Let's Trade Options | Page 127 | 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

  • #2,521
  • Jan 16, 2014 7:04am Jan 16, 2014 7:04am
Quoting Boy Wonder
{quote} Aside from the obvious places to look - elitetrader and trade2win - I don't, sorry. You should be really careful selling naked options. The exploding gamma on short term short options positions can kill ye, I say to ye.
Hi Boy Wonder. Thanks for the tips on the sites, I'll take a look. Yes, selling naked options can be quite risky but I sell options that are waaaaaay OTM. Somewhere around 85-95% OTM....
  • #2,522
  • Jan 16, 2014 7:57am Jan 16, 2014 7:57am
Quoting njr
{quote} Hi Boy Wonder. Thanks for the tips on the sites, I'll take a look. Yes, selling naked options can be quite risky but I sell options that are waaaaaay OTM. Somewhere around 85-95% OTM....
Taleb likened that to picking up pennies in front of a steamroller
Just make sure in that case that you use stops on the option and/or on the underlying (to hedge yourself).
If you sell an ATM option you are selling a .50 delta option; it can only go from 0.5 to 1.
If you sell a far OTM option you are probably selling a 0.10 or 0.15 delta options; it can go from there to 1 which can be quite bad for the old ticker.
But anyway, good luck.
I have no clue what I'm talking about.
  • #2,523
  • Jan 16, 2014 8:13am Jan 16, 2014 8:13am
Quoting Boy Wonder
{quote} Taleb likened that to picking up pennies in front of a steamroller Just make sure in that case that you use stops on the option and/or on the underlying (to hedge yourself). If you sell an ATM option you are selling a .50 delta option; it can only go from 0.5 to 1. If you sell a far OTM option you are probably selling a 0.10 or 0.15 delta options; it can go from there to 1 which can be quite bad for the old ticker. But anyway, good luck.
Cool analogy :-). Yeah, my deltas are super low...normally less than 0.05 so they are pretty low risk of going ITM. I always keep an eye out for any black swans though :-)
  • #2,524
  • Jan 16, 2014 8:37am Jan 16, 2014 8:37am
Quoting The Fool
{quote} will be watching UNH, announces 0600, I might fade a heavy move either way afterwards
So, UNH is dropping on a slim beat - that's the best scenario to fade, as it would probably recover to the upside. We'll see.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,525
  • Jan 16, 2014 9:01am Jan 16, 2014 9:01am
Quoting njr
{quote} Cool analogy :-). Yeah, my deltas are super low...normally less than 0.05 so they are pretty low risk of going ITM. I always keep an eye out for any black swans though :-)
Well, the whole idea is you can't look out for them, but nevermind
Anyway, don't be a stranger, let us know how you get on....the more the merrier here...it's not like there are many of us to go round
I have no clue what I'm talking about.
  • #2,526
  • Jan 16, 2014 9:02am Jan 16, 2014 9:02am
Seems to me still that bond prices are going higher despite everyone seemingly expecting them to go lower.
Currently short calls and puts and long the underlying. I think there's room for a move to 136.
I have no clue what I'm talking about.
  • #2,527
  • Jan 16, 2014 9:16am Jan 16, 2014 9:16am
Quoting Cecil Gee
{quote} Instead I have longed a strangle on CITI with closer strike prices. Long call $52.50 at $1.49 and long $50 put at 93c for a total cost of $2.42 or $242. All Feb 22nd 2014 expiration. Earnings out Jan 16 C Feb 2014 52.500 call (C140222C00052500) -OPR 1.49 {image} 0.04(2.76%) 15:26 C Feb 2014 50.000 put (C140222P00050000) -OPR 0.93 {image} 0.02(2.11%) 15:26
Exited the long call $52,50 position on the original strangle at $1.57 just about break even, I now hold Jan 24 long put $53.,50 position as quoted on page 123

C Feb 2014 52.500 call (C140222C00052500)
-OPR
1.57 http://l.yimg.com/a/i/us/fi/03rd/down_r.gif 1.48(48.52%) 14:52
  • #2,528
  • Jan 16, 2014 9:41am Jan 16, 2014 9:41am
Quoting Cecil Gee
Bought some UNG gas contracts for a quick scalp Fridays expiration. long $21.50 UNG calls for 27c or $27 per contract. If it doubless or better I will close out early. UNG is at $21.22 right now United States Natural Gas (UNG) -NYSEArca 21.22 {image} 0.27(1.29%) 20:05 - Nasdaq Real Time Price UNG Jan 2014 21.500 call (UNG140118C00021500) -OPR 0.27 {image} 0.04(17.39%) 19:36
closed out UNG long $21.50 calls earlier this morning for 69c or $69 per contract more than doubled on this one

UNG Jan 2014 21.500 call (UNG140124C00021500)
-OPR
0.69 http://l.yimg.com/a/i/us/fi/03rd/up_g.gif 0.36(109.09%) 1
  • #2,529
  • Jan 16, 2014 10:29am Jan 16, 2014 10:29am
Quoting Boy Wonder
{quote} Well, the whole idea is you can't look out for them, but nevermind Anyway, don't be a stranger, let us know how you get on....the more the merrier here...it's not like there are many of us to go round

Lol - Thanks Boy Wonder and you're right about looking for the elusive black swan :-) I'll post on this site in case anyone is interested:


Summary of positions last week (closed)

  1. SOLD 10 ES FOP Jan31'14 1750 PUT (EW) @GLOBEX @ 3.75‏
  2. BOUGHT 10 ES FOP Jan31'14 1750 PUT (EW) @GLOBEX @ 1.55

  1. SOLD 10 ES FOP Mar07'14 1685 PUT (EW1) @GLOBEX @ 6
  2. BOUGHT 10 ES FOP Mar07'14 1685 PUT (EW1) @GLOBEX @ 4.8

  1. SOLD 10 ES FOP Feb07'14 1750 PUT (EW1) @GLOBEX @ 5
  2. BOUGHT 10 ES FOP Feb07'14 1750 PUT (EW1) @GLOBEX @ 2.9

Summary of current positions:

  1. SOLD 10 ES FOP Mar31'14 1685 PUT (EW) @GLOBEX @ 9.75

  • #2,530
  • Jan 16, 2014 11:12am Jan 16, 2014 11:12am
Quoting njr
{quote} Lol - Thanks Boy Wonder and you're right about looking for the elusive black swan :-) I'll post on this site in case anyone is interested: Summary of positions last week (closed) SOLD 10 ES FOP Jan31'14 1750 PUT (EW) @GLOBEX @ 3.75‏ BOUGHT 10 ES FOP Jan31'14 1750 PUT (EW) @GLOBEX @ 1.55 SOLD 10 ES FOP Mar07'14 1685 PUT (EW1) @GLOBEX @ 6 BOUGHT 10 ES FOP Mar07'14 1685 PUT (EW1) @GLOBEX @ 4.8 SOLD 10 ES FOP Feb07'14 1750 PUT (EW1) @GLOBEX @ 5 BOUGHT 10 ES FOP Feb07'14 1750 PUT (EW1) @GLOBEX @ 2.9Summary of current positions: SOLD 10...
Deltas on those March 1685 are 0.10, and I'm surprised you can get that much for them. Looks like good r/r to me.
It makes me think, why do I go so close when I could go so far out like that? I suppose it's because I'm greedy. But I'm not so greedy as I used to be so I think I should be going farther out like that.
Also it's interesting that you close your short puts with so much value left in them...do you do that for a reason? Do you always do that?
I have no clue what I'm talking about.
  • #2,531
  • Jan 16, 2014 11:16am Jan 16, 2014 11:16am
Quoting Boy Wonder
{quote} Aside from the obvious places to look - elitetrader and trade2win - I don't, sorry. You should be really careful selling naked options. The exploding gamma on short term short options positions can kill ye, I say to ye.
itīs risky only if you do it on assets you do not want to own, if for example yo do it for long term investments, you can short puts on indexes and then when assigned, just keep selling calls against it, its a pretty good strategy
  • #2,532
  • Jan 16, 2014 11:18am Jan 16, 2014 11:18am
Quoting Boy Wonder
{quote} Deltas on those March 1685 are 0.10, and I'm surprised you can get that much for them. Looks like good r/r to me. It makes me think, why do I go so close when I could go so far out like that? I suppose it's because I'm greedy. But I'm not so greedy as I used to be so I think I should be going farther out like that. Also it's interesting that you close your short puts with so much value left in them...do you do that for a reason? Do you always do that?
Exactly - hence the benefit of selling waaaaay OTM FO's which will naturally theta decay in time. I don't see 1685 being hit anytime soon and if there is a black swan event I'd roll down or out. However, with natural theta decay, my p/l will incrementally increase. I don't plan to hold to expiry and will close the position around 50 - 75% max profit....
  • #2,533
  • Jan 16, 2014 11:27am Jan 16, 2014 11:27am
You both make good points. I would say though that if the underlying goes sailing past your strike price then you're carrying a hefty loss, and you can find that if there's a V-shaped rebound after you've sold calls (at the bottom) you end up having sold calls for peanuts and having locked in your loss.
Of course, you can then roll the calls, I appreciate that, but it all gets quite unpleasant and difficult to manage. Eg the u/l drops, you get assigned, you sell calls against your position, the u/l shoots back up 5%, what do you do? Roll the (now heavily underwater) calls, and sell the u/l? If you do then you're now naked a bunch of ITM calls - what happens if the u/l goes up another 5%?
Having said that, selling calls at what turns out to be the bottom is mitigated to some degree because the IV would have been elevated when you sold them, so the effect of a rising u/l will (usually) be mitigated by a collapsing IV.
I have no clue what I'm talking about.
  • #2,534
  • Jan 16, 2014 11:28am Jan 16, 2014 11:28am
Interesting site for the stock pickers amongst us: http://www.gurufocus.com/stock/AAPL
I have no clue what I'm talking about.
  • #2,535
  • Jan 16, 2014 11:33am Jan 16, 2014 11:33am
Quoting Boy Wonder
You both make good points. I would say though that if the underlying goes sailing past your strike price then you're carrying a hefty loss, and you can find that if there's a V-shaped rebound after you've sold calls (at the bottom) you end up having sold calls for peanuts and having locked in your loss. Of course, you can then roll the calls, I appreciate that, but it all gets quite unpleasant and difficult to manage. Eg the u/l drops, you get assigned, you sell calls against your position, the u/l shoots back up 5%, what do you do? Roll the (now...
you only sell calls far OTM, only to keep cash flow coming into your account, remember, this is for assets you want to own... if you sold calls and your assets are taken, then sell another PUT at the nearest STRIKE and in that way you should be outperforming the market, specially when it is stable or ranging like the one I believe we will have this year...
  • #2,536
  • Jan 16, 2014 12:57pm Jan 16, 2014 12:57pm
check out the 5-day chart on NUS.

HLF is cut from the same cloth.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,537
  • Jan 16, 2014 1:23pm Jan 16, 2014 1:23pm
Quoting The Fool
{quote} So, UNH is dropping on a slim beat - that's the best scenario to fade, as it would probably recover to the upside. We'll see.
Bought the UNH Mar 22 $77.50 calls for $0.69, looking for a retrace in next days & will diagonal sell Feb 22 or even Feb 7 calls to cut down the debit.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,538
  • Jan 16, 2014 1:24pm Jan 16, 2014 1:24pm
Quoting The Fool
{quote} Bought the UNH Mar 22 $77.50 calls for $0.69, looking for a retrace in next days & will diagonal sell Feb 22 or even Feb 7 calls to cut down the debit.
sold strangle on ESH4 as per this image. 3/2 ratio between puts and calls.
Attached Image (click to enlarge)
Click to Enlarge Name: ESH4 strangle.png Size: 96 KB
  • #2,539
  • Jan 16, 2014 2:20pm Jan 16, 2014 2:20pm
Quoting The Fool
check out the 5-day chart on NUS. HLF is cut from the same cloth.
hard to find these but these are the ones can can set you up for life if you get in a couple
  • #2,540
  • Jan 16, 2014 2:45pm Jan 16, 2014 2:45pm
SLB has earnings out in the morning, it trading at $88.63 at the moment so I'm waiting right until the end to take a strangle for as cheap as possible and for same day expiration. like to get the pair for no more than a whole $dollar

long $89 call and long $88 put or a may go a extra dollar out
5 traders viewing now