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Let's Trade Options

  • #2,081
  • Dec 6, 2013 9:22am Dec 6, 2013 9:22am
im long a small euro trade from 1.3678 and GBP from 1.6346.....wont be in for long
  • #2,082
  • Dec 6, 2013 9:29am Dec 6, 2013 9:29am
Quoting pipple
im long a small euro trade from 1.3678 and GBP from 1.6346.....wont be in for long
that was quick.
adjusted stop to +3 ticks when it went into profit on both....stopped out in euro +3 and closed GBP +15. thought I would get more in euro.
  • #2,083
  • Dec 6, 2013 9:48am Dec 6, 2013 9:48am
I have long the $79.50 SPY put as I think the market will retrace back near yesterdays close
S&P etf SPDR SPY. I have longed at 7c or $7 per contract..

Goldman sachs has already gave back 90% of its early gains.

SPY trading at $180.32

SPDR S&P 500 (SPY)
-NYSEArca
180.32 http://l.yimg.com/os/mit/media/m/bas...nt-1093278.png 1.38(0.77%) 15:42 - Nasdaq Real Time Price


SPY Dec 2013 179.500 put (SPY131206P00179500)
-OPR
0.07 http://l.yimg.com/a/i/us/fi/03rd/down_r.gif 0.95(93.14%) 15:22
  • #2,084
  • Dec 6, 2013 10:44am Dec 6, 2013 10:44am
oil spiked the 50% retracement fib if you take the sept high to last weeks low....also 200 MA sitting right on top of it. bounced off 50 twice. could be close to all for upside but I wouldn't be surprised if it attracts to the 200 on the daily and the 800 on the 4 hr before turning around as they are both relatively in striking distance
  • #2,085
  • Dec 6, 2013 12:33pm Dec 6, 2013 12:33pm
Quoting The Fool
NFP beats all, USD strength, gold <$1,200, all in the cards & the deck is stacked. Don't miss that train.
LOL...DEAD WRONG. The whole "market down (my dog died, etc) because the Fed might taper" meme just got sold down the river.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,086
  • Dec 6, 2013 1:25pm Dec 6, 2013 1:25pm
Quoting The Fool
in the end I did punt on USO, got the 12/6 $34.50 puts for $0.05. Maybe I'll be a hero. Also in 12/6 UVXY $22c for $0.17. So all straight downside...
USO puts might regain $0.02 before the end of the day if heavy selling comes in, in which case I would sell so they wouldn't be a total loss....shitty little $0.21 range on the day, USO just doesn't move enuf.

UVXY ranged $1.80...in the wrong direction...will be a total loss
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,087
  • Dec 6, 2013 2:00pm Dec 6, 2013 2:00pm
Quoting The Fool
{quote} LOL...DEAD WRONG. The whole "market down (my dog died, etc) because the Fed might taper" meme just got sold down the river.
yeah got a spanking today trying to second guess the market,
  • #2,088
  • Dec 6, 2013 2:04pm Dec 6, 2013 2:04pm
Quoting The Fool
{quote} LOL...DEAD WRONG. The whole "market down (my dog died, etc) because the Fed might taper" meme just got sold down the river.
$ strength is coming, but considering the world and his wife seem to have been short euro, I guess it was postponed til next week
Similarly gold, tried to shake out a few weak shorts, but failed. Looks for all the world like a double bottom test sub 1200 will present itself soon.

Just bought 10 EEM 43/42 bear call credit spreads for -0.34. Or sold for 0.34, if you prefer. Anyway, short the 42 long the 43 for protection ostensibly but really just to bring the margin down and get the ROC up. I prolly shoulda gone for 44/42 thinking about it; the chances of this rallying up to there is slim to non-existent in my opinion but anyway...EEM currently 41.95.
I have figured I write too many naked options for megabucks most of which work but some of which don't and so I take far too many risks in my account. I'm going to start playing a bit more with spreads like these, see how they go. And I'm starting to keep a log of my trades.
Expiry on the EEM spread is next Friday.
I have no clue what I'm talking about.
  • #2,089
  • Dec 6, 2013 3:02pm Dec 6, 2013 3:02pm
Quoting Boy Wonder
{quote} $ strength is coming, but considering the world and his wife seem to have been short euro, I guess it was postponed til next week Similarly gold, tried to shake out a few weak shorts, but failed. Looks for all the world like a double bottom test sub 1200 will present itself soon. Just bought 10 EEM 43/42 bear call credit spreads for -0.34. Or sold for 0.34, if you prefer. Anyway, short the 42 long the 43 for protection ostensibly but really just to bring the margin down and get the ROC up. I prolly shoulda gone for 44/42 thinking about...
looks like a nice statistical play. im still learning these but am I right if I thought your breakeven point was 42.34?
  • #2,090
  • Dec 6, 2013 3:20pm Dec 6, 2013 3:20pm
Quoting pipple
{quote} looks like a nice statistical play. im still learning these but am I right if I thought your breakeven point was 42.34?
Yes that's right - about the breakeven. Not sure it's a great statistical play though . Essentially it's just a gamble that price won't go above 42 as it's the top of a short term channel. If it does, I may well adjust very quickly at it could mean a run is coming at 43 or 44. Or I may just say what the hell and wait and see how the week turns out. I will be most miffed if it lands up at 43 next Friday. But then, I need to learn; you gotta play if you want to learn, and this is my education.
Maybe I shoulda done 43/44s..that would've been better. Ah well, in the heat of battle one makes mistakes....

Thinking about it now it's probably not the greatest trade in the world because I have no way of knowing if it will bust out of the flag to the upside early next week but the weekly is interesting - it shows a massive head and shoulders and whilst price is just above the 200DMA it's just below the 200 week MA. I would expect price to end up in the red box below at some point but when, is impossible to know.
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I have no clue what I'm talking about.
  • #2,091
  • Dec 6, 2013 5:12pm Dec 6, 2013 5:12pm
Quoting Cecil Gee
{quote} yeah got a spanking today trying to second guess the market,
Yes, humbling day to be sure. Almost all of my assumptions were wrong. I probably had lots of company. But scalp losses were small. I have learned through bitter experience to severely limit my wagers on the very short tf and/or unidirectional trades.

Then, at the end of the day, I got a dip on TSLA and sold 12/13 $120 puts for $0.38. We'll see if those hold. Will more than erase the day's scalp stains if they do.

Otherwise I have no clue what the market may do next week and beyond. The world may have been turned upside down today, in which case it has come back to being rightside up again, but time will tell....

Have a good weekend all.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,092
  • Dec 6, 2013 11:14pm Dec 6, 2013 11:14pm
Quoting The Fool
{quote}Otherwise I have no clue what the market may do next week and beyond...
Most stocks will now just go up forever. There are countless candidates for bullish call spread programs:
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,093
  • Dec 6, 2013 11:42pm Dec 6, 2013 11:42pm
A guy I know likes to buy stock. Total buy and hold. Occasionally he will sell something if it shows an incorrigible (say 40%) loss. He bought VISA in '09 for $60, 1,000 shares. He has 1,000 share blocks of many similar names. And I'm pretty sure he is worth >1,000x what I am. We're about the same age. He says he finished high school, but mostly he started going fishing in Alaska before he was 20, did that for 15 years, and then retired. I have tried to explain to him options trading, sovereign debt crisis, USD reserve currency intricacies, etc etc: he doesn't understand any of it. Buy and hold, buddy, that's all ya need to know.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,094
  • Dec 7, 2013 12:12am Dec 7, 2013 12:12am
The natural growth rate of V stock price is about $5/month. This obviously an immutable natural law.

With V lt @ $201.87, it should be trading around $215-$20 by March 2014. Buy Mar $230c @ $1.64, sell Jan 18 $215c for $1.16. ($0.50 debit) ... Do call writes for further credit in Feb and Mar.

By the way, if anyone wants to learn me how to optimize these credit/debit spreads, I'm all ears. One thing I had hoped to do this weekend....
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,095
  • Dec 7, 2013 1:59am Dec 7, 2013 1:59am
GG a useful player in gold spreads
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,096
  • Dec 7, 2013 2:08am Dec 7, 2013 2:08am
http://finance.yahoo.com/news/wto-ov...055710307.html

"A study by the Washington, D.C.-based Peterson Institute of International Economics estimated the agreement would inject $960 billion into the global economy and create 21 million jobs, 18 million of them in developing nations."
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,097
  • Dec 7, 2013 4:49am Dec 7, 2013 4:49am
Quoting The Fool
The natural growth rate of V stock price is about $5/month. This obviously an immutable natural law. With V lt @ $201.87, it should be trading around $215-$20 by March 2014. Buy Mar $230c @ $1.64, sell Jan 18 $215c for $1.16. ($0.50 debit) ... Do call writes for further credit in Feb and Mar. By the way, if anyone wants to learn me how to optimize these credit/debit spreads, I'm all ears. One thing I had hoped to do this weekend.... {image}
Have I missed something? Why would you buy the higher strike and sell the lower if you're bullish? That's a bear call spread. If you're bullish you should be buying the lower and selling the higher.
By going deeper ITM you get a higher delta and (I think) less time decay and therefore more return if it goes higher. Of course, you also have more downside should it not go higher.
But if you really are in it for the long haul, you can do what your friend does but much more efficiently by buying an ITM LEAP and selling the short-term OTMs against it. I might start doing this myself and hedging with long dated OTM index puts which of course are quite cheap at the moment.
I have no clue what I'm talking about.
  • #2,098
  • Edited 9:40am Dec 7, 2013 9:01am | Edited 9:40am
Quoting Boy Wonder
{quote} Have I missed something? Why would you buy the higher strike and sell the lower if you're bullish? That's a bear call spread. If you're bullish you should be buying the lower and selling the higher...
g'day BW and thankyou for trying to help me. I would do what you suggest within the margin constraints that my meager equity balance allows, with smaller positions. By buying the far month far otm calls I can sell nearer month but still relatively far otm calls for credit and have the long calls help reduce the margin requirements for the call writes and I can do that multiple times - as I suggest I will do for V in Jan - Mar. The original position is likely a debit but by the second call write it moves to be or credit and the more V moves up, the better, so long as I have not got too greedy and had to buy back any calls. If I do this on a stock with weekly options I may sell calls (puts) for credit against the original position many times.

An example of this is the TSLA bear spread I have been journaling here, with an original anchor of Dec 21 $100 puts - I am on the third set of put writes there. Even though TSLA didn't move in my favor in the long run I have come out well ahead via the multiple put writes as it stands.

What I need to do is spend some time writing a model of how account margin requirements interacts with these running positions: there's a point at which the margin benefit of the original "anchor" long call or put has diminished and the run is over, the original should be sold - the latter case true when the underlying is moving away from the original position....and also true generally from its time decay.

If I had large equity accounts where I could buy/sell decent-sized blocks at will, I might be in and out of positions more fluidly. But I don't & I am up against the daytrader limits (~3 rt/mo) so I need to be economical in the actual number of trades I make. I don't know if I will try to do this with V, but it appears to fit the bill.

Feel free to poke holes in my approach here - I welcome constructive criticism.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,099
  • Dec 7, 2013 12:15pm Dec 7, 2013 12:15pm
Quoting The Fool
{quote} there's a point at which the margin benefit of the original "anchor" long call or put has diminished and the run is over, the original should be sold - the latter case true when the underlying is moving away from the original position....and also true generally from its time decay. If I had large equity accounts where I could buy/sell decent-sized blocks at will, I might be in and out of positions more fluidly. But I don't & I am up against the daytrader limits (~3 rt/mo) so I need to be economical in the actual number of trades I make....
Hey there TF. You raise a number of points, the first of which I don't quite understand. "there's a point at which the margin benefit of the original "anchor" long call or put has diminished and the run is over" Sorry, I'm not sure what you mean by that.
The daytrader limits suck big time. I thought it was 5 day trades per week - that's what IB appears to do - but 3 rt/month? Seriously? That means you can only open and close 3 separate positions PER MONTH? I just checked (only very quickly) and http://en.wikipedia.org/wiki/Pattern_day_trader suggests it's 4 or more within 5 business days, in a margin account of less than $25k.
There are videos on trading in smaller accounts put out by tastytrade at http://www.youtube.com/user/tastytrade1, in case you're not aware. Btw that's where I got the deep ITM covered call idea (they call it the poor man's covered call). I was watching a few of their videos this week. They're worth watching if you have some spare time but they can waffle a bit. They've done some very interesting analysis on the returns of different strategies.
Generally it appears like you have the right ideas. I'm no expert myself, having moved to options only seriously about a year or so ago. I tend to sell futures options but that causes a ton of stress albeit it has worked because my account has profited but as you've seen from pipple's experiences (I do similar to him but go very close to the money instead) it ain't easy. And he's a pro and I'm not...
The fundamental ideas are to sell short term and buy long term, understand delta and gamma, how gamma can explode, how IV affects the prices, historical vol vs current IV, and accept that we really haven't got a clue what's going to happen. I think you've got all that already: sounds like your TSLA is going really well; that's the way to do it. Oh, and there's this idea you should be trying to get 1% time decay from your portfolio per day. Check out the channel's vids if you have a bit of time.
There's a chap called Phil something at philstockworld who does all this, comes up with trade ideas, he's pretty good I think; it's a heavy subscription though; I did subscribe once but...ah, didn't work for me..too many people fighting for his attention in his chatroom.
I have no clue what I'm talking about.
  • #2,100
  • Dec 7, 2013 1:23pm Dec 7, 2013 1:23pm
Quoting pipple
{quote} dude where are you.....are you in the bathroom? are you watching me? if you are what color are my boxers? this is creepy honestly buddy your US faction left bad tastes in a lot of clients and IBs mouths.....I understand you might be a different company over in England, but for here, you guys really screwed the pooch, even when you were open when I typed that response, I actually forgot you guys went out of business here.....we were an IB for you, and you caused us a bit of a headache. I lost clients from the PFG fiasco as well.....so forgive...
Lol...


Well, gee. I'm just getting the general idea of what you guys do on options trading. Can anyone tell me WHY the heck the internet has to make the confounded subject so complicated?

First things first - why is it that the only people that make any money on Options are the ones that use extremely complicated mathematical equations?

The bloody pros say that if I think that past performance is an indicator of future activity I can just pack up from now < <


@TheFool You use thinkorswim correct?

I am deeply interested in this now
uphill battle
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