Let's Trade Options | Page 113 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

BELLA SYSTEM. Let's try it, let's improve it! 118 replies

Let's Trade The News V 0.4 ! 479 replies

Any Options, Bull Options & Option Bit 39 replies

Let's Trade The News! 46 replies

Let a trade develop? 17 replies

Attachments: Let's Trade Options
Exit Attachments

Let's Trade Options

  • #2,241
  • Dec 20, 2013 2:10pm Dec 20, 2013 2:10pm
Quoting The Fool
{quote} Crossed fingers on the TLT trade expiring next week, if it stays below $104 by 12/27 I'll not be too hurt.....
So of course, TLT picks the day after the taper to go up $1.50....maybe next week we'll see the bond market settle down, but maybe all the taper fear has been flushed out with the dovish FOMC and T10y will fall. Down under 2.9% today. And maybe keep on sliding next week, in which case TLT rises into next week. TLT gaining into the close, currently $104.13.

So I'm long TLT $105 calls, short TLT $104 calls, both for 12/27. I might be better off buying back the $104c for a hefty loss in hopes that we get another good day for TLT early next week & maybe even touch my $105 strike.....

FOMC trade has been a shit sandwich regardless how it's sliced....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,242
  • Edited 2:22am Dec 21, 2013 2:09am | Edited 2:22am
Quoting The Fool
morning, Cecil - TLT strangle is looking deathly, puts not likely to survive I'd say. I sold the 12/27 $104 calls same price as bought the 12/27 $105 calls ($0.23) - so if those hold I'll be out $0.21 + comms on the puts, unless we get a miracle I guess...
MADE a mess here it looks like, will prolly double my losses after it's over. Shoulda known TLT would bounce off stiff support in the $102.50-$102.00 zone after what was essentially a dovish FOMC despite the taper news. Still in the short $104 puts, tried to get out late Friday but missed. TLT rose steadily AH and finished at $104.31. Will watch for a pullback on Monday but sure looks like TLT will put in a good move long. Might get out of short $104 puts on Monday then see TLT go beyond $105, where I have long calls, in which case I might recoup most loss. Or less likely TLT reverses and stays below $104 which would be fine also. Just a dumb trade, not the strangle, but the short $104 puts taken to try to help out the strangle - a shot in the dark as it turns out.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,243
  • Dec 21, 2013 1:57pm Dec 21, 2013 1:57pm
http://www.cnbc.com/id/101290538?__s...%20of%20an%20e

I don't often agree with Cramer, but I'm finally ready to give up on my contrarian tendencies and embrace the great bull market of 2013-2xxx.

This is surely a sign of an impending crash.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,244
  • Dec 21, 2013 2:31pm Dec 21, 2013 2:31pm
Quoting The Fool
http://www.cnbc.com/id/101290538?__s...%20of%20an%20e I don't often agree with Cramer, but I'm finally ready to give up on my contrarian tendencies and embrace the great bull market of 2013-2xxx. This is surely a sign of an impending crash.
Calling a drop is something of a pointless exercise. You can at best tell from the candles when it looks like it might be about to drop, but you can never know really if it will drop or even when it does which drop will turn into an avalanche. You simply cannot, cannot, cannot know, ahead of time, whether a small drop will become a medium drop, or a big drop, or a huge drop. You might find you get 9 drops in a row that get bought up at a 2.5% decline. The 10th might turn into a real humdinger...or it might become a 5% drop that retraces a full 100% takes out stops and then reverses and becomes a 20% drop. That's usually the way the bastards work.
So I've come to the opinion that it's pointless trying to predict it. All you can do is watch the candles and always bear in mind you have very little idea of what is actually going to happen. I think it probably will drop by 20% at some point, be that next month or as far out as 2015 or 2016; I just hope that I'm on the right side of it - selling calls - when it does.

Separately, I have just been engaging my brain cells to reverse engineer the compound interest calculation so that given a final sum and a starting sum and a term, I can calculate the rate of return required to get from the starting sum to the final sum.
I just used it to work out that to multiply your principal 10-fold in 52 weeks you have to have a return of 4.53% per week.
Of course, you could make the periods months instead so you could go from say 10k to 100k in 52 years with a rate of 4.53% per week (but of course that excludes taxes).
My next exercise is to work out exactly how unrealistic gunning for 4.53% per week is given the obvious constraint of risk.
Addendum: I just realised that at the same rate (4.53% per week) if you double the term you can take 10k to 1000k

Of course it's hopeless trying to achieve such returns but hey, it's an interesting diversion nonetheless.
I have no clue what I'm talking about.
  • #2,245
  • Dec 21, 2013 2:53pm Dec 21, 2013 2:53pm
Quoting Boy Wonder
{quote} Calling a drop is something of a pointless exercise. ..... I think it probably will drop by 20% at some point, be that next month or as far out as 2015 or 2016; I just hope that I'm on the right side of it - selling calls - when it does.

.....My next exercise is to work out exactly how unrealistic gunning for 4.53% per week is given the obvious constraint of risk. Addendum: I just realised that at the same rate (4.53% per week) if you double the term you can take 10k to 1000k Of course it's hopeless trying to achieve such returns...
I'm loathe to admit it but I agree with Cramer. I am looking for hot momentum stocks to ride up. I will be covering my shortside ass, though. Re: high returns, 5% a week is doable in any market. Scalping forex is a great place to get that done if you have the constitution. But you can do it in options, too. Everything gets easier when you are above the limits - a) daytrader and b) portfolio margin....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,246
  • Dec 21, 2013 3:03pm Dec 21, 2013 3:03pm
Quoting The Fool
{quote} I'm loathe to admit it but I agree with Cramer. I am looking for hot momentum stocks to ride up. I will be covering my shortside ass, though. Re: high returns, 5% a week is doable in any market. Scalping forex is a great place to get that done if you have the constitution. But you can do it in options, too. Everything gets easier when you are above the limits - a) daytrader and b) portfolio margin....
Its the VIX that will give us the best indication when the top or near top has formed, look for it to go under $10, check out the history of this pa
  • #2,247
  • Dec 21, 2013 3:25pm Dec 21, 2013 3:25pm
Mmmaybe. VIX could range between 10-20 for years, or it could stretch the bottom end of that range and put in a new bull range sub-15. No guarantees on the empty righthand side of the charts....
Attached Image (click to enlarge)
Click to Enlarge Name: 2013-12-21_VIX.png Size: 54 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,248
  • Dec 23, 2013 6:48am Dec 23, 2013 6:48am
Quoting The Fool
{quote} I'm loathe to admit it but I agree with Cramer. I am looking for hot momentum stocks to ride up. I will be covering my shortside ass, though. Re: high returns, 5% a week is doable in any market. Scalping forex is a great place to get that done if you have the constitution. But you can do it in options, too. Everything gets easier when you are above the limits - a) daytrader and b) portfolio margin....
3.14% to go from 1->5 in a year e.g 1000 -> 5000.
3.14% seems more realistic; I think there's a big difference between aiming for 4.53 and 3.14.
I have no clue what I'm talking about.
  • #2,249
  • Edited 8:24am Dec 23, 2013 7:58am | Edited 8:24am
http://www.amazon.com/gp/product/111...?ie=UTF8&psc=1

Just got this book last week and read into it over the weekend. Off the bat I'd have to say one of the better trading books I have looked at, focused specifically on options volatility trading.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,250
  • Dec 23, 2013 8:08am Dec 23, 2013 8:08am
Quoting The Fool
http://www.amazon.com/gp/product/111...?ie=UTF8&psc=1 Just got this book last week and read into over the weekend. Off the bat I'd have to say one of the better trading books I have looked at, focused specifically on options volatility trading.
I don't understand how people can expect to trade volatility any more than they can expect to trade price.
Price is largely random and therefore volatility, as a function of price movement, must also be largely random.
It always comes down to the same thing: you think the current price is wrong and will move either up or down. But who am I to know better than the market?
With vol it seems you think the current vol is wrong and you think vol will move up or down. But who am I to know better than the market?
I can't see how applying a bit of maths helps solve the problem. There must be armies of maths geeks working for hedge funds and yet still they underperform the market year after year.

If you can educate me on this to help me with my ignorance I would appreciate it
I have no clue what I'm talking about.
  • #2,251
  • Edited 8:24am Dec 23, 2013 8:08am | Edited 8:24am
Quoting The Fool
{quote} MADE a mess here it looks like, will prolly double my losses after it's over. Shoulda known TLT would bounce off stiff support in the $102.50-$102.00 zone after what was essentially a dovish FOMC despite the taper news. Still in the short $104 puts, tried to get out late Friday but missed. TLT rose steadily AH and finished at $104.31. Will watch for a pullback on Monday but sure looks like TLT will put in a good move long. Might get out of short $104 puts on Monday then see TLT go beyond $105, where I have long calls, in which case I might...
TLT pulling back just under $104 premarket, maybe bonds will do what they should, which of course is sell off in the teeth of a roaring bull market in equities and in the face of continuing good US econ data....and the tapirs, my god the tapirs...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,252
  • Edited 12:35pm Dec 23, 2013 8:17am | Edited 12:35pm
Quoting Boy Wonder
{quote} If you can educate me on this to help me with my ignorance I would appreciate it
Well, I may be able to answer better after I have read the book and played with the models more.

But I have always thought it easier to predict volatility than price. For instance, many of the short term simple strangles I have journaled here are based on that idea. Like I just made some money trading the ORCL earnings. Earnings releases are notorious and obvious places to look for volatile moves in the underlying. I don't know which direction the ul will go, ergo the strangle, although the strangle strikes can be chosen based on historical moves. And these events are scheduled, so how cool is that?

Doesn't always work, just tried the same thing with the FOMC announcement and TLT and it missed. But I could have better chosen one of the leveraged index etf's and made out like a bankster.

Sinclair points to of course a more sophisticated approach, which is where lots of options traders live, so I need to bone up on that. I'll review the book more after I finish it...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,253
  • Dec 23, 2013 8:23am Dec 23, 2013 8:23am
Quoting The Fool
{quote} Well, I may be able to answer better after I have read the book and played with the models more. But I have always thought it easier to predict volatility than price. For instance, many of the short term simple strangles I have journaled here are based on that idea. Like I just made some money trading the ORCL earnings. Earnings releases are notorious and obvious places to look for volatile moves in te underlying. I don't know which direction the ul will go, ergo the strangle, although the strangle strikes can be chosen based on historical...
I think with ORCL you were right but the question is, how many times are you right when buying a strangle rather than selling one?
The "house" tends to write options; the "player" tends to buy them. I see it like a casino: a player can win any time, but over time, the house wins.
Hence, options going into key events are priced high by the house, because the house doesn't like to lose.
That said, I am coming round to the idea of buying options, but only when volatility is low.
I took on a TWTR spread position last week; I was right in direction (up) but the bullish leg - long a LEAP call - made virtually nothing despite the U/L moving $2 higher than when I bought the LEAP. The reason? IV was very high when I bought the LEAP. It got hit as IV moved higher as the U/L moved higher.
I made the mistake of thinking LEAP = low time premium = guaranteed money if the UL rises. Big mistake.
I have no clue what I'm talking about.
  • #2,254
  • Dec 23, 2013 8:28am Dec 23, 2013 8:28am
The only reason I'm not a seller more is I don't have the scratch. Making money trading is a lot easier if you already have shitloads of money....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,255
  • Dec 23, 2013 8:33am Dec 23, 2013 8:33am
AAPL up big along with CHL on the announcement, although this has been on the burner for a month.

700,000,000 new potential IPhone customers? How fast do you think AAPL can make $1,000 in 2014?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,256
  • Edited 11:24am Dec 23, 2013 8:49am | Edited 11:24am
Quoting Boy Wonder
{quote} I think with ORCL you were right but the question is, how many times are you right when buying a strangle rather than selling one? The "house" tends to write options; the "player" tends to buy them. I see it like a casino: a player can win any time, but over time, the house wins. Hence, options going into key events are priced high by the house, because the house doesn't like to lose. That said, I am coming round to the idea of buying options, but only when volatility is low.
Assuming what you say is true, the logical approach would be to search out instances of "scheduled volatility" wherein there is an exploitable disparity between the marketmaker's projection of volatility and what may be realized. This gets harder to do the shorter the timeframe I think, but you trade that off against the cheaper cost of short tf options....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,257
  • Dec 23, 2013 8:54am Dec 23, 2013 8:54am
Quoting The Fool
The only reason I'm not a seller more is I don't have the scratch. Making money trading is a lot easier if you already have shitloads of money....
That's fair enough, and very true. That said, having being able to trade an account with lots of money is for most people like giving them the rope to hang themselves with. If you're experienced or lucky enough to have a good mentor it's ok but if not, you simply have more money to lose.
I have no clue what I'm talking about.
  • #2,258
  • Dec 23, 2013 9:17am Dec 23, 2013 9:17am
Bought 100GDX, sold Jan24 20.5P and Jan24 20.5C for a net entry of 18.64. It's a way of being long the miners whilst having short exposure to the underlying.
I very much hope that GDX goes nowhere in the next month but frankly I couldn't care less if it goes up or down.
I have no clue what I'm talking about.
  • #2,259
  • Edited 4:29pm Dec 23, 2013 1:19pm | Edited 4:29pm
Quoting The Fool
{quote} TLT pulling back just under $104 premarket, maybe bonds will do what they should, which of course is sell off in the teeth of a roaring bull market in equities and in the face of continuing good US econ data....and the tapirs, my god the tapirs...
Getting some relief here, TLT <$103.80. Have to babysit this thing all week but if TLT will drop and stay down I'll be a genius for saving the call leg of my 12/27 strangle. Still a dumb trade, though....(because if I had waited I could have sold further otm calls for enough credit to push the whole strangle into profit, but that's 20/20 hindsight talking a little...)
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,260
  • Dec 23, 2013 2:53pm Dec 23, 2013 2:53pm
I have been thinking...and I think bonds are going down, and so possibly are stocks, but on the latter I am less confident.
But anyway as ever the timing is the problem as is the extent of any decline. Bonds could rally a bit, as could stocks, even from here.
Closed some spreads just now on IWM and SPY on this bullish action. I think I only put them on sometime last week. I never used to do spreads and only started a few weeks ago but so far they seem to be doing ok, and far far less stress and risk than my usual modus operandi of selling naked ATM or close to the money futures options.
I have no clue what I'm talking about.
3 traders viewing now