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  • #2,561
  • Jan 19, 2014 8:26am Jan 19, 2014 8:26am
Quoting The Fool
As plausible as anything else. The shit needs a break sometime. Earnings are not exactly stellar and the FED could blow it all wide open in 11 days. http://www.zerohedge.com/news/2014-0...-correct-lower "Overall in an environment where: Yields hit the highs of the year at the end of 2013 The stock market is at the highs and has rallied on the back of on-going Q.E The Fed’s “emergency” stimulus has turned a corner / “topped out” The US economic recovery is patchy Confidence has likely peaked in this cycle Inflation is...
Sorry, don't think it's gonna happen. I'd love a drop, everybody would love a drop. I think any drop that comes must be bought unless and until it turns into something more than a dip.
Just gotta watch those averages. I'm trying to think how I can play to the upside with little exposure on the downside. I think some of the stuff I've read in the McMillan book can help with that.
I have no clue what I'm talking about.
  • #2,562
  • Jan 19, 2014 12:08pm Jan 19, 2014 12:08pm
Quoting Boy Wonder
{quote} Sorry, don't think it's gonna happen. I'd love a drop, everybody would love a drop. I think any drop that comes must be bought unless and until it turns into something more than a dip. Just gotta watch those averages. I'm trying to think how I can play to the upside with little exposure on the downside. I think some of the stuff I've read in the McMillan book can help with that.
Yep, "not" case also plausible & defensible. But the point of Citi's analysis from the ZH article remains: the bond market has a say, always. The Fed won't raise rates anytime soon and know that rates rising via market effects alone will weigh on the US econ recovery and employment outlook. What they can do is peel back QE. If the result is a slide in equities and treasury yields it could be what is wanted. Most Americans don't own any stocks and most that do have their holdings in mutual funds and large caps etc via managed accounts. QE has been a long dose of welfare for the big banks and the resultant frothy stock markets have benefitted mostly the very small minority of rich people who play there. Unemployment rate going down but labor participation rate also at a decades low. I am sure all this keeps Janet Yellen up at night.

http://data.bls.gov/timeseries/LNS11300000

Meanwhile, the market doctors are poking at the patient and wisely nodding together, "this pig needs to be bled." And of course the doctors would all like a good buying opportunity. Nobody likes to pay the limit.

I think the Fed will deliver, open another vein on the pig, and we see a quick 10-20% slide in equities and 10y yields back to 2.5% or lower.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,563
  • Jan 19, 2014 12:32pm Jan 19, 2014 12:32pm
Quoting Boy Wonder
{quote} As a "Brit" (we don't use that word in the UK),
Well, tooshay. We're all just people. But I find much to like about the British. And of course, my people came from there (or Flanders, France, etc) oh about 350 years ago. Watched a couple good vids about British toughness & ingenuity last week.

http://www.pbs.org/wgbh/nova/militar...or-attack.html

http://www.pbs.org/wgbh/nova/shackleton/1914/
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,564
  • Jan 19, 2014 1:38pm Jan 19, 2014 1:38pm
Hello option traders, i want to ask forex options is american style or euorpean?
  • #2,565
  • Jan 19, 2014 2:02pm Jan 19, 2014 2:02pm
Quoting 3ckune
Hello option traders, i want to ask forex options is american style or euorpean?
OTC tend to be European, but I reckon there is a place where you can pay the premium for american style,

For Futures options, I think they are american options on CME, but you can also get european

http://www.cmegroup.com/trading/fx/g...l#prodType=EUR
  • #2,566
  • Jan 19, 2014 3:17pm Jan 19, 2014 3:17pm
Quoting The Fool
{quote} Yep, "not" case also plausible & defensible. But the point of Citi's analysis from the ZH article remains: the bond market has a say, always. The Fed won't raise rates anytime soon and know that rates rising via market effects alone will weigh on the US econ recovery and employment outlook. What they can do is peel back QE. If the result is a slide in equities and treasury yields it could be what is wanted. Most Americans don't own any stocks and most that do have their holdings in mutual funds and large caps etc via managed accounts. QE...
Yeah sorry I just clicked on that ZH link and I see that Citi are now calling for lower rates.
I've been on the lower rates train for over a month now; the massive drop in CL sealed the deal for me; also the quite remarkable drops in yields of even the PIIGS's govt yields, weak inflation; bond market being ahead of the curve; all seemed obvious to me. I've made some nice money on it too, though not nearly as much as if I'd been straight out (i.e. unhedged) with long bonds or short puts, during most of which time there was nary a single voice anywhere calling for lower rates. That was good. Now, the lower rates voices are starting to creep out of the woodwork, which I find a bit disconcerting.
Still, the long-term downtrend in yields (on a 40 year chart) is clear. Also there seems room for ZB to move up to about 136.

The taper has such a tiny effect on things it's quite bizarre how it's getting so much attention. The only real effect is psychological, I think.

I would almost stake my house that you won't get a 20% decline in equities. In fact, I don't even think you'll get a 10% decline. 5% is about as good as it's gonna get. I reckon this is the 90s all over again, up up up and more up. And then up some more. Look at the charts over the 80s and 90s to see how mental it can get, and how the CBs don't pay a blind bit of notice and just let the whole thing chug along to the upside. And this time there's fuck all inflation (sorry for my French) and the employment situation is really really dire. And the credit hangover is still there, virtually everywhere.
But I'm probably the classic retail guy who flips at the exact wrong moment...it'd be funny if we get a crash tomorrow.
I have no clue what I'm talking about.
  • #2,567
  • Jan 19, 2014 5:05pm Jan 19, 2014 5:05pm
Hoping for a drop in ES this week, maybe 20 points would be nice; currently about 55% short 45% long, let's see what the random number generator stock market gives us.
I have no clue what I'm talking about.
  • #2,568
  • Jan 19, 2014 11:54pm Jan 19, 2014 11:54pm
Quoting Boy Wonder
{quote} The taper has such a tiny effect on things ... you won't get a 20% decline in equities. In fact, I don't even think you'll get a 10% decline. 5% is about as good as it's gonna get.
Could be the whole "fear the tapir" effect is long since baked in. After all, the actual first step of tapirs coming, announced in December, rallied the markets. But that was December, and a Dec rally was gonna be hard to stop. And this is now. If the Fed really shows an aggressive hand in pulling the POMO punchbowl away, and I think they will, then it's going to have an effect. Dips in the S&P since late Spring 2013, when the tapirs first raised their ugly snouts, have been small, <100 pts. If we're due another one here in Q1-Q2, I'd bet its a little deeper than that - I'll throw out 1,650 before Q3 for funsies.

So there ya go - a 10-11% drop in the S&P by May. How ya gonna play it?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,569
  • Jan 20, 2014 1:40am Jan 20, 2014 1:40am
Quoting Boy Wonder
{quote} It might be possible to trade futures with $10k with IB but I think the pattern day trader rules also apply to futures trading.
those rules don't apply to commodities at all.
you can get in and out as often as you like. no questions asked.
you can even (at most FCMs, or at least all but one that I clear biz at) use margin against unrealized option premium. for example:
you have a $10k account, and sell 20 puts for $400 each ($8,000 minus fees) and 20 calls for $400 each ($8,000 minus fees) in natural gas for a total short option value of $16,000 (minus fees lets call it $15,500), and the margin is $1k per strangle, so with 20 strangles on you would need roughly $20k in margin for that trade.
$10k cash deposited + $15,500 short option value = $25,500 total equity in account.......so you could actually write more options in this scenario should you choose to.
I disagree that they allow this, but it allows me to make an extra mistake or 2, or hold out for a roll on a position should I choose. It is helpful.
Still in Nat Gas for March. just put on some puts last week at 3.75, and will write more calls over next 3 days to add to the 7s and 6s and 6.50s. kinda wanna wait until feb to sell anything in the 5s for safety reasons. gammas on those things go nuts with a little momentum. so do margins.
I doubt its gonna break $5 before exp on feb 25. hope I don't have to roll the puts. good trade. longer term for me, but I needed to hit new highs after crude.
  • #2,570
  • Jan 20, 2014 9:49am Jan 20, 2014 9:49am
Quoting The Fool
{quote} Could be the whole "fear the tapir" effect is long since baked in. After all, the actual first step of tapirs coming, announced in December, rallied the markets. But that was December, and a Dec rally was gonna be hard to stop. And this is now. If the Fed really shows an aggressive hand in pulling the POMO punchbowl away, and I think they will, then it's going to have an effect. Dips in the S&P since late Spring 2013, when the tapirs first raised their ugly snouts, have been small, <100 pts. If we're due another one here in Q1-Q2, I'd bet...
I think I'm gonna be trying some new (for me) spreads on ES; not sure yet, cos I've got existing positions to liquidate, but one thing is sure, I don't want to wake up one day and find ES down 50 handles and I forgot to set hedges to the downside.

But we should have a competition: just for fun, what do you think will be
a) the low this year
b) the high this year
c) the close on 31st December?

My guesses:
low: 1800
high: 1950
close: 1900

Come on chaps, let's have your predictions Then we can look back at the end of the year and see how truly impossible it is to forecast the markets
I have no clue what I'm talking about.
  • #2,571
  • Jan 20, 2014 9:57am Jan 20, 2014 9:57am
Quoting pipple
{quote} those rules don't apply to commodities at all. you can get in and out as often as you like. no questions asked. you can even (at most FCMs, or at least all but one that I clear biz at) use margin against unrealized option premium. for example: you have a $10k account, and sell 20 puts for $400 each ($8,000 minus fees) and 20 calls for $400 each ($8,000 minus fees) in natural gas for a total short option value of $16,000 (minus fees lets call it $15,500), and the margin is $1k per strangle, so with 20 strangles on you would need roughly $20k...
You are mental pipple Naked options on natgas, what a nutter! I did a covered call on NG futures recently; I made some really good money even though it was only one contract. I'm bloody annoyed though - I saw an inverse HnS targetting 4.40-4.50 (can't remember exactly) which is what motivated the trade in the first place, and was playing for it but as is sometimes the way, you just happen to see some fuckwit's analysis (as you do) on some site or other eg insidefutures, seekingalpha, whatever ("we're expecting NG to trade down to the 3.65 area in the coming months" etc etc blah blah blah) that just sows that seed of doubt in your mind. I held long enough to get some good money (to about 4.05), then ...you start thinking...what if that geezer's right..maybe he knows something I don't, after all he's a pro and I'm not...and so I pulled the plug. Fucking thing then put another 10% on in about a week or two. Fucking "pro's", they're no better than the rest of us most of the time..grrr.

But as for the PDT rules and futures day trading, that's interesting.
I think different brokers use different margin requirements, which is confusing to me because the various exchanges also set margin requirements. I think IB is quite conservative and that suits me perfectly cos I'm terrible when it comes to money management (but getting better now). I'm far too greedy so I need to be restrained. Eg IB require about 3.5k maybe 4k for an ES futures contract, but I reckon there are brokers there doing it for 1k or maybe less. But maybe I'm wrong.
I have no clue what I'm talking about.
  • #2,572
  • Jan 20, 2014 10:33am Jan 20, 2014 10:33am
Quoting Boy Wonder
{quote} You are mental pipple Naked options on natgas, what a nutter! I did a covered call on NG futures recently; I made some really good money even though it was only one contract. I'm bloody annoyed though - I saw an inverse HnS targetting 4.40-4.50 (can't remember exactly) which is what motivated the trade in the first place, and was playing for it but as is sometimes the way, you just happen to see some fuckwit's analysis (as you do) on some site or other eg insidefutures, seekingalpha, whatever ("we're expecting NG to trade down to the...
that is true what you say about different FCMs using different margins regardless of what CME says.....and you are also correct about IB being conservative. I have a client who has a separate account there besides what he has with me, and he showed me once when I had on a bunch of crude options that I was having around $1500 held up in margin per strangle that he put the same strangle on in his IB account and they held over $2400 per strangle! A little excessive maybe in some situations, but they don't want people to get caught sleeping during a messy move I suppose. Dorman (an older FCM that is pretty respected in commodities circles) doesn't allow much (if any) option selling anymore at all. They actually wont even allow me to use any more option selling CTAs for the few clients I have there. They let me grandfather stuff in if I already had it there, but a few months back they stopped any new option writing biz period. A few bad apples ruined it for everyone.
IB is also higher on he ES options from what I have been told. It seems as time has gone on that a lot of these FCMs acknowledge the risk, and also make you pay to play in that pool. They are just protecting themselves I guess. Cant really blame them since the world has gotten so damn lawsuit happy. People wanna blame others for letting them be irresponsible and that held up in court a few times, so these FCMs are tightening up.
  • #2,573
  • Jan 20, 2014 10:47am Jan 20, 2014 10:47am
Quoting Cecil Gee
{quote} forgot about market being closed on Monday so no time to put a order in for Haliburton who release there earnings on Tuesday morning before the market open. It can move. So will look to play UTX on Wednesday earnings. Look to take a strangle on GS 2 weeks out you can get a very cheap price 1-2 strikes OTM, i'm already in from a few weeks ago FEB22 expiration. People can get a much better price than me
the more I look at haliburton the more I think it will have a big move on earnings tomorrow, glad I'm in SLB as it will have an affect on it. Hope to see some good volatility on crude, hope its to the upside as SLB broke to the upside on there earnings
  • #2,574
  • Jan 20, 2014 10:52am Jan 20, 2014 10:52am
Also ear marked Google and Facebook for large moves. With any luck hoping Google does not make there move before earnings on the 30 Jan, may be a tall order for them as a lot of the major NASDAQ corporations do look vulnerable for a give back
  • #2,575
  • Jan 20, 2014 1:07pm Jan 20, 2014 1:07pm
Quoting Boy Wonder
{quote} I think different brokers use different margin requirements, which is confusing to me because the various exchanges also set margin requirements. I think IB is quite conservative and that suits me perfectly cos I'm terrible when it comes to money management (but getting better now). I'm far too greedy so I need to be restrained. Eg IB require about 3.5k maybe 4k for an ES futures contract, but I reckon there are brokers there doing it for 1k or maybe less. But maybe I'm wrong.
http://www.cmegroup.com/clearing/cme...nce-bonds.html

futures margins not something I know much about, but the exchanges set the margin requirements, although FCM's may be free to alter those for their clients, idk.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,576
  • Jan 20, 2014 1:19pm Jan 20, 2014 1:19pm
Quoting Boy Wonder
{quote} My guesses: low: 1800 high: 1950 close: 1900 Come on chaps, let's have your predictions Then we can look back at the end of the year and see how truly impossible it is to forecast the markets
So, S&P gained ~440 in 2013, and you say it'll range just 150 in 2014.

OK, I'll say we dip to 1,625 by Q2end, then spend the rest of the year getting back to 1,900.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,577
  • Jan 20, 2014 1:45pm Jan 20, 2014 1:45pm
Quoting Cecil Gee
Also ear marked Google and Facebook for large moves. With any luck hoping Google does not make there move before earnings on the 30 Jan, may be a tall order for them as a lot of the major NASDAQ corporations do look vulnerable for a give back
NFLX. I am in a put spread, 2/22 $295 long & 1/31 $305 short. The original credit was about $0.90, but now the $305 is worth about $0.60 more than the $295. Earnings out 1/22 & I need enough pop so the $305 will expire worthless by 1/31. If NFLX drops hard I will likely do little better than break even. NFLX was around $360 when these were put on. Not sure what to do other than wait n see.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,578
  • Jan 20, 2014 2:58pm Jan 20, 2014 2:58pm
Quoting The Fool
{quote} So, S&P gained ~440 in 2013, and you say it'll range just 150 in 2014. OK, I'll say we dip to 1,625 by Q2end, then spend the rest of the year getting back to 1,900.
150 points is about 8%, seems about right to me - consolidate the existing move, move up a bit, down a bit, then up a bit and up a bit more.

If we see 1625 by end Q2 you get guru status for life.
I have no clue what I'm talking about.
  • #2,579
  • Jan 20, 2014 3:04pm Jan 20, 2014 3:04pm
Quoting The Fool
{quote} NFLX. I am in a put spread, 2/22 $295 long & 1/31 $305 short. The original credit was about $0.90, but now the $305 is worth about $0.60 more than the $295. Earnings out 1/22 & I need enough pop so the $305 will expire worthless by 1/31. If NFLX drops hard I will likely do little better than break even. NFLX was around $360 when these were put on. Not sure what to do other than wait n see.
I would've thought it NFLX drops hard your spread will be worth a lot more than $0.90.
Basically you're gambling that they won't drop hard. If you win, you make up to 60c. If you lose you can lose up to $9.10.
Is my understanding correct? If so it seems to me you're playing with fire.
I came across news today of BBY getting hit on disappointing earnings, and I think other co'.s are getting hit despite coming in in-line. I don't much follow earnings but it seems from my woeful understanding of these matters that the market is not in a forgiving mood.
But hey, it's your trade.
Attached Image
I have no clue what I'm talking about.
  • #2,580
  • Edited 3:50pm Jan 20, 2014 3:28pm | Edited 3:50pm
http://ecx.images-amazon.com/images/...SH20_OU01_.jpg

Bought this a while back and have been giving it a read this weekend. I scanned most of the front end and closely read the latter chapters, "Trading rhe Earnings Cycle", "Trading the Expiration Cycle", and "Building a Toolset". There was enough in the last 60 pages of the book to make it worth the $20-$30 I paid for it.

The "Earnings Cycle" chapter describes trading strategies for two scenarios that typically occur at the earnings announcements for stocks:

1) trades that benefit from increasing volatility during the days that precede an earnings release, and
2) trades that benefit from post earnings volatility collapse

The approach for (1) is to buy a wide, delta-neutral strangle and sell it just before earnings are out. (Strangle is bought a few weeks before earnings, before the iv begins to ramp up pre-earnings.) This works well, of course, if there is an accompanying move in the underlying. The example Augen shows is a GOOG strangle bought 20 dte and there's a 10% drop in GOOG by 2 dte. Sweet. Things don't always work out so nicely, but the strategy is nonetheless valid. The relationship of increasig iv to options pricing running up to earnings is clearly shown, and timing the exit relative to the iv spike is the meat of the strategy.

The book is worth a read to find out what he has to say about the balance of those chapters. I didn't get a whole lot out of the "Toolset" chapter but it was worth reading...
"If The Fool persists in his Folly he will become wise." - William Blake
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