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Let's Trade Options

  • #2,181
  • Dec 17, 2013 7:00pm Dec 17, 2013 7:00pm
Quoting The Fool
{quote} 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.
I just worked this out for IWM and it comes to 1.69 or thereabouts. It's a bit skewiff because IWM is between strikes (curr 111.24/111.35); I chose 111.5 as ATM and 112C and 111P as OTM. So anyway the expected move is 169 which from a mid of about 111.30 says a 1SD move (I think; maybe it's 2SDs..does anybody know?) would have us land somewhere between 109.61 and 112.99 by Friday's expiration.

Current: 111.23/35
111.5C: 82.5 , 111.5P: 109.5, 112C: 60, 111P: 86.5
82.5+109.5+60+86.5/2 = 169.25.

That's very interesting and not purely academic for me because I have a short 112C and short 110P so I could be 1 strike too close on both sides.
I have no clue what I'm talking about.
  • #2,182
  • Dec 17, 2013 8:03pm Dec 17, 2013 8:03pm
Very interesting stuff and thanks for the video Boy Wonder. 2SD move is a pretty big move from the looks of it so that information alone is very interesting.

The Globex sessions this week have been super busy too. Very exciting price action. Yesterday I posted that I was feeling bullish on stocks (still am fundamentally), but today's action wasn't a great follow up to the great day Monday. I see red weekly candle last week, red daily candle today, and concerning price action in Globex session already tonight. So overall now I'm feeling like tmrw could be a little coin flippy on the direction.
Twitter: @zusch_ -- Preselecting trending pairs, stocks on a weekly basis.
  • #2,183
  • Dec 18, 2013 1:28am Dec 18, 2013 1:28am
Some good news on big cap stock GS AMZN PCLN and a few others have had there strike prices reduced from $5 apart to $2.50, more opportunities. Also the new weekly options have recently been issued on a Wednesday but need to check this out
  • #2,184
  • Edited 1:54am Dec 18, 2013 1:39am | Edited 1:54am
TLT hi/lo ranges previous FOMC days:

10/30: $1.00

9/17 $2.57

7/31: $2.07

6/19: $2.17

5/01: $0.58

3/20: $0.91

TLT lt $103.36. 12/27 and 12/21 $104.50 calls each $0.29, 12/21 $101.50 puts $0.22

I might go even deeper otm on the put side, to $101p @ $0.15

I reckon a surprise taper announcement will really sink TLT, so it's worth the risk for a deeper move. Business as usual will see TLT go up $1-$2 in 1-2 days
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,185
  • Dec 18, 2013 1:57am Dec 18, 2013 1:57am
Quoting Cecil Gee
Some good news on big cap stock GS AMZN PCLN and a few others have had there strike prices reduced from $5 apart to $2.50, more opportunities. Also the new weekly options have recently been issued on a Wednesday but need to check this out

yeah that's cool, PCLN still too rich for me tho...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,186
  • Dec 18, 2013 4:44am Dec 18, 2013 4:44am
Quoting The Fool
TLT hi/lo ranges previous FOMC days: 10/30: $1.00 9/17 $2.57 7/31: $2.07 6/19: $2.17 5/01: $0.58 3/20: $0.91 TLT lt $103.36. 12/27 and 12/21 $104.50 calls each $0.29, 12/21 $101.50 puts $0.22 I might go even deeper otm on the put side, to $101p @ $0.15 I reckon a surprise taper announcement will really sink TLT, so it's worth the risk for a deeper move. Business as usual will see TLT go up $1-$2 in 1-2 days
Bit of a coin flip but I feel any selloff in bonds should be bought (figuratively e.g. sell puts, buy calls, buy the underlying, whatever).
Reason: taper expectations are arguably higher now, and the economy stronger, than at any time in the past 12 months, and yet bonds are higher than they were in September. It's probably ridiculously crude and simplistic (and wrongheaded) thinking but I reckon any selloff should be faded, at least for a short-term bounce. So I'm expecting 2 scenarios: selloff then rally, or rally. I'm not expecting selloff that leads to a more protracted selloff.
But largely, this is very very very much guesswork; having said that I've flipped to long bonds this week but short an ATM call so kinda 1/2 long.
I think any tapering that comes will carry largely symbolic semantics; inflation is still very low and the participation rate is also low. So it's softly softly catchy monkey as far as the Fed is concerned. A symbolic taper would probably still cause the market to go mayhem initially and then once it's digested the real implications - not many - would sink in.

But hell, it's all just bloody guesswork...
But hell, it's all just bloody guesswork...
But hell, it's all just bloody guesswork...
But hell, it's all just bloody guesswork...
But hell, it's all just bloody guesswork...
But hell, it's all just bloody guesswork...
But hell, it's all just bloody guesswork...
(repeat to self to fade....)
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I have no clue what I'm talking about.
  • #2,187
  • Dec 18, 2013 9:25am Dec 18, 2013 9:25am
Bought 2 IWM 103P @0.04 each purely for the fact that it took my margin down by $2K. Seems like a fair trade to me: spend $8 to get $2K of buying power.
I have no clue what I'm talking about.
  • #2,188
  • Dec 18, 2013 9:41am Dec 18, 2013 9:41am
I'm gonna wait until the announcement and see where price actions wants to go, everyone is expecting lots of volatility but it may happen later in the week
  • #2,189
  • Dec 18, 2013 10:38am Dec 18, 2013 10:38am
Quoting Boy Wonder
{quote} I think any tapering that comes will carry largely symbolic semantics; inflation is still very low and the participation rate is also low. So it's softly softly catchy monkey as far as the Fed is concerned. A symbolic taper would probably still cause the market to go mayhem initially and then once it's digested the real implications - not many - would sink in. But hell, it's all just bloody guesswork... {image}
lol, softly softly catchee monkey, I had to wiki that...englishmen are so cute....but yeah BW, it's a gamble, but then all trading is. re: TLT I still see the same scenario - a surprise out of the FOMC today will sink TLT and business as usual will float it. Looks like they are juking it down to the $102.50 strike, a call side setup tell? Since I started trading options I have come to see movements of all the ul instruments as a pinball game between the strikes.

Like ORCL, which I may also scalp today, is pinning at $34.00....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,190
  • Dec 18, 2013 12:30pm Dec 18, 2013 12:30pm
Quoting The Fool
{quote} Like ORCL, which I may also scalp today, is pinning at $34.00....
strangled it for 12/21, $31.50p/$35.50c, $0.17/$0.20 - $0.37 debit, need a $2 pop, ORCL trading around $33.80 now, looking for $4+ drop, but we'll see if FOMC fireworks/fizzle gets in the way or helps....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,191
  • Dec 18, 2013 12:47pm Dec 18, 2013 12:47pm
Quoting The Fool
{quote} re: TLT I still see the same scenario - a surprise out of the FOMC today will sink TLT and business as usual will float it. Looks like they are juking it down to the $102.50 strike, a call side setup tell? Since I started trading options I have come to see movements of all the ul instruments as a pinball game between the strikes. Like ORCL, which I may also scalp today, is pinning at $34.00....
saw TLT jumping and decided to dive in, strangled 12/21 $101.5p @ $0.21 and 12/27 $105c @ $0.23, stacked 3/2 call side
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,192
  • Dec 18, 2013 12:49pm Dec 18, 2013 12:49pm
Quoting The Fool
{quote} Since I started trading options I have come to see movements of all the ul instruments as a pinball game between the strikes. .
Yeah it's funny how it changes the way you view the markets.
Re TLT...I am leaning at this late stage towards fake breaks on eg the $ and on bonds. Eg a break lower on bonds, a break lower on EURUSD, GBPUSD.
EURUSD could eg move down to mid/high 1.36s and settle there for the day before being ramped higher over the coming days and weeks to take out 1.38, maybe 1.39.
Really, who the f knows, dammit there's so much guesswork in this game.
The only thing I'm truly comfortable with (which means I'm probably wrong LOL) is that gold is headed to sub 1200 in the coming days or weeks. But like I say, I'll probably be wrong on that too.
I have no clue what I'm talking about.
  • #2,193
  • Dec 18, 2013 12:51pm Dec 18, 2013 12:51pm
ww.youtube.com/watch?v=I3aACyAP1Eow
  • #2,194
  • Dec 18, 2013 12:52pm Dec 18, 2013 12:52pm
Quoting The Fool
{quote} saw TLT jumping and decided to dive in, strangled 12/21 $101.5p @ $0.21 and 12/27 $105c @ $0.23, stacked 3/2 call side
Otherwise I have spread legs expiring 12/21, only one of concern is SSO $90p - if we get a selloff in the S&P I might have to deal there, SSO around $94.50 now, but can move fast...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,195
  • Dec 18, 2013 12:55pm Dec 18, 2013 12:55pm
Quoting The Fool
{quote} saw TLT jumping and decided to dive in, strangled 12/21 $101.5p @ $0.21 and 12/27 $105c @ $0.23, stacked 3/2 call side
not in it but if i were that's exactly i how i would do it
  • #2,196
  • Dec 18, 2013 12:56pm Dec 18, 2013 12:56pm
Quoting The Fool
{quote} Otherwise I have spread legs expiring 12/21, only one of concern is SSO $90p - if we get a selloff in the S&P I might have to deal there, SSO around $94.50 now, but can move fast...
Short the 90P? You can roll that if needs be.
I have no clue what I'm talking about.
  • #2,197
  • Dec 18, 2013 12:59pm Dec 18, 2013 12:59pm
Taken TLT strangle $105 call 14c and $101 put also for 14c, 2 minutes before the release both long positions

iShares 20+ Year Treasury Bond (TLT)
-NYSEArca
102.95 http://l.yimg.com/a/i/us/fi/03rd/down_r.gif 0.34(0.33%) 6:59PM GMT - Nasdaq Real Time Price
  • #2,198
  • Dec 18, 2013 1:01pm Dec 18, 2013 1:01pm
watch out for the bounce on indexes as were near the 50 day
  • #2,199
  • Dec 18, 2013 1:02pm Dec 18, 2013 1:02pm
Quoting Boy Wonder
{quote} Short the 90P? You can roll that if needs be.
yeah that'll be ok in the end, even though I was dead wrong about the S&P, that's the cool thing about spreading, I will need to go one more short put leg against Jan $80 SSO long puts, was hoping the short $90's would expire worthless, they prolly will...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,200
  • Dec 18, 2013 1:02pm Dec 18, 2013 1:02pm
Letting them duke it out .....
Probably best not to put any positions on until at least the end of today.
I have no clue what I'm talking about.
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