Let's Trade Options

TLT steady motoring up about $1-2 a month, cruised to $112 AH Friday. Easy to make a case for $115 by July. Make it $125 by summer's end if geopolitical troubles overhang the markets. Goes with the above a downturn in equities, Gold back to $1400+, etc, etc. A trader can make money....

re: TLT, I mind the recurring $2-3 waveguide and set up to sell puts on the dips (via put credit spreads)

Trader named "merenkov" on the Yahoo TLT message board always has good bond market comments, says ^TYX dip below 3.00% will be the lower limit and so will correspond to the upper limit for TLT.

^TYX last at 3.00% 5/7-9/2013, TLT was $120-$121.

Aug $119c @$0.45, $120c $0.36. Sep same $0.66 and $0.55. I have been making money selling puts, prolly stick with that....

Heavy heavy market-moving data in the coming week, heavy moving days Wed-Fri....I'd have to expect risk asset selling, sell in May go away underway, nay?

4/28: US pending home sales
4/29: BOJ policy statement, late; FOMC meets 4/29-30 (next FOMC meet won't be til mid-June...)
4/30: US: ADP employment & Advance GDP; China: Manufacturing PMI
5/1: Yellen, ISM, unemployment claims
5/2: NFP

ER's on tap coming week:

4/28: HLF, BWLD
4/29: BMY. DDD, EBAY, MRK, PNRA, STX, TWTR
4/30: SCCO, TSO, YELP
5/1: AKAM, EXPE, XOM, LNKD, MPC, MA, OUTR, TMUS
5/2: CVX

My general approach is still to look for spikes up in high-spec equities post-ER and fade them via long puts or bearish put debit spreads or bearish call credit spreads. A few of the above I might long strangle pre-ER, will detail later.

Made to strangle...

We may see FB show the way on TWTR, EXPE, even YELP. These have been beat down in Q1's tech stock rout, so strong ER's could produce some big upside pops.

YELP could shoot back > $75 no prob. TWTR to $50+....

HLF, will it weather the storm? PE 11.8. EPS 4.9, and lawsuits keep coming. It will probably bounce back to $65+ on a good ER. dotm options are all over the map....might be worth it to keep some 2-3 month out $30 puts in the book, but they're not cheap...

below, TBT Jun puts & May puts, TLT Jun calls and May calls. There's a neat way to trade these two inversely correlated etf's together that I will narrate here.

trading options is a math puzzle

http://www.macroption.com/black-scholes-excel/ http://www.hoadley.net/options/calculators.htm

http://www.macroption.com/implied-volatility-excel/

http://office.microsoft.com/en-us/ex...010283133.aspx

www.vbadeveloper.net/optionpricerblackscholesvba.pdf

http://www.cfotemplates.com/black-scholes-modelms.htm

New position:

SOLD ES FOP Jun06'14 1655 PUT (EW1) @GLOBEX @ 2.9

Market whiplash today!

Position closed at 25% profit!

Hey njr, gonna be an interesting week....

watching HLF, will look to fade any hot upside moves.

(....no such luck...)

http://video.cnbc.com/gallery/?video...o%7c&par=yahoo

natgas back up today, UNG closed $26.36. I have been sitting on hands, looking for a break >$27, asking my cousins in the South if the signs say a hot Summer.

http://brucewilds.blogspot.com/2014/...edit-trap.html

Hey TF,

Yeah, it should be an interesting week with the FOMC minutes and the NFP on friday. How did you go with HLF?

Can anyone comment on a longer term options strategy such as this one:

Select a good quality stock less than $50, preferably from the Dow 30
company list.
 Buy the longest dated put option available, at or above current price.
 At the same time, sell a current-month put option at the same price or
below the long dated put option.
 Each month thereafter, sell either a put option (if you do not own stock)
or sell a call option (if you do own stock) at the closest option strike
price the stock is currently trading. Always do this for the current-month
option expiry date only. Repeat this process each a month for the
duration of your long dated protective put.
 After this long period, if the stock is trading below your insurance put
price, you may choose to exercise your right to sell this at the original
protective put price thus recouping any capital losses sustained during
this period.
 If after this long period expiry, the stock closed above your insurance
put option price (and you chose not to increase this protection, or roll
out further any time during the period), simply allow the option to expire,
worthless. Just as you wouldn't feel badly about not claiming on your
house insurance because it didn't burn down, don’t allow this outcome
to disappoint you.

Looking to get my feet wet but want to start simple and slow...

I was hoping for a spike to $65 on HLF, I see it is rising well today, so I'm watching. I might do a long call credit spread on it. Watching for a runup on TWTR on today's ER. Otherwise doing spreads on index etfs, TLT/TBT, etc....

Show us an example of how you would initiate a trade like this, using put selling (I is too poor to own stock.)

Place a calendar spread trade when long dated and current month strike prices are the same for the stock at say $20 (assuming the stock price is currently trading at $19.80). Simultaneously, you buy a April.14 $20 put which costs you say $3.60 and sell a current month $20 put which you receive a $1.20 premium.
Because this is a debit spread your account is not margined on this protective trade. In this example April 14 is 18 months out; therefore the cost of your purchased long dated insurance put is 0.20 cents per month ($3.60 ÷ 18). Any current month premium received from selling either a put or call option above this cost is profit. Once the long dated insurance put cost is covered (approximately 3 to 5 months from monthly trading premiums), then it’s pure profit
each month thereafter. You simply repeat the process once each month and watch for the potential requirement to adjust the long dated put to a higher strike price if the stock continually rises, to maintain protection.

After each monthly option expiry date, go back to basics. If you own stock, you sell a call option for the next month for someone to take that stock away from
you. You will receive a premium up front which you keep. The price you sell that call option is simply the closest strike price to the current stock trading price at
the time. If you do not own stock then you sell a current month put option for someone to assign you that stock. Again, you will receive a premium up front which is yours to keep. The price at which you sell that put option is the closest strike price to the current stock trading price at the time.

did an SSO credit spread today, 5/23 short $110/long $112 for $0.30 net credit.