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Let's Trade Options

  • #3,161
  • Mar 4, 2014 1:34am Mar 4, 2014 1:34am
Quoting Boy Wonder
{quote} I think it's a sideshow, at least for the moment. I've been looking at the 10 and 30 year yield charts as opposed to the price charts and it seems to me I may be wrong to flip. ..thinking.. Maybe I'll close the trade; maybe I'll get long the underlying. Dunno.
Hey BW - I agree. At the moment is all muscle flexing by all parties and a bit of intimidation by Putain et al. Yesterday the VIX didn't move as one would probably expect for an impending war; it moved to 16 which is still 'relatively' low!!

This report and others seem to suggest (for the moment) that it is just a short term 'blip'...

http://www.cnbc.com/id/101462584

Futures at the moment are also pointing to a higher open....Es mini up 12.75 so we are back to where we were pre-Ukraine 'crisis'
  • #3,162
  • Mar 4, 2014 7:23am Mar 4, 2014 7:23am
Quoting njr
{quote} Futures at the moment are also pointing to a higher open....Es mini up 12.75 so we are back to where we were pre-Ukraine 'crisis'
woohoo, a buying opp, we should see a new S&P high by Friday
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,163
  • Mar 4, 2014 8:30pm Mar 4, 2014 8:30pm
Quoting The Fool
{quote} woohoo, a buying opp, we should see a new S&P high by Friday
I meant 1,900, of course
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,164
  • Mar 5, 2014 1:17am Mar 5, 2014 1:17am
Quoting The Fool
{quote} I meant 1,900, of course
Hey TF - Yeah, it seems we are on the way there. I think the catalyst to get us there will be a decent NFP number. Although if it comes in as a 'bad' number, it'll be blamed on the weather (as usual) and we'll probably still get there......

I'm in London this week so I need to rely on finding cafe's with wifi and use my tablet. I'll try to check in on the market later and look at an IC on COST.

The 'expert' analysts are predicting a 3% move to the upside/downside on their earnings (reported before the bell 3/6) so I'll probably set my shorts there and my longs just outside this.
  • #3,165
  • Mar 5, 2014 2:01am Mar 5, 2014 2:01am
Trading options..., this is great for a trader.
Initially the options have been created as a hedge. Imagine that you buy Eurofuture. And you buy a put too. Now you do not have to be worried that the market gapped much bellow your mental stop loss (this is the beauty of an option, it is the perfect tool to protect; It does not matter how far the underline moved against you, you always will exercise at at your strike.). Let suppose that you do not like to be long this put, it could cost you too much. Then you can sell something to finance your put, for example you sell the next strike above your underline. Now you have a tipical instrument to hedge, a collar.
Knowing options means to know how their premium is calculated, what are the greeks and how to use them for your trades.
Two greeks are very important to be known (for me): theta, which is the time decay and shows how much the premium of an option decrease in time, when you aproach the expiration. The other is vega, which shows you how much the premium increase or decrease for 1% change in Implied volatility. This is why you have to buy options (go long when the IV is low) and sell them (go short) whenever the IV is high. There are many strategies that make this greeks to work for us. Even if they have sounding names (Butterfly, condors, Iron condors, etc) they are combinations of spreads with calls, puts, or both.
Regarding trades, I have a put spread on XDE ( this is the equivalent for EURUSD pair).Is not short term, I gave myself enough time to be right. with my bearish view about this pair.
  • #3,166
  • Mar 5, 2014 5:22am Mar 5, 2014 5:22am
Quoting njr
{quote} Hey TF - Yeah, it seems we are on the way there. I think the catalyst to get us there will be a decent NFP number. Although if it comes in as a 'bad' number, it'll be blamed on the weather (as usual) and we'll probably still get there...... I'm in London this week so I need to rely on finding cafe's with wifi and use my tablet. I'll try to check in on the market later and look at an IC on COST. The 'expert' analysts are predicting a 3% move to the upside/downside on their earnings (reported before the bell 3/6) so I'll probably set my shorts...
Hey njr, enjoy the City and keep us posted on COST, not sure I will trade it but probably will. I don't have a prediction for NFP but if pressed I would lean for a beat and another market jump higher, we'll probably see some ranging until Friday. I expect last year's good news/taper fear dance is done, we'll see.

I am looking at putting a bearish spread on HAL, details later....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,167
  • Mar 5, 2014 9:19am Mar 5, 2014 9:19am
Quoting The Fool
{quote} Hey njr, enjoy the City and keep us posted on COST, not sure I will trade it but probably will. I don't have a prediction for NFP but if pressed I would lean for a beat and another market jump higher, we'll probably see some ranging until Friday. I expect last year's good news/taper fear dance is done, we'll see. I am looking at putting a bearish spread on HAL, details later....
Thanks TF!

New Trade: Iron Condor on COST

SOLD COST Mar07'14 112 PUT @ 0.27
BOUGHT COST Mar07'14 111 PUT @ 0.12
SOLD COST Mar07'14 120 CALL @ 0.27
BOUGHT COST Mar07'14 121 PUT @ 0.11
  • #3,168
  • Mar 5, 2014 9:50am Mar 5, 2014 9:50am
This is not an IC on COST; You show us 3 puts and one call; and the call is naked !!! maybe it is a typo mistake (121 should be call). Any way, the credit is good, 30%, . But the earnings are tomorrow. It could be a good one, if COST does not move more than +/-$4. The drop in IV could also help the trade;The expected move is +/_$2.53
  • #3,169
  • Mar 5, 2014 10:56am Mar 5, 2014 10:56am
Quoting Constantins
This is not an IC on COST; You show us 3 puts and one call; and the call is naked !!! maybe it is a typo mistake (121 should be call). Any way, the credit is good, 30%, . But the earnings are tomorrow. It could be a good one, if COST does not move more than +/-$4. The drop in IV could also help the trade;The expected move is +/_$2.53
I'm sure it's a typo, Constantins - welcome to the thread, always good to see other options traders around here.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,170
  • Edited Mar 6, 2014 1:00am Mar 5, 2014 1:00pm | Edited Mar 6, 2014 1:00am
Quoting Constantins
This is not an IC on COST; You show us 3 puts and one call; and the call is naked !!! maybe it is a typo mistake (121 should be call). Any way, the credit is good, 30%, . But the earnings are tomorrow. It could be a good one, if COST does not move more than +/-$4. The drop in IV could also help the trade;The expected move is +/_$2.53
Thanks TF and Constantins - yup a typo as I'm trying to trade from a coffee shop on my tablet and have to manually type in each leg rather than cutting a pasting from my account window. It should be:

BOUGHT COST Mar07'14 111 PUT @ 0.12
SOLD COST Mar07'14 112 PUT @ 0.27
SOLD COST Mar07'14 120 CALL @ 0.27
BOUGHT COST Mar07'14 121 CALL @ 0.11
  • #3,171
  • Mar 6, 2014 2:19pm Mar 6, 2014 2:19pm
Quoting njr
{quote} Thanks TF and Constantins - yup a typo as I'm trying to trade from a coffee shop on my tablet and have to manually type in each leg rather than cutting a pasting from my account window. It should be: BOUGHT COST Mar07'14 111 PUT @ 0.12 SOLD COST Mar07'14 112 PUT @ 0.27 SOLD COST Mar07'14 120 CALL @ 0.27 BOUGHT COST Mar07'14 121 CALL @ 0.11
Looking good so far. As long as the underlying stays between the 112 and 120 strike prices then I'm ITM! I need to be after burning a hole in my wallet in this city!
  • #3,172
  • Mar 6, 2014 6:22pm Mar 6, 2014 6:22pm
Quoting njr
{quote} Looking good so far. As long as the underlying stays between the 112 and 120 strike prices then I'm ITM! I need to be after burning a hole in my wallet in this city!
COST looks like it should bounce off $110, I might spread Mar 22 puts $105 long/$110 short for $0.10/$0.43, $0.33 credit....will watch tomorrow....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,173
  • Mar 7, 2014 9:50am Mar 7, 2014 9:50am
Quoting njr
{quote} Looking good so far. As long as the underlying stays between the 112 and 120 strike prices then I'm ITM! I need to be after burning a hole in my wallet in this city!
Position still looking good. Expiry in a few hours and full profit expected.
  • #3,174
  • Mar 7, 2014 1:04pm Mar 7, 2014 1:04pm
Quoting The Fool
{quote} COST looks like it should bounce off $110, I might spread Mar 22 puts $105 long/$110 short for $0.10/$0.43, $0.33 credit....will watch tomorrow....
COST spread too risky. I hesitate spreading against the downside, would generally rather sell calls now instead.

I am in a CAT credit spread, Mar 14 $100c short, Mar 22 $105c long, for $0.07 credit (woohoo) - but a rescue, so ok...

Have long HAL Apr $55 puts @ $1.05, those have tried to make $0.20 today, looking for more

Another to watch re: Ukrainian volatility is CVX....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,175
  • Mar 8, 2014 12:42pm Mar 8, 2014 12:42pm
Follow the big money?

http://www.forbes.com/sites/greatspe...es-are-buying/
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,176
  • Mar 8, 2014 7:35pm Mar 8, 2014 7:35pm
Some interesting names from the "billionaire" article I may follow now,
Attached Image (click to enlarge)
Click to Enlarge Name: 2014-03-08_HOLX.png Size: 63 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,177
  • Mar 9, 2014 1:05pm Mar 9, 2014 1:05pm
Quoting njr
{quote} Position still looking good. Expiry in a few hours and full profit expected.
Position Closed on COST:

Both legs expired OTM and full profit received.
  • #3,178
  • Mar 9, 2014 1:13pm Mar 9, 2014 1:13pm
Quoting The Fool
{quote} COST spread too risky. I hesitate spreading against the downside, would generally rather sell calls now instead. I am in a CAT credit spread, Mar 14 $100c short, Mar 22 $105c long, for $0.07 credit (woohoo) - but a rescue, so ok... Have long HAL Apr $55 puts @ $1.05, those have tried to make $0.20 today, looking for more Another to watch re: Ukrainian volatility is CVX....
Hey TF,

I'm back in Heidi land! Yeah, I'm not sure what direction COST will head now but I am out of the position with last weeks expiry. I agree that it is a little risky now. CAT and HAL look pretty good though and best of luck. Now that earnings is pretty much done, I'm going to see where some of the indexes and commodities might move in the next few weeks and shift my focus back to them. After a few days in London I need to top up my bank balance again
  • #3,179
  • Mar 9, 2014 1:16pm Mar 9, 2014 1:16pm
Quoting The Fool
Follow the big money? http://www.forbes.com/sites/greatspe...es-are-buying/
Good point TF - I think with financial investors like this, these companies are certainly going to be supported and pushed into growing. Something to keep an eye on.


I didn't see your name on the list..............yet
  • #3,180
  • Mar 9, 2014 2:15pm Mar 9, 2014 2:15pm
Congratulations, very good trade(IC on COST). I tried the day before the earnings to get in, but I was not filled.
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