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  • #2,161
  • Dec 16, 2013 4:48pm Dec 16, 2013 4:48pm
Quoting Boy Wonder
{quote} Sold 2 IWM DEC 20 '13 112Cs @ 0.78 each earlier against those long 109C LEAPS; as you pointed out, it makes sense and provides a bit of protection should we get a dip. As soon as I sold 'em I thought, shoulda gone for the 113s; less money but better chance of keeping it. I think we could see 113 this week. I don't think we'll get a dip from here but we may do - to say, 108, 109. Nobody knows. Price landing anywhere between 108 and 113 at 9pm GMT Friday (4PM EST) will suit me just fine. IWM closed 111.41.
yup always a battle between greed and caution, but if you keep plugging every month that way, even if you tend towards caution you'll be able to pay down >half of your LEAPS cost.

I was out til after close today, so nothing new. I have lots of free margin & need to put it to work, so will be shopping this week. Have my doubts about any major moves on the FOMC, but I will take a couple 2- or 9-day shots there.

Will be watching HLF, if it rises again tomorrow I will have to fade that...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,162
  • Dec 16, 2013 5:21pm Dec 16, 2013 5:21pm
Can anyone help and knows what implied move for IWM is this week? Looks way more bullish than SPY & I'm thinking taper or no taper, stocks are headed higher.
Twitter: @zusch_ -- Preselecting trending pairs, stocks on a weekly basis.
  • #2,163
  • Dec 16, 2013 5:33pm Dec 16, 2013 5:33pm
Quoting zusch
Can anyone help and knows what implied move for IWM is this week? Looks way more bullish than SPY & I'm thinking taper or no taper, stocks are headed higher.
I don't know how to work it out, sorry (I feel I should though, so it's a good question)...IIRC it's something to do with the pricing of either the straddle or the strangle. I may try to find out later but if you do find out do let us know
I have no clue what I'm talking about.
  • #2,164
  • Dec 16, 2013 5:37pm Dec 16, 2013 5:37pm
Quoting The Fool
{quote} yup always a battle between greed and caution, but if you keep plugging every month that way, even if you tend towards caution you'll be able to pay down >half of your LEAPS cost. I was out til after close today, so nothing new. I have lots of free margin & need to put it to work, so will be shopping this week. Have my doubts about any major moves on the FOMC, but I will take a couple 2- or 9-day shots there. Will be watching HLF, if it rises again tomorrow I will have to fade that...
Was just checking out AMZN. Looks like its goose might be cooked, short-term. No idea fundy wise on this incredible (in the literal sense of the word - defying credibility) stock, although I've heard stuff (maybe) about a big tax loophole that may be closing, but anyway TA wise it's just broken a steep trendline and there is a chance that that could herald a drop at least down to the 360 area.
So I'm considering some kind of spread but not quite sure..only just started looking at it. Maybe short the ATM call buy an ITM call eg sell 390C buy 370C, hoping that the spread expires worthless. Bear call spread I guess. But I'd need to work out the risk/reward...pricey stock. I think a Jan spread might be $12 or something. Confused.
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I have no clue what I'm talking about.
  • #2,165
  • Edited 9:50pm Dec 16, 2013 9:38pm | Edited 9:50pm
ORCL has popped some goodly moves @ earnings this year...looks like somebody got started early for Dec tho.

Earnings out Wed afternoon: 12/21 $30/$31/$31.50 puts lt $0.06/$0.12/$0.19; $36 call $0.12. A just atm finish either way would pay ~$0.75
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,166
  • Edited 1:28am Dec 17, 2013 12:58am | Edited 1:28am
Quoting Boy Wonder
{quote} So I'm considering some kind of spread but not quite sure..only just started looking at it. Maybe short the ATM call buy an ITM call eg sell 390C buy 370C, hoping that the spread expires worthless. Bear call spread I guess. But I'd need to work out the risk/reward...pricey stock. I think a Jan spread might be $12 or something. Confused.
I would not bet on much AMZN downside myself, it looks like it's in for some topend ranging. But don't mind me because I don't really watch the >$300 stocks much, I am too poor.

But I will look to spread with bearish intent on some other of these inflated stocks. I had my eye on TWTR but I was a day late, as I see it lost $3+ today on a downgrade somewhere. I have had success with put spreads on TSLA lately but I am waiting for that to get dizzy again. YELP is an excellent prospective victim but not where I want it neither.

Visa (V) I think is due for a big move. Up or down. Nailed that, didn't I? I think $230 will hold V by Jan opex, so if I am bullish I might:

buy Jan 18 $225c and sell Jan 18 $230c (-$0.56+$0.20) = $0.36 net debit

I think $180 will hold V to the downside by Jan opex, so, similarly:

buy Jan 18 $185p sell Jan 18 $180p ($-0.45+0.30) = $0.15 net debit

This is a wide strangle that tries to pay its way a little.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,167
  • Dec 17, 2013 1:27am Dec 17, 2013 1:27am
Quoting The Fool
{quote} Visa (V) I think is due for a big move...
I am actually bullish V so I will look a little further out and maybe buy March calls. I could buy March $240c @ $1.54. This gives me a couple months to sell nearer calls, like I might sell Jan 3 $220c @ $0.63 when I buy the March calls for a net debit of $0.90 for the spread. I will then keep selling weekly calls to try to get to credit on the spread. The best thing that can happen is for VISA to gradually go up so all my call writes expire worthless and I am at my $240 long strike by early March. If V goes down I will be making money on the call writes and I will do that as long as the $240 long calls are contributing any decent margin to the spread.

I have a near term goal of being able to model these spreads so that I actually know wtf I am doing, when is the best time to get out, etc, and that will be tots magoats. Meanwhile, just eyeballing everything halfasswise, but I have not lost money on one of these yet. Although I am in one now - SSO Jan $80 long puts that I have been trying to get to credit by selling SSO near otm puts last couple months and tomorrow I will probably sell Jan 3 $85 puts for $0.50+ to get to near be on the spread, not counting whatever the Jan $80p are worth, which is slipping under $0.20 I see....

Anyway, if you followed the above I hope it made sense.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,168
  • Dec 17, 2013 6:13am Dec 17, 2013 6:13am
Quoting The Fool
{quote} I would not bet on much AMZN downside myself, it looks like it's in for some topend ranging. But don't mind me because I don't really watch the >$300 stocks much, I am too poor. But I will look to spread with bearish intent on some other of these inflated stocks. I had my eye on TWTR but I was a day late, as I see it lost $3+ today on a downgrade somewhere. I have had success with put spreads on TSLA lately but I am waiting for that to get dizzy again. YELP is an excellent prospective victim but not where I want it neither. Visa (V) I think...
I think you're right re AMZN ranging; I think the same, except I think it's sideways-down rather than sideways or sideways-up.
V is another strong stock though. Looking at the chart it just goes from bottom left to top right. If anything I'd be selling naked puts or put spreads that, if they end up ITM, I'd be happy to either take delivery or just roll over. In short, it looks like a bullish stock.

TWTR down 4% - thanks for mentioning it - it looks like a good possible low risk pullback long; I might look at that for a low risk bullish entry somehow later. Maybe sell the ATM put and buy a few $ down. You could set a limit to go outright short the u/l on a move below Friday's or Thursdays' low for added protection.

AMZN, I've been playing with IB's new Option Strategy Lab. It's a bit like TOS's options window...from memory (TOS closed all their UK accounts a few years ago when they were taken over by TDW...bah). Looks like I should be using it more. Quite interesting.
Here's a butterfly idea: Long 375C Short 2x390C Long 405C all Jan17 2014 expiry. I might put this on but also with a long LEAP put...I'd need something anyway because the width is quite narrow....I'd want to be protected more on a move below 380.
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I have no clue what I'm talking about.
  • #2,169
  • Dec 17, 2013 6:20am Dec 17, 2013 6:20am
Quoting The Fool
{quote} I am actually bullish V so I will look a little further out and maybe buy March calls. I could buy March $240c @ $1.54. This gives me a couple months to sell nearer calls, like I might sell Jan 3 $220c @ $0.63 when I buy the March calls for a net debit of $0.90 for the spread. I will then keep selling weekly calls to try to get to credit on the spread. The best thing that can happen is for VISA to gradually go up so all my call writes expire worthless and I am at my $240 long strike by early March. If V goes down I will be making money on...
Bullish V seems like the way to go from a brief look at the chart.
Why not buy LEAPS instead of March? I know, I'm not used to it either but logically I'm not sure what advantage there is to buying 3 months out vs buying 2 years out. Maybe there's a downside..perhaps the delta is lower for the LEAPS?

As for modelling, I know what you mean; this is why I've started looking at the tools that my broker (IB) offers; they're probably not the best but a hell of a lot better even after playing with them for only 5 minutes than doing it by guesswork. It's great to be able to mess about with the strikes to see what your breakeven points are. Are you on TOS? They have a great setup for options traders. I'm started to see now how I've been doing it half-assed myself.
I have no clue what I'm talking about.
  • #2,170
  • Dec 17, 2013 6:21am Dec 17, 2013 6:21am
Anyway, studying to do...back later.
I have no clue what I'm talking about.
  • #2,171
  • Dec 17, 2013 9:25am Dec 17, 2013 9:25am
Quoting Cecil Gee
{quote} TLT is a must for me, best take a strangle long position 2 strike out for pennies on the day of FOMC
TLT now might slide steady into tomorrow, puts are gaining. If it's a no-show on the taper news, the calls will pay handsomely I suppose...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,172
  • Dec 17, 2013 9:46am Dec 17, 2013 9:46am
Quoting zusch
Can anyone help and knows what implied move for IWM is this week? Looks way more bullish than SPY & I'm thinking taper or no taper, stocks are headed higher.
I used to know this, may have to read up on it again but I think you add a strike from either side of the actual price at the start of the week to give you a guide of an expected move
  • #2,173
  • Dec 17, 2013 10:25am Dec 17, 2013 10:25am
How to calculated expected move:
Inserted Video

A common method I think is (ATM straddle/stock price). But a variation is to (ATM straddle + OTM strangle)/2. I think that's what Tom Sosnoff does in the video.
Another method: http://www.optionsanimal.com/using-i...d-range-stock/

It behooves us to work this stuff out and see how much they differ for different instruments.
I have no clue what I'm talking about.
  • #2,174
  • Dec 17, 2013 10:49am Dec 17, 2013 10:49am
TOS closed all their UK accounts a few years ago when they were taken over by TDW...bah

only the UK or has this applied to the rest of Europe as well?
  • #2,175
  • Dec 17, 2013 11:04am Dec 17, 2013 11:04am
Quoting rendite
TOS closed all their UK accounts a few years ago when they were taken over by TDW...bah only the UK or has this applied to the rest of Europe as well?
Don't know sorry.
I have no clue what I'm talking about.
  • #2,176
  • Dec 17, 2013 11:33am Dec 17, 2013 11:33am
Quoting Boy Wonder
{quote} Don't know sorry.
no problem....just chatted with TOS....not possible in the EU...being a non-EU country, Switzerland is exempt
  • #2,177
  • Dec 17, 2013 11:59am Dec 17, 2013 11:59am
I think I've just figured out the danger of being long LEAPS. If you buy when IV is high, you can get crushed by a drop in IV. An option will always lose value when IV drops but the $ amount for a LEAP will be higher.
Therefore it makes sense to beware of IV vs HV when buying LEAPS.
I guess it's a trade-off like everything.
Ideally you probably want to get long LEAPS when IV is low. That way even if the price of the u/l drops you can be compensated somewhat because IV will probably increase somewhat as price drops.

Just some thoughts. Welcome other views.
I have no clue what I'm talking about.
  • #2,178
  • Edited 12:51pm Dec 17, 2013 12:13pm | Edited 12:51pm
Quoting Boy Wonder
{quote} As for modelling, I know what you mean; this is why I've started looking at the tools that my broker (IB) offers; they're probably not the best but a hell of a lot better even after playing with them for only 5 minutes than doing it by guesswork. It's great to be able to mess about with the strikes to see what your breakeven points are. Are you on TOS? They have a great setup for options traders. I'm started to see now how I've been doing it half-assed myself.
I will be trading out of a TDA IRA on ToS pretty soon. Meanwhile, I am going to write my own routines. I prefer using my own software when it's practical. There's a host of competing methods for volatility calculation and calculating options pricing & it will be interesting to be able to choose methods used. Also, I need models that specifically reflect peculiar ways that I am trading & even if the latter are fairly mundane I still need to understand where numbers come from if they get spit out at me, especially if I am putting chunks of my life's savings at risk in relation. Been slow going tho, had to dust off programming skills that have been unused for eons...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,179
  • Dec 17, 2013 2:55pm Dec 17, 2013 2:55pm
Just waiting. Will poke my head out after the FOMC to see where new spreads for 1st Qtr 2014 will point. Will take scalp shots at ORCL and a few others tomorrow.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,180
  • Dec 17, 2013 6:16pm Dec 17, 2013 6:16pm
Quoting zusch
Can anyone help and knows what implied move for IWM is this week? Looks way more bullish than SPY & I'm thinking taper or no taper, stocks are headed higher.
Hey, thanks for the question and thanks to Boy Wonder for posting the tastytrade vid that has a detailed explanation, that's a good thing to know.

Possible that there has been alot of baking going on last 6 months ago with constant Fed jawboning and various false starts re: QE taper and that in the end everything is baked in already. On the other hand a correction of some kind is really what lots of traders want to see parked in the driveway come Christmas. We'll see soon enough.
"If The Fool persists in his Folly he will become wise." - William Blake
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