stock options. Trading oil via the stocks you have USO, XLE, individual oil sector company stocks, etc - some of the above can be good to trade but nothing like the futures market.

Anyway, I made no new trades today. Was looking at another TSLA credit spread but didn't get in. A lot of these bubbled up stocks I believe could sell off fairly well in December, I want to catch some of that if & when.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,530
  • Edited 7:08pm Nov 13, 2013 3:42pm | Edited 7:08pm
Quoting The Fool
Cisco has earnings out 11/14, has moved well on prior releases, with up to 200MM shares traded the day.... sitting @ ~$23.50, an 11/16 $25c/$22p strangle is $0.15/$0.15 - $0.30 net a buckfifty move does not look like too much to ask... {image}
watching this AH, CSCO shares falling, looking for $23.00. I will prolly need to see $22.50 or lower at the open to make this strangle pay well....

...lookin good, shares down near 8% ah, looking for $22.00, we'll see if it holds....$23.50 put leg could be worth near 3x the strangle stake in the morning if I'm lucky

...she dropped almost $2.50 ah and is sitting at $21.53...fingers crossed
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,531
  • Nov 13, 2013 7:39pm Nov 13, 2013 7:39pm
Quoting The Fool
{quote} sold SSO 11/22 $86, bought Jan '14 $82, net debit $0.90
this put spread has done what it should, was actually net out $1.00, 11/22 $86p sitting at $0.11, if it will drop to <$0.05 tomorrow I may roll it into another leg for credit, or put the margin to work somewhere else....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,532
  • Edited 9:44pm Nov 13, 2013 7:56pm | Edited 9:44pm
Quoting The Fool
{quote} or put the margin to work somewhere else....
....like maybe an 11/22 BBY $44p/$46c long strangle, BBY earnings out 11/19, popped long $5 last release, will need to watch the prices next 2 days...

...GMCR has some juicy options: buy 12/21 $50p/sell Nov 22 $58p is $1.73/$3.10, nets $1.25 credit ($57.5p nets $1.07),

I gotta figure out what's up with the $3 flash drop today...

....well, idk, but GMCR could be set up for a wicked short squeeze, with 43% of the float short (as of 10/15), and earnings out 11/20. I bet it gets run up til 11/20 and short puts in the spread above pay well....
Attached Image (click to enlarge)
Click to Enlarge Name: 2013-11-13_gmcr.png Size: 58 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,533
  • Edited 11:13pm Nov 13, 2013 9:47pm | Edited 11:13pm
Quoting The Fool
{quote} or put the margin to work somewhere else....
...or Pandora:....wow, P has doubled twice in a year.... I might sell a near call then buy next month call for credit or wash, will look again later
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,534
  • Nov 14, 2013 12:27am Nov 14, 2013 12:27am
k maybe I should've read the whole thread more thoroughly...I thought being on FF that an options thread was about mostly commodities. clearly it is stocks predominantly.
that is actually good, because I was at a sleazy options seminar a month ago where some dirtbags were trying to hock a $3,000 system, and the used car salesman schtick was just oozing off of them. but they had me interested, and I have been dying to learn this stuff. They kept saying they use CAT, MCD, Microsoft, IBM etc. earnings plays 4x per year, etc etc. prob same stuff you're doing I imagine?
Fool if you can teach me stock options I will make you craploads of commodity money.
Deal?
Howmuch should I put in an account if I was going to trade some stock options? Can you do any damage with less than $20k? $10k? or do you need more?
I know that all depends on how much patience you have. I actually have a client who wanted to do a joint account with me and we were gonna do it together. you may not believe this, but I have never traded stocks. only commods and fx
which broker is good?
  • #1,535
  • Nov 14, 2013 1:04am Nov 14, 2013 1:04am
Quoting pipple
Fool if you can teach me stock options I will make you craploads of commodity money. Deal? Howmuch should I put in an account if I was going to trade some stock options? Can you do any damage with less than $20k? $10k? or do you need more? I know that all depends on how much patience you have. I actually have a client who wanted to do a joint account with me and we were gonna do it together. you may not believe this, but I have never traded stocks. only commods and fx which broker is good?
lol, pipple, like I think I say near the front of the thread, as one of the good ole traders on FF used to say: "it's all one trade" (that was PayTheLimit) - so if you have traded oil or natgas futures and futures options, you can jump in and trade options on USO or UNG. E-mini futures options same as trading SPY options, etc. In some cases, the liquidity is better on one side vs. the other, but yep, it's all one trade. basic rules and notions visavis technical analysis and fundies all the same. Options pricing models, greeks, etc - all the same...

You can trade stock options in a $2,500 account - that's a minimum I have seen in several brokers' spiels, and you need min $25k to avoid the pattern daytrader limits, ie, if you have <$25k you can only do 3 rt in any 5 consecutive market days. My mo has been to try to get to $25k asap and then use those accounts to fund other starter accounts. I like getting the Roth IRA's going since the profits in those are untaxed.

Lots of options traders I know like the Think or Swim platform, which was bought by TD Ameritrade, and lots of them like the deep discount brokers, of which Interactive Brokers may be the best.

Anyway, I am not fit to be anybody's mentor - I have not been trading options very long, but I will gladly share whatever I know. I post trades I make in real time, but I don't post all the trades I make... When I say I want to do a trade I will usually explain why. Like that long strangle on CSCO just above - that did exactly what I thought it would and with a little luck I will turn that for +3-400% come Thursday. Just as frequently things do not go as planned, and as I have said, that's where I need to improve: I need to learn to manage my losing trades better. I've heard it said, and I think it's true - that trading is a losing game - you have to be good at losing if you want to be a good trader.

If you want to post about your futures options trades that's just fine & I hope you will, I can follow along no problem. If you want to try some stock options trades you will find some good examples in here, some things that work and maybe some that don't. Anyway I hope you will stick around.

Where are ya at anywayz - Midwest? I'm on the west coast, so I have to get up too early to catch eastcoast/Chicago opens. And I'm still a working Joe. To tell you the truth, I have tried trading full time and I found it no kind of life, not for me anyway. Might've been different if I had come to trading as a younger man, but I didn't.

So have a good night, I'll be chaecking in here Thursday.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,536
  • Nov 14, 2013 1:20am Nov 14, 2013 1:20am
Quoting pipple;7088639[b
]hope nobody thinks I am posting too much....I just found this thread by accident and was pretty happy I did. Trading gets lonely sometimes,[/b] haha. It would be nice to have a thread to communicate with people what I am doing. I am pretty sure I can give some free information to traders out there trying to make it, and hopefully stop some from making mistakes. Im sure there are blogs and such out there where I could have been doing this before, but I just never looked. years ago I posted some FX trades on FF, but I never followed up with it. I still trade fx futures out of the same accounts for my clients that I do my options work in, but I don't do it every day, maybe once or twice a week when I see something quick that I like. FX is a beast, and I do waaaay better writing options than I ever did trading the euro! the 100s are already trading down to $320, and the 87.50s at $370. very volatile markets. S&P up 10. don't get married to any option trades. I just did my main January strangle because I usually get into them during expiration week of the previous month (December in this case) when you get to about 16-18 days till exp in crude it gets hard to write anything over $5-$6 away for any substantial premium, so I would rather get in earlier, and take a quick beating being forced to roll than later, you end up with a wider strangle that way as well. any feedback or questions are more than welcome. I hope someone can learn something from all that.
hear you on that, keep it coming, some good posts
  • #1,537
  • Nov 14, 2013 5:21am Nov 14, 2013 5:21am
Quoting Cecil Gee
taken a earnings trade on BBBY which is due out on DEC 16, Bbby is due a breakout and while its IV is relatively low i've decided to buy as it gets closer to release the IV will increase making the options more expensive. I do have a bias to the downside on this too. So i bought the DEC 21 $72.50 put for 90c BBBY is trading around $75.51 currently Bed Bath & Beyond Inc. (BBBY) -NasdaqGS 75.51 {image} 1.86(2.40%) 5:04PM GMT - Nasdaq Real Time Price BBBY Dec 2013 72.500 put (BBBY131221P00072500) - 0.90 {image} 0.15(20.00%) 4 Nov 19:58
closed the above trade yesterday when i saw a break of 77$, BBBY has some buyers coming in from 76$ and did not like the trade any more. closing price was 33c but i closed at 41c so a loss of 49c, however I rolled in to a new trade on this stock for its earning coming out on DEC 16, I sold the JAN $67.50 for 51c and bought $85 DEC 21 for 12C on the strong up move

So in total I'm down 2c so far plus my commission costs. Closing price for BBBY WAS $78.16 YESTERDAY

EDIT; DOWN 10C

BBBY Dec 2013 85.000 call (BBBY131221C00085000)
-OPR BOUGHT
0.12 http://l.yimg.com/a/i/us/fi/03rd/down_r.gif 0.13(52.00%) 13 Nov 20:51


BBBY Jan 2014 67.500 put (BBBY140118P00067500)
-OPR SOLD

0.51 http://l.yimg.com/a/i/us/fi/03rd/down_r.gif 0.06(10.53%) 13 Nov 20:51


BBBY Dec 2013 72.500 put (BBBY131221P00072500)
-OPR
0.33 http://l.yimg.com/a/i/us/fi/03rd/down_r.gif 0.34(50.75%) 13 Nov 20:5
  • #1,538
  • Nov 14, 2013 6:13am Nov 14, 2013 6:13am
Prob going to slide sideways/down for the next hour ahead of unemployment claims at 8:30, then buy it all.
Twitter: @zusch_ -- Preselecting trending pairs, stocks on a weekly basis.
  • #1,539
  • Nov 14, 2013 8:09am Nov 14, 2013 8:09am
still in the following
15 Dec emini 1825 calls
15 Dec emini 1660 puts
30 jan crude 100 calls
30 jan crude 87.50 puts
10 jan crude 105 calls
taking minimal heat on the emini calls and the crude puts
  • #1,540
  • Nov 14, 2013 8:42am Nov 14, 2013 8:42am
Quoting pipple
The first real breakthrough for me managing options trades was to buy them back at a reasonable sniff of trouble. 30-100%. I know that is a large window, but it need to be, market needs breathing room. I am confused when you say you have issues managing the risk. in stocks is there no viable rolling options to go to when you get in trouble? I look at it like this, if I throw 20k in premium against the wall, the market cant be both places at once, so one of my sides is guaranteed to expire ITM, and I am happy with 1/3 of that, but usually...
Well, simple as it sounds, if that was all I ever did, I would be alot better off. In truth, I am doing better as I go along and generally have been more consistently profitable as I work non-directionally.

Texas, huh? I love/hate Texas...TX women are warm...I'm from podunk Mississippi originally, been on the west coast for 30 yr.

Just looked and sold CSCo 11/16 $22 puts for $1.10, so the strangle was actually:

CSCO 11/25 $25c/$22p long at $0.19/$0.10, out at $0.00/$1.10... prolly a little more there but gotta hit the road.
"If The Fool persists in his Folly he will become wise." - William Blake
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