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Let's Trade Options

  • #2,381
  • Jan 7, 2014 1:58pm Jan 7, 2014 1:58pm
Quoting The Fool
Cecil, I couldn't sell you on some MU earnings juice?
Not my kinda trade but good luck with it
  • #2,382
  • Jan 7, 2014 2:06pm Jan 7, 2014 2:06pm
Quoting Cecil Gee
{quote} Not my kinda trade but good luck with it
$21.50 now they might get $22.00 before the close and if so I will take a double and call it good
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,383
  • Jan 7, 2014 2:37pm Jan 7, 2014 2:37pm
Quoting JeremyWS
{quote} why dont you just trade Futures options for FX? i.e. options on EURUSD futures from CME. you can get options on FXE for example but quite illiquid to say the least {image}
They're not for everybody...certainly in my short experience trading them they are not for the faint of heart as they are highly leveraged. Futures contracts are leveraged as it is but futures options are like leveraged futures contracts. That said, I like to fly by the seat of my pants rather than sell the far OTMs for peanuts. I'm trying to make money, not pocket money.
That said you can always buy, and that's what I'm doing now, incorporating long futures options positions into my trading. I like that.

The only low leveraged route into fx options is going to be on currency ETFs.
I have no clue what I'm talking about.
  • #2,384
  • Jan 7, 2014 2:43pm Jan 7, 2014 2:43pm
Quoting The Fool
{quote} $21.50 now they might get $22.00 before the close and if so I will take a double and call it good
if news is good then can't see why it won't work out for you
  • #2,385
  • Jan 7, 2014 2:51pm Jan 7, 2014 2:51pm
Quoting Boy Wonder
{quote} They're not for everybody...certainly in my short experience trading them they are not for the faint of heart as they are highly leveraged. Futures contracts are leveraged as it is but futures options are like leveraged futures contracts. That said, I like to fly by the seat of my pants rather than sell the far OTMs for peanuts. I'm trying to make money, not pocket money. That said you can always buy, and that's what I'm doing now, incorporating long futures options positions into my trading. I like that. The...
how much leverage and are they more liquid than FXE?
  • #2,386
  • Jan 7, 2014 3:00pm Jan 7, 2014 3:00pm
Tsla has my attention for Long weekly calls. Current price $149.19

Longed $155 call weekly for 77c or $77 per contract. Just before close

TSLA Jan 2014 155.000 call (TSLA140110C00155000)
-OPR
0.77 http://l.yimg.com/a/i/us/fi/03rd/down_r.gif 0.05(6.10%) 20:34


Tesla Motors, Inc. (TSLA)
-NasdaqGS

149.19 http://l.yimg.com/os/mit/media/m/bas...nt-1093278.png 2.19(1.49%) 20:58 - Nasdaq Real Time Price
  • #2,387
  • Jan 7, 2014 3:02pm Jan 7, 2014 3:02pm
Quoting Cecil Gee
{quote} if news is good then can't see why it won't work out for you
about to find out. bought 1/18 $19 puts near the close for $0.18, ratioed about 2:5 to the calls....

...$23 AH, see if the night can keep it up
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,388
  • Jan 7, 2014 3:05pm Jan 7, 2014 3:05pm
Quoting The Fool
{quote} about to find out. bought 1/18 $19 puts near the close for $0.18, ratioed about 2:5 to the calls....
Blew through $22, after hours Trading at $22.60
  • #2,389
  • Jan 7, 2014 3:06pm Jan 7, 2014 3:06pm
Quoting The Fool
{quote} about to find out. bought 1/18 $19 puts near the close for $0.18, ratioed about 2:5 to the calls.... ...$23 AH, see if the night can keep it up
over $23 now

Micron Technology Inc. (MU)
-NasdaqGS
21.73 http://l.yimg.com/a/i/us/fi/03rd/up_g.gif 1.06(5.13%) 21:00|After Hours: : 23.04 http://l.yimg.com/a/i/us/fi/03rd/up_g.gif 1.31 (6.03%) 9:05PM GMT - Nasdaq Real Time Price
  • #2,390
  • Jan 7, 2014 3:18pm Jan 7, 2014 3:18pm
Quoting Cecil Gee
{quote} over $23 now Micron Technology Inc. (MU) -NasdaqGS 21.73 {image} 1.06(5.13%) 21:00|After Hours: : 23.04 {image} 1.31 (6.03%) 9:05PM GMT - Nasdaq Real Time Price
yup, the pieces were there, all that short %, now just see how far it runs. I'm in about $0.40 debit and if it can do better than $23.50 by tomorrow I might net +$1.00 or better. Heavy volume in MU though, anything can happen....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,391
  • Jan 7, 2014 3:50pm Jan 7, 2014 3:50pm
Quoting Cecil Gee
{quote} how much leverage and are they more liquid than FXE?
I haven't traded FXE options but I would be very surprised if they are not liquid enough for retail, at least in the ATM or near the money strikes.
But futures options, yes, they're liquid in EUR contracts but less so in other contracts, and the liquidity obviously changes per instrument (eg CHF is much less liquid than EUR), and strike and contract date.
As with all futures, what you see is what you get. If the prices are blank, then nobody is making a market in your particular security.

As for leverage, you can find that out from various sites, I guess. I just tried IB and CME but couldn't find it out. I think it's kinda complicated and varies with strikes, moneyness, etc. All I can say is that if you sell a futures option short for $200 you can easily end up $2000 in the hole, and in fact that can end up $5k or more. You can work out how much each futures option is worth from the contract specs eg each EUR futures option is 1:1 for a EUR futures contract and the futures contract is equivalent to 125000 eur/usd.

However, buying turns that all on its head. It offers good opportunities that I'm only now starting to realise and use to my advantage. I am having to reprogram my head away from a "sell time" mentality.
I have no clue what I'm talking about.
  • #2,392
  • Jan 7, 2014 4:41pm Jan 7, 2014 4:41pm
TWTR earnings out 2/5 after the bell.....am gonna have to work to dig myself out of that hole...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,393
  • Jan 7, 2014 4:52pm Jan 7, 2014 4:52pm
Quoting The Fool
TWTR earnings out 2/5 after the bell.....am gonna have to work to dig myself out of that hole...
What's the hole? Looks like it's triangulating between 70 and 55 at the moment. I checked TWTR option IV recently, maybe it was y'day, can't remember, and it was through the roof, over 100% I think, but I have irons in enough fires right now so had to pass.
I have no clue what I'm talking about.
  • #2,394
  • Jan 7, 2014 5:18pm Jan 7, 2014 5:18pm
Quoting Boy Wonder
{quote} What's the hole? Looks like it's triangulating between 70 and 55 at the moment. I checked TWTR option IV recently, maybe it was y'day, can't remember, and it was through the roof, over 100% I think, but I have irons in enough fires right now so had to pass.
Hole is Feb 22 $75 long calls that I bought around TWTR @ $65 then let run like a dufus without benefit of counteracting spread position. So yes iv is juicy and I will just have to work to pare down my loss. TWTR has been resilient and has a small float so I was complacent thinking it would bounce off the downgrade onslaught but I see it maybe has been wounded pretty badly today.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,395
  • Jan 7, 2014 5:51pm Jan 7, 2014 5:51pm
Quoting The Fool
{quote} Hole is Feb 22 $75 long calls that I bought around TWTR @ $65 then let run like a dufus without benefit of counteracting spread position. So yes iv is juicy and I will just have to work to pare down my loss. TWTR has been resilient and has a small float so I was complacent thinking it would bounce off the downgrade onslaught but I see it maybe has been wounded pretty badly today.
Now that's funny; I wrote a big ol' post based on my reading of the chart and it turns I was looking at the weekly. What an eejut.
Anyway, now I see what you mean, a big ol mofo bearish engulfing candle. That doesn't look good.
On the plus side, the IV of your call must be going up as the price drops! Not sure how much that offsets a 7% drop in teh u/l though.
You could always hedge with a short of the u/l, turning your long call into a synthetic put. I would think a drop below 60 would be another nail in the coffin.
Normally I would expect this to just drift sideways until earnings but I'm bearish on equities here, and the high betas could be in the vanguard of that, but then we've been waiting for a drop on equities for aeons now and we could be waiting for aeons yet.
I have no clue what I'm talking about.
  • #2,396
  • Jan 7, 2014 6:14pm Jan 7, 2014 6:14pm
I was just wondering how IV affects calendar spreads and found this good little article - http://www.investopedia.com/articles...dar-spread.asp
The synopsis is that generally one should enter calendars when IV is currently low because an increase in IV will ceteris paribus cause further out options (and hence the long leg) to increase in value more than the near term options (the short leg).
That's why I got hammered on my TWTR spreads; I effectively put the most extreme calendar spread on LOL - buying a LEAP and selling the weekly against it, and when IV dropped (because the price went up..I guess there's some skew there) the long LEAP got whacked far more than the short weekly.
I have no clue what I'm talking about.
  • #2,397
  • Jan 7, 2014 6:30pm Jan 7, 2014 6:30pm
Guys,

Thanks to all those who answered some of my FX options questions.
So my bottom line is looking at currency ETF options, and then liquid (e.g., on EU) FX
futures options, being careful about not shorting

Athar.
  • #2,398
  • Jan 7, 2014 9:10pm Jan 7, 2014 9:10pm
Quoting atharmian
Guys, Thanks to all those who answered some of my FX options questions. So my bottom line is looking at currency ETF options, and then liquid (e.g., on EU) FX futures options, being careful about not shorting Athar.
Sorry to blow you off up above Athar, I was in the middle of sweating out some trades. The CBOE website is a good place to start if you are new to trading stock options.

http://www.cboe.com/
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,399
  • Jan 7, 2014 9:14pm Jan 7, 2014 9:14pm
Happy New Year TF and everyone else in this thread --

I'm learning a bit about options, but I still need to find a good strategy to trade with, lol

In other news, I hear that buying naked puts is how the real money is made in this game

uphill battle
  • #2,400
  • Jan 7, 2014 10:04pm Jan 7, 2014 10:04pm
Quoting Gizmosis350k
Happy New Year TF and everyone else in this thread -- I'm learning a bit about options, but I still need to find a good strategy to trade with, lol In other news, I hear that buying naked puts is how the real money is made in this game
hey whatup Giz, did you find a broker who would take your money?

I'd have to say I'm still looking for the best strategy for me, too - trying a bit of everything. Buying/selling naked is where it's at for the poor man - I don't own any of the underlying for any of the options I buy/sell, ever. Just remember if you're selling, you have no rights, only obligations. Selling options naked is very risky then, but you can limit your risk by selling/buying together - that's spreading - a good thing to understand.
"If The Fool persists in his Folly he will become wise." - William Blake
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