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Let's Trade Options

  • #4,181
  • Jul 24, 2014 5:34pm Jul 24, 2014 5:34pm
Quoting StrayDog
At the end, I got filled on SBUX and BIDU.... Chicken Iron Condors SBUX 76/77 + 83/84 for $0.28 credit BIDU 187.5/190 + 220/222.5 for $0.73 credit Will hold my pants now...
Bidoo I see $217+ AH, but you likely be ok by tomorrow if some profit-taking sets early in & she falls back...

Downside of selling options is this little game of nerves that you have to play sometimes - but in this case it can't drag out more than a day....good luck, StrayDog.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,182
  • Jul 24, 2014 6:18pm Jul 24, 2014 6:18pm
Quoting StrayDog
{quote} Market makers are usually right, I think in over 80% of time, but when I try to think logically - I would assume that is far more easier to calculate move on older companies, and far more reliable, not on the momentum stocks and "next big thing company that never made a penny but it would make billions..." Far more reliable on MCD, MSFT, AAPL, EBAY, IBM, F, GM, CSCO.... you now, the old school ones. The ones that you don't expect that have capability to dazzle the market, the ones that lost their "wow effect"... What do you (and others by...
This is a good question & I wiil respond after a little more cogitation & when I have a little spare time.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,183
  • Jul 24, 2014 7:41pm Jul 24, 2014 7:41pm
may take a trade on IWM for tomorrows expiry $114 puts if I can get is for 15c or lower on the open. To me the USD may show some temporary weakness as we're near some resistance and a little pull back on the indicies may happen. The problem with IWM is its between 50 and 200 MA so the movement may not be smooth.
Closing price for IWM $114 put is below

IWM Jul 2014 114.000 put (IWM140725P00114000)
-OPR
0.21 https://s.yimg.com/os/mit/media/m/ba...nt-1093278.png 0.10(32.26%) 24 Jul 21:14
  • #4,184
  • Jul 25, 2014 2:18am Jul 25, 2014 2:18am
Quoting StrayDog
{quote} - I would assume that is far more easier to calculate move on older companies, and far more reliable, not on the momentum stocks and "next big thing company that never made a penny but it would make billions..." Far more reliable on MCD, MSFT, AAPL, EBAY, IBM, F, GM, CSCO.... you now, the old school ones. The ones that you don't expect that have capability to dazzle the market, the ones that lost their "wow effect"... What do you (and others by all means) think about that?
Well, I think you are on to a valid premise there. Could you restate it something like, "predictability of measured move correlates directly to an instrument's historical volatility." If that is true, we should call it StrayDog's Law.

When one is looking to sell volatility around a scheduled event like an ER, though, one is looking for a run-up in implied volatility, which is a function of historical volatility. So one is looking for a balance between predictability and some level of volatility.

Or perhaps it's better to shift that balance in favor of predictability? Settle for lower, but safer returns? I see decent options volume in HYG, for instance, which barely moves....

..sure, better to be safe, if you can trade in size sufficient to inflate low returns into something worthwhile...
Attached Image(s) (click to enlarge)
Click to Enlarge Name: 2014-07-25_hyg2.png Size: 61 KB
Click to Enlarge Name: 2014-07-25_hyg1.png Size: 84 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,185
  • Jul 25, 2014 2:34am Jul 25, 2014 2:34am
http://finance.yahoo.com/news/best-b...094706911.html

looking at a Sep 20 $25/$35 long strangle for about $0.80 net debit. BBY ER's 8/26....
Attached Image (click to enlarge)
Click to Enlarge Name: 2014-07-25_bby.png Size: 58 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,186
  • Jul 25, 2014 2:55am Jul 25, 2014 2:55am
Quoting The Fool
does anyone believe Argentina will go into default? http://www.bloomberg.com/news/2014-0...t-or-boom.html some decent volume in the YPF Aug puts, @ $27 and $30..... {image}
tick tock.....

http://money.cnn.com/2014/07/25/inve...ult/index.html
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,187
  • Jul 25, 2014 5:41am Jul 25, 2014 5:41am
Quoting Cecil Gee
may take a trade on IWM for tomorrows expiry $114 puts if I can get is for 15c or lower on the open. To me the USD may show some temporary weakness as we're near some resistance and a little pull back on the indicies may happen. The problem with IWM is its between 50 and 200 MA so the movement may not be smooth. Closing price for IWM $114 put is below IWM Jul 2014 114.000 put (IWM140725P00114000) -OPR 0.21 {image} 0.10(32.26%) 24 Jul 21:14
not gonna get a chance on IWM puts as pre market there already way down from yesterdays close of 114.64, pre market sowing a price of 113.58

iShares Russell 2000 (IWM)
-NYSEArca
114.64 https://s.yimg.com/lq/i/us/fi/03rd/down_r.gif 0.22(0.20%) 24 Jul 20:59
|Pre-Market : 113.58 https://s.yimg.com/lq/i/us/fi/03rd/down_r.gif 1.06 (0.92%) 11:26 - Nasdaq Real Time Price
  • #4,188
  • Edited 9:07am Jul 25, 2014 7:36am | Edited 9:07am
Quoting StrayDog
At the end, I got filled on SBUX and BIDU.... Chicken Iron Condors SBUX 76/77 + 83/84 for $0.28 credit BIDU 187.5/190 + 220/222.5 for $0.73 credit Will hold my pants now...
Feeling the heat on BIDU which is $220.65 now... SBUX is $77.70....

I will close call side of BIDU IC right at open, and put side on SBUX IC.


Edit: closed the call side on BIDU IC for a loss. Always better to wait a little, because first 2-3 minutes at the open option prices are wild.... Entire IC on it will bring some pennies or breakeven.

I will leave the put side on BIDU and entire SBUX IC to expire worthless... after all there will be some gain, thanks to SBUX.

Note to myself - When you collect premium like $0.28 on SBUX, commissions are something you have to think about in advance. Luckily I am using IB which have perfect commissions, for example about 3.2 - 3.9 bucks for entire IC, but hey - it better be something like $0.50 per IC!!!
Hope is dangerous in this game.
  • #4,189
  • Jul 25, 2014 11:23am Jul 25, 2014 11:23am
Quoting StrayDog
{quote} Entire IC on it will bring some pennies or breakeven.
That was a miscalculation... BIDU IC will be about $0.30 loss per IC... since $0.73 credit I got for it was distributed as $0.44 for put and only $0.29 for call side.

But after all SBUX + BIDU Condors - will be some money in the bank, because I have 3 times more SBUX.
Wanted to have equal size positions / credit received, so that helped this time.
Hope is dangerous in this game.
  • #4,190
  • Jul 25, 2014 11:37am Jul 25, 2014 11:37am
Just saw on Bloomberg TV... one of their options guys had an idea for DDD earnings... it was a bullish call spread 54/59 for Aug01 expiration. It is about $1.31 debit.

I have noticed that they always tells you to buy something... spreads, single options, butterflies, but never straddles or strangles, and never do credit spreads... Yeah, just buy what we are selling to you! Market makers...
Hope is dangerous in this game.
  • #4,191
  • Jul 25, 2014 11:57am Jul 25, 2014 11:57am
Quoting StrayDog
Just saw on Bloomberg TV... one of their options guys had an idea for DDD earnings... it was a bullish call spread 54/59 for Aug01 expiration. It is about $1.31 debit. I have noticed that they always tells you to buy something... spreads, single options, butterflies, but never straddles or strangles, and never do credit spreads... Yeah, just buy what we are selling to you! Market makers...
the more legs the better so the MM's can make money off you....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,192
  • Jul 25, 2014 2:25pm Jul 25, 2014 2:25pm
That bear call spread on AMZN you mentioned yesterday would be nice, but what do you think about doing it now?

Lets say 350/355 for Sep 19th expiration. We could get at least $0.80 credit for it, and possibly more. Looking at chart - when AMZN dropped on earnings, it continued to go downside for a couple of days... Today is pullback, but I really can not see it to "fill the gap"... Hm... Will leave that for Monday.

Have a nice weekend to all of you.
Hope is dangerous in this game.
  • #4,193
  • Jul 25, 2014 3:38pm Jul 25, 2014 3:38pm
Quoting StrayDog
That bear call spread on AMZN you mentioned yesterday would be nice, but what do you think about doing it now? Lets say 350/355 for Sep 19th expiration. We could get at least $0.80 credit for it, and possibly more. Looking at chart - when AMZN dropped on earnings, it continued to go downside for a couple of days... Today is pullback, but I really can not see it to "fill the gap"... Hm... Will leave that for Monday. Have a nice weekend to all of you.
if it rejects of 328/9 then it going below 300 to test 294, that what I see anyways
  • #4,194
  • Jul 25, 2014 5:00pm Jul 25, 2014 5:00pm
Quoting Cecil Gee
{quote} if it rejects of 328/9 then it going below 300 to test 294, that what I see anyways
big dips @ the Jan and Apr ER's were $55 and $45. This one has been about $35-$40 so far. I would look for further moves below $310 and I think that will show up next week. We could be in for a bit of a pullback in US equities for next week, maybe even (as I saw Golden Slacks said today) for the next 3 months. Anyway, I'd bet AMZN will stay below $330 for a while.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,195
  • Jul 25, 2014 6:39pm Jul 25, 2014 6:39pm
Quoting The Fool
{quote} big dips @ the Jan and Apr ER's were $55 and $45. This one has been about $35-$40 so far. I would look for further moves below $310 and I think that will show up next week. We could be in for a bit of a pullback in US equities for next week, maybe even (as I saw Golden Slacks said today) for the next 3 months. Anyway, I'd bet AMZN will stay below $330 for a while.
yep, the VIX indicates this but VXX may be the better trade for a big spike up
  • #4,196
  • Jul 25, 2014 11:07pm Jul 25, 2014 11:07pm
http://seekingalpha.com/article/2343...tting-underway

Gold seasonality. The yellowmetal bounced pretty well off $1,290 and made an inverse move against falling risk assets today. I have been playing GLD (mostly call) diag calendar spreads since the flatline break back in May, making some money. Just GLD, no miners. Nice to see gold putting up some decent moves. I bet we see GLD match last years late summer high of $137.50. I'll be rolling into new GLD spreads next week, looking out to Oct. Might do long Oct $135c/short 8/16 $132c for $0.71/$0.21 - net debit 4 bits.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,197
  • Edited Jul 26, 2014 12:26am Jul 25, 2014 11:53pm | Edited Jul 26, 2014 12:26am
Quoting StrayDog
{quote} Note to myself - When you collect premium like $0.28 on SBUX, commissions are something you have to think about in advance. Luckily I am using IB which have perfect commissions, for example about 3.2 - 3.9 bucks for entire IC, but hey - it better be something like $0.50 per IC!!!
I hear you on this and I have learned to avoid low-paying short legs. The GLD 8/16 $132 short call leg I show in the post above - for $0.21 - is as low as I want to go. A little different if you are planning on holding to expiration and so will collect all of the short value, but it's nice to be able to roll out before expiry with decent profit and if the short leg value is low anyway you can get left holding the bag at the end if the options are somewhat illiquid.

Which leads to another point (that I have learned through bitter experience): If you are diagonalizing and plan on hitting multiple short legs on weeklies, you have to be careful, because some of the weekly strikes may actually be pretty thin and you might get stuck holding til expiry on them just to collect something worthwhile.

All of the above of which, of course, is just an argument for sticking with the most liquid names.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,198
  • Jul 26, 2014 12:38am Jul 26, 2014 12:38am
TSLA reports next Thursday. I bet TSLA may get shot down for the same reason AMZN did. Bet they're plowing too much of whatever profits they have in Giga factories. A break of $200 on the ER opens the door to a slide to $180 or lower in August.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,199
  • Jul 26, 2014 1:05am Jul 26, 2014 1:05am
looking at SPY put spreads, 8/29 $187/Oct $185 is $0.68/$1.68 --- $1.00 net debit....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,200
  • Jul 27, 2014 2:17pm Jul 27, 2014 2:17pm
If Argentina defaults, YPF might repeat the $10 drop from late January. No default, and YPF bounces. But maybe not very far...? Aug calls and puts below. I'm looking at bear call spreads: $45/$40 for $0.45 credit, or....? YPF share price may slide Mon-Tue, Wed D-Day.....
Attached Image(s) (click to enlarge)
Click to Enlarge Name: 2014-07-27_ypf.png Size: 21 KB
Click to Enlarge Name: 2014-07-27_ypf-02.png Size: 45 KB
Click to Enlarge Name: 2014-07-27_ypf-03.png Size: 46 KB
"If The Fool persists in his Folly he will become wise." - William Blake
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