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Let's Trade Options

  • #3,881
  • Jun 6, 2014 7:43pm Jun 6, 2014 7:43pm
Quoting The Fool
{quote} Hello StrayDog and sell naked calls there, and only cash-secured short naked puts. But I have a larger straight brokerage account that I am going to be trading naked calls/puts more starting soon. I think that's a great way to trade options but it requires sufficient capitalization....sigh....

If you don't have the capital to do it, you can get the same income & reduce the margin requirements by selling credit spreads rather than naked selling.

Example:
Sell 1 naked call on IWM (120 Call for credit of $68)=Unlimited risk so high margin requirement
Sell credit spreads on IWM (Sell 120Cx2 for $136, Buy 122Cx2 for $62)(Total credit of $74)=Risk of $326 so lower margin requirement
  • #3,882
  • Jun 6, 2014 8:36pm Jun 6, 2014 8:36pm
Quoting srt
{quote} If you don't have the capital to do it, you can get the same income & reduce the margin requirements by selling credit spreads rather than naked selling.
THANKS, SRT - I do credit spreads alla time....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,883
  • Jun 6, 2014 11:57pm Jun 6, 2014 11:57pm
Quoting StrayDog
. Sometimes I have a great idea, but not very shure what option strategy should I use.
Hi StrayDog - welcome to the forum. As you probably know there are lots of strategies for trading options. I found that the information on the Tasty Trade site (www.tastytrade.com) is pretty good, particularly if you want to start selling naked options. I recall that there is a segment called Where Do I Start which goes through option basics and some of the different selling strategies......Good luck with the trades....
  • #3,884
  • Jun 7, 2014 12:03am Jun 7, 2014 12:03am
Quoting njr
{quote} Hi StrayDog - welcome to the forum. As you probably know there are lots of strategies for trading options. I found that the information on the Tasty Trade site (www.tastytrade.com) is pretty good, particularly if you want to start selling naked options. I recall that there is a segment called Where Do I Start which goes through option basics and some of the different selling strategies......Good luck with the trades....
good tip, njr.

is there any conceivable reason you can find for the US indices to do anything but go up forever?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,885
  • Jun 7, 2014 12:06am Jun 7, 2014 12:06am
mmmmm, spikey
Attached Image (click to enlarge)
Click to Enlarge Name: 2014-06-06_vix.png Size: 132 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,886
  • Jun 7, 2014 12:36am Jun 7, 2014 12:36am
Hi all,

I'm seeking some confirmation. Does anyone know with certainty how the expiration of the ES minis weekly options is done?

Yesterday I had to roll up my ES mini 1945 calls to 1955. The 1955 position expired OTM according to the ESF Special Fixing Price (http://www.cmegroup.com/trading/fixing-price.html?tabs=20) which is calculated in the last 30 seconds prior to 15hr00 central time. However, I noted in the 15 minutes after, the ES mini rose even higher to close at 1949.30. This got me thinking about what AH risk there is on these contracts when there could be further movement.

My understanding is that the ESF Special Fixing Price is the final price used to identify all OTM and ITM contracts. However, does anyone concretely know if there is any AH risk on these ES mini contracts as I'm keen to avoid any change of being ITM at close or AH.

Thanks....
  • #3,887
  • Jun 7, 2014 12:49am Jun 7, 2014 12:49am
Quoting njr
I'm seeking some confirmation......does anyone concretely know if there is any AH risk on these ES mini contracts as I'm keen to avoid any change of being ITM at close or AH. Thanks....
Hi, njr - I'm sorry I don't have an answer to your question re: the ES minis, but I have labored over this very question in regards other expiring options contracts. I hate the whole premarket/after hours complication.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,888
  • Jun 7, 2014 1:03am Jun 7, 2014 1:03am
Quoting The Fool
{quote} good tip, njr. is there any conceivable reason you can find for the US indices to do anything but go up forever?
Hey TF - Honestly, I really don't know

There are the usual two sides to the coin; Those that believe the market is currently in consolidation before moving higher up to the dizzy heights of 2000 - 2050 on the SPX and the others that believe the market is over due for a correction for a multitude of reasons (artificial fueling by QE, geopolitical risk, China hard landing, etc, etc). For every news report / article that I read about the market going higher there is another one that negates it. I am not sure what bias to form but one this is for certain, I'm remaining cautious......

This week has certainly been interesting for me and I have had to watch my positions much more closely than usual. I had sold 1945 calls and yesterday had to roll up to 1955 and overall took a small loss. I'll continue with my current approach of selling naked put/calls or short strangles but I'm going to keep the timescales shorter than usual. This approach has and will continue to work in the current uptrend. However, if there are any consistent and significant market drops which results into a 'real downtrend' [rather than the usual down a few days then reaching a new high], then I'll revert back to a longer DTE......
  • #3,889
  • Jun 7, 2014 1:52am Jun 7, 2014 1:52am
Quoting njr
{quote} Hey TF - Honestly, I really don't know ......
well, that makes two of us. beddy-bye time. have a good weekend, njr....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,890
  • Jun 7, 2014 4:06am Jun 7, 2014 4:06am
Quoting The Fool
{quote} well, that makes two of us. beddy-bye time. have a good weekend, njr....
Thanks TF - enjoy your weekend
  • #3,891
  • Jun 7, 2014 4:13am Jun 7, 2014 4:13am
Quoting The Fool
{quote} Hi, njr - I'm sorry I don't have an answer to your question re: the ES minis, but I have labored over this very question in regards other expiring options contracts. I hate the whole premarket/after hours complication.....
Regarding stock options I think it is quite clear regarding the risk AH as per the links below. However, I am not sure if the same risk applies to the ES minis or if these options are solely determined by the ESF Special Fixing Price at the 15hr00 close and once this is calculated, any price movement after that is for the following week's expiration.

http://www.nasdaq.com/article/automa...issues-cm45720

http://www.cboe.com/LearnCenter/Conc...xpiration.aspx

https://www.thinkorswim.com/tos/disp...lessonExercise
  • #3,892
  • Jun 7, 2014 5:14am Jun 7, 2014 5:14am
Quoting The Fool
{quote} VIX could sit down at 10 or below for months or even years, I think we'll see S&P 2,200 this year. Only sneaking caveat is the US mid-term elections...I have posted chart somewhere far above....historically US markets dip in the summer months preceding the mid-terms. And the continuing taper...although the ECB looks to take up the slack there....
yes your right and it certainly did before the financial crises in 2007/8 but this also happened when the market was much lower. Once everyone starts to think there market has just one direction which is up is the time to consider longing VIX calls but go out 2 years and buy when IV is at its lowest ever
  • #3,893
  • Jun 7, 2014 9:44am Jun 7, 2014 9:44am
Quoting Cecil Gee
{quote} yes your right and it certainly did before the financial crises in 2007/8 but this also happened when the market was much lower. Once everyone starts to think there market has just one direction which is up is the time to consider longing VIX calls but go out 2 years and buy when IV is at its lowest ever
The only thing I'd consider doing with the VIX based options is sell them, as the underlying vehicles have a tendency to go to zero.
Attached Image (click to enlarge)
Click to Enlarge Name: 2014-06-07_vxx.png Size: 144 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,894
  • Jun 7, 2014 10:05am Jun 7, 2014 10:05am
Quoting The Fool
{quote} VIX could sit down at 10 or below for months or even years, I think we'll see S&P 2,200 this year. Only sneaking caveat is the US mid-term elections...I have posted chart somewhere far above....historically US markets dip in the summer months preceding the mid-terms. And the continuing taper...although the ECB looks to take up the slack there....
S&P 1850-2200 in calendar year 2014 compares to 1450-1850 in yr 2013. Probably not again? Why not?

If I had just successively bought long duration otm SSO (or other S&P derivatives) or QQQ calls in 2013 I would have been MUCH better off.

(But that 20/20 hindsight is useless in trading. Crystal clear foresight much better.)

So, assuming one "knows" the bull market will keep on truckin', what's the single most lucrative way to trade that "knowledge"?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,895
  • Jun 8, 2014 12:30pm Jun 8, 2014 12:30pm
LULU.....meh...

http://www.cboeoptionshub.com/2014/0...eek-weeklys-2/
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,896
  • Jun 8, 2014 8:11pm Jun 8, 2014 8:11pm
http://www.investopedia.com/terms/q/...lewitching.asp

quadruple witching + summer solstice, VIX sub-10, US midterm election funk, Godzilla. There has to be a limit to how big Godzilla can get.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,897
  • Jun 8, 2014 8:30pm Jun 8, 2014 8:30pm
amusing

http://www.bloomberg.com/news/2014-0...tml?cmpid=yhoo

" “The bond market is divorced from economic reality,” "

" “This is no time to be a hero,” "
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,898
  • Jun 8, 2014 11:28pm Jun 8, 2014 11:28pm
http://www.amazon.com/Volatility-Tra...=euan+sinclair

don't know if I mentioned it above. was reading it again over the weekend. really one of the best trading books I have. Skip it if you don't like math, though....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,899
  • Jun 9, 2014 7:57am Jun 9, 2014 7:57am
Quoting njr
{quote} Hi StrayDog - welcome to the forum. As you probably know there are lots of strategies for trading options. I found that the information on the Tasty Trade site (www.tastytrade.com) is pretty good, particularly if you want to start selling naked options. I recall that there is a segment called Where Do I Start which goes through option basics and some of the different selling strategies......Good luck with the trades....
Thanks njr, I know that thanks to this thread, and already watched a few dozen of those vids. Combining them with other stuff I have learned to trade verticals.
Hope is dangerous in this game.
  • #3,900
  • Jun 9, 2014 8:31am Jun 9, 2014 8:31am
Quoting StrayDog
{quote} Thanks njr, I know that thanks to this thread, and already watched a few dozen of those vids. Combining them with other stuff I have learned to trade verticals.
welcome to the thread
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