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Let's Trade Options

  • #2,601
  • Jan 21, 2014 10:26am Jan 21, 2014 10:26am
Quoting Cecil Gee
{quote} I think Goldman sachs will move next week and with it only being a 4 day week they have priced the options cheap enough for a strangle perhaps 1 strike otm. If you don't mind a little more risk by tying more more money then go out 2 strikes OTM but Feb 22 expiration date
Goldman has the potential to drop over $20, already in over 2 weeks ago
  • #2,602
  • Jan 21, 2014 2:11pm Jan 21, 2014 2:11pm
“I’d rather have a teaspoon of butter than four tablespoons of margarine,” she says.
http://www.marketwatch.com/story/but...ars-2014-01-20

Yeah baby, butter all the way, none of that manufactured muck for me....
I have no clue what I'm talking about.
  • #2,603
  • Jan 21, 2014 2:29pm Jan 21, 2014 2:29pm
Quoting Boy Wonder
“I’d rather have a teaspoon of butter than four tablespoons of margarine,” she says. http://www.marketwatch.com/story/but...ars-2014-01-20 Yeah baby, butter all the way, none of that manufactured muck for me....
lol that's funny stuff. I have a client who makes ice cream and hedges through me with butter and sugar once in awhile. true story. all puns aside butter is a thin market. tough to trade. you get into am option and are pretty much down 5%-10% immediately at a minimum because of the spread.
I cant even talk seriously about this without sounding like I am making a joke. Spread. Thin. Margin (margarine) ...........too many jokes!

Nice move up in Natural Gas today. Seeing if the propane and weather talk will push it through $4.50 before I peel off some puts at a profit and sell more calls. Gotta be careful with expiration coming for Febs early next week. Crazy mover at exp cause people are forced to roll.
Regardless.....it is volatile.....but it will pay if played right. So far looks good.
Sold calls for about $220 average around $6.50-$7.00
Sold puts for about $330 average at $3.75
roughly 2 to 1 call-put ratio
running around 35% M/E ratio
Feb 25 expiration for March options
Lot of time left, but with it sitting at $4.37 for March spot price, my puts are almost 15% away to the downside, and the majority of my calls are 60% away on the upside.......so I am well insulated for a spike should it come.
Thought process is if it does spike, I will begin pulling off some puts 10-20% at a time, while selling more calls slowly. Market can't be 2 places at once, and expiration day will come, so once the Febs expire on Jan 28th (1 week from today), and I am front month, the theta will begin to decay around 5% per day on average, and its just a matter of managing risk from that point on.
  • #2,604
  • Edited 3:01pm Jan 21, 2014 2:44pm | Edited 3:01pm
gonna strangle AMD $3.50p/$4.50c...mostly I need the entertainment & can't look at porn while I'm at work.

got in for 1/31 $0.08/$0.19 for $0.27 net debit, even money either side
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,605
  • Jan 21, 2014 3:44pm Jan 21, 2014 3:44pm
Quoting The Fool
gonna strangle AMD $3.50p/$4.50c...mostly I need the entertainment & can't look at porn while I'm at work. got in for 1/31 $0.08/$0.19 for $0.27 net debit, even money either side
AMD down 8% AH, $4.15 to $3.80, need $3.50 by tomorrow
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,606
  • Jan 21, 2014 3:56pm Jan 21, 2014 3:56pm
Quoting pipple
{quote} lol that's funny stuff. I have a client who makes ice cream and hedges through me with butter and sugar once in awhile. true story. all puns aside butter is a thin market. tough to trade. you get into am option and are pretty much down 5%-10% immediately at a minimum because of the spread. I cant even talk seriously about this without sounding like I am making a joke. Spread. Thin. Margin (margarine) ...........too many jokes!
LOL!

As to your NG "roughly 2 to 1 call-put ratio".. I've no idea of your deltas but I guess that makes you more short than long?....I'd rather be long than short - it's more likely there's a cyclical bull in NG than a cyclical bear IMO (although as we know price can go anywhere in the short term), so I'd be tilted to the long side myself, but I haven't seen the chart recently. Anyway I also have no position as I'm still spitting blood at my earlier premature exit. $4 on the downside would get me interested in covered calls. But then I think a naked put is equivalent to a covered call (I think I read that in McMillan) so maybe a naked put at $4. Funny, a naked put sounds more risky than a CC but apparently they're equivalent (but not the same, esp for stock options cos of divis, risk of assignment and other stuff).

I really need to start taking profits on my short options here. I had a bunch of short calls on CL that were heavily in profit...and I KNEW and STATED expiration was less than 72 hours away...what did I do? I got greedy for those last $$$ of time value...and as I suspected they would, they goosed the bastard and all my call options lost a bundle in 72 hours....weeks of time value up in smoke, pooof!!! Still, I was reasonably hedged to the upside with short puts so it wasn't all bad. But the lesson (I'm learning so many lessons recently, it's a miracle I make any money) is don't be a greedy fookin bastard. Too fooking greedy, that's my problem. Trying to eke out every last $ of time value premium. Bad trader!!! Naughty trader!!!

"They" are really fookin clever, those ES big boys. Suckered in some longs over the holiday close, goosing ES to low 40s, drop the bastard today to 27/28, to sucker in some shorts and shake out some of those longs, and now it looks like they're gonna goose it again tomorrow, going into the rest of the week. I'm short puts and calls and the underlying, so slightly net short, but not doing anything till we see upper 40s or lower 20s. Didn't get far enough on the downside for me today so I'm looking to exit some short puts or add a short call or two at the high 40s / low 50s should they oblige, which they almost certainly will by the looks of things, over the course of this week.
I have no clue what I'm talking about.
  • #2,607
  • Jan 21, 2014 4:02pm Jan 21, 2014 4:02pm
Quoting The Fool
{quote} AMD down 8% AH, $4.15 to $3.80, need $3.50 by tomorrow
shorting AMD at earnings is shaping up to be a pretty reliable trade.....won't be anything left to short before too long tho.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,608
  • Jan 21, 2014 4:03pm Jan 21, 2014 4:03pm
Quoting The Fool
{quote} AMD down 8% AH, $4.15 to $3.80, need $3.50 by tomorrow
Got into an INTC combo today....10x(sold Feb 25P, Feb 26C, bought Jul 25P, Jul 26C), and just for good measure sold 5x Jan24 25.5C (i.e. ATMs).
The plan is to just keep selling near-term straddles/strangles/whatever against my July longs. INTC is a good company, I'm happy to own them long term (although I don't expect to), they're a cheap (as in in $) stock (as opposed to e.g. AMZN, GOOG, AAPL, NFLX etc) so I'm not gonna get killed if they drop or jump 5% etc. Hopefully a nice stress-free way to make a few $$$. The only thing is there's a divi somewhere and I really should find out when. But net-net I guess the effect on puts and calls zeroes out as far as divis are concerned (although that doesn't include the assignment risk on calls).
I have no clue what I'm talking about.
  • #2,609
  • Jan 21, 2014 4:08pm Jan 21, 2014 4:08pm
Quoting Boy Wonder
{quote} Got into an INTC combo today....sold 10x(Feb 25P, Feb 26C, bought Jul 25P, Jul 26C), and just for good measure sold 5x Jan24 25.5C (i.e. ATMs). The plan is to just keep selling near-term straddles/strangles/whatever against my July longs. INTC is a good company, I'm happy to own them long term (although I don't expect to), they're a cheap (as in in $) stock (as opposed to e.g. AMZN, GOOG, AAPL, NFLX etc) so I'm not gonna get killed if they drop or jump 5% etc. Hopefully a nice stress-free way to make a few $$$.
well that'll keep you busy for a while. Good luck with it.

NFLX bounced off ~$320 second time in a week, gonna break through manana I spec
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,610
  • Jan 21, 2014 4:10pm Jan 21, 2014 4:10pm
Quoting The Fool
{quote} AMD down 8% AH, $4.15 to $3.80, need $3.50 by tomorrow
$3.80, I think I'd be selling puts tomorrow if it opens down there, albeit that's just based on a quick look at the chart. $3.50, that looks like it's gonna be a stretch. Good luck.
I have no clue what I'm talking about.
  • #2,611
  • Jan 21, 2014 4:10pm Jan 21, 2014 4:10pm
Quoting The Fool
{quote} well that'll keep you busy for a while. Good luck with it. NFLX bounced off ~$320 second time in a week, gonna break through manana I spec
Cheers mate.
Hope you're managing your risk in that NFLX trade!
I have no clue what I'm talking about.
  • #2,612
  • Jan 21, 2014 4:15pm Jan 21, 2014 4:15pm
NOK, NOK.
Who's there?
Mike.
Mike Who?
Microsoft.

LOL...http://seekingalpha.com/article/1957...ally-past-8_20
I have no clue what I'm talking about.
  • #2,613
  • Jan 21, 2014 5:19pm Jan 21, 2014 5:19pm
Quoting Boy Wonder
{quote} $3.80, I think I'd be selling puts tomorrow if it opens down there, albeit that's just based on a quick look at the chart. $3.50, that looks like it's gonna be a stretch. Good luck.
last qtr earnings dip was $4.16 to $3.04, took ~5 days to bottom, and then ranged <$3.40 for many days thereafter. That's why I went to 1/31. Given how cheap the options are I am going to need a dip well below my $3.50 strike to make much. Looks to settle around $3.75 +/- AH.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,614
  • Jan 21, 2014 5:41pm Jan 21, 2014 5:41pm
Quoting The Fool
{quote} last qtr earnings dip was $4.16 to $3.04, took ~5 days to bottom, and then ranged <$3.40 for many days thereafter. That's why I went to 1/31. Given how cheap the options are I am going to need a dip well below my $3.50 strike to make much. Looks to settle around $3.75 +/- AH.
Yeah it's interesting looking at the chart..a confluence of support given by the MAs though of course that doesn't mean price can't scythe through them as if they weren't there. Also looking at the red boxes which I assume (maybe wrongly) were the last 2 earnings reports, as you say the sell-offs continued after the post-earnings gaps down, although this time price has sold off ahead of earnings, so presumably much of the air has been let out of the balloon already.
I know bugger all about the company but I might have a look tomorrow, put a small position on.
I have no clue what I'm talking about.
  • #2,615
  • Edited 6:44pm Jan 21, 2014 6:25pm | Edited 6:44pm
Quoting Boy Wonder
{quote} Cheers mate. Hope you're managing your risk in that NFLX trade!
well we see soon enough. Given decay of the front short leg of the spread the two legs are getting close to evenly hedged. I'm not going to lose money, but return will be cut bad if NFLX crashes <$300. I have resisted the urge to complicate things with further legs or other appendages, just gonna take what comes now.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,616
  • Jan 21, 2014 6:49pm Jan 21, 2014 6:49pm
Quoting The Fool
{quote} well we see soon enough. Given decay of the front short leg of the spread the two legs are getting close to evenly hedged. I'm not going to lose money, but return will be cut bad if NFLX crashes <$300. I have resisted the urge to complicate things with further legs or other appendages, just gonna take what comes now.
I just realised (sorry, I'm slow..but ploughing through McMillan is helpful in this respect) that this isn't a calendar cos the strikes are different; it's a diagonal. So you've sold a diagonal bullish put spread (sell n/t OTM put, buy longer term put further OTM) and the the u/l has declined and you're still making $. In fact one could say you're right on target. Options eh...doncha just love 'em.
I have no clue what I'm talking about.
  • #2,617
  • Jan 21, 2014 7:00pm Jan 21, 2014 7:00pm
Quoting Boy Wonder
{quote} I just realised (sorry, I'm slow..but ploughing through McMillan is helpful in this respect) that this isn't a calendar cos the strikes are different; it's a diagonal. So you've sold a diagonal bullish put spread (sell n/t OTM put, buy longer term put further OTM) and the the u/l has declined and you're still making $. In fact one could say you're right on target. Options eh...doncha just love 'em.
the terminology gets in the way sometimes. Even "bearish" and "bullish" - a little too black & white. I was definitely bearish NFLX (the long put), but I bet that it wouldn't fall quite so fast (the short put). The latter not "bullish" per se, rather a bet it would bounce and range at $320 - which it has done.

Problems are I could have waited and set the short put below the long put, and I could have set the short put before earnings - had I just waited a few more days and done that as NFLX was falling further...had I done that I would be much better positioned. Putting the short put post-earnings was a big mistake. Unless NFLX bounces on earnings - then I'm a genius.

With the short put strike at 1/31 I will have a week+ to think about what to do either way.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,618
  • Jan 21, 2014 7:08pm Jan 21, 2014 7:08pm
I am in UNH Mar 22 $77.50 long calls, bought after UNH dropped at earnings, when UNH was $72.50 +/-. UNH gained well today, ranged up to $73.62, but finished at $73.00. The idea was to sell some front month $77.50 calls, had a chance today as UNH moved higher, and missed it. Will be watching for further upside. Hate spacing out on good opps like that.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,619
  • Jan 22, 2014 6:01am Jan 22, 2014 6:01am
AMD: http://seekingalpha.com/article/1958...me-on-earnings
Short % of Float (as of Dec 31, 2013)3: 20.00%
I have no clue what I'm talking about.
  • #2,620
  • Jan 22, 2014 6:32am Jan 22, 2014 6:32am
Danny Riley (MrTopStep) is bullish, and I have to agree with him: http://seekingalpha.com/article/1949...the-algo-plays
Meanwhile, GS is dealing with irate clients, apparently: http://seekingalpha.com/news/1516831...valuation-call

I killed some ES shorts earlier, replaced with slightly OTM calls (so chopped my delta on the u/l in half, making me more long / less short) cos it seems to me we are going up.
Sod's law, they fooled me and we will end up going down lol.
I have no clue what I'm talking about.
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