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Let's Trade Options

  • #4,521
  • Aug 20, 2014 11:53am Aug 20, 2014 11:53am
the dust clears, indices full bounce, but bonds not.

TLT runs these $3-5 oscillations, bounced $113.xx-$118.xx in early Aug, dropped $118.xx to $115.xx in the last few days.

The bonds should break before stocks do, imho, if the dovish CB heads hold sway. The reverse may happen if geopoli redflags fly...
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,522
  • Aug 20, 2014 12:12pm Aug 20, 2014 12:12pm
Quoting The Fool
the dust clears, indices full bounce, but bonds not. TLT runs these $3-5 oscillations, bounced $113.xx-$118.xx in early Aug, dropped $118.xx to $115.xx in the last few days. The bonds should break before stocks do, imho, if the dovish CB heads hold sway. The reverse may happen if geopoli redflags fly... {image}
Yup, SPX back on course straight to 2000ville! Depending on Jackson Hole, we could see it go through 2000 this week!
  • #4,523
  • Aug 20, 2014 12:22pm Aug 20, 2014 12:22pm
Quoting njr
{quote} Yup, SPX back on course straight to 2000ville! Depending on Jackson Hole, we could see it go through 2000 this week!
Friday for sure, SnP 2k reaching for the KY...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,524
  • Aug 20, 2014 12:29pm Aug 20, 2014 12:29pm
And E/U trap door opens....it's looking for the level from when? - that's right, Jackson Hole 2013!

Draghi et al will have a nice weekend in the warm latesummer mountain sunshine and decide how far and how fast to sink the euro....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,525
  • Edited 5:51pm Aug 20, 2014 5:33pm | Edited 5:51pm
Quoting The Fool
{quote} I'll show you some examples of how I do diagonals later today when I have some free time,
I will use diagonals sometimes when I am thinking I want to catch a directional move & I want a early short leg to fund a later long leg. In the SPY example I think SPY is going to be trading >$200 in September, but I think that the transition past $200 might be rocky. So I sell short the near term $202.50 call and buy the longer term $205.00 call. If I am wrong and SPY moves down then I have made a break-even trade, m/l; I can let the 9/5 call expire and then sell another call leg with 9/20 expiration.

If SPY moves up or flatlines but fails to reach $202.50 by 9/5, then I can let the 9/05 call expire and then sell another 9/12 or 9/20 leg or wait to see if SPY will move up in September, etc. With luck I might get out of the 9/05 at expiry with full credit and then SPY runs up well in the next 1-2 weeks and the $205 call is worth something...

If SPY moves up hard and threatens the $202.50 short call level before 9/05, then I will roll out before it gets to $202.50 and sell $205 calls at a 9/12 expiry, perhaps losing some money...

I often do these with the first long leg 2-3 months out, with the plan of selling legs against it on weekly strikes a number of times.

I might do this or a similar trade but I am watching to see if SPY will get to Friday moving up...
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,526
  • Aug 20, 2014 10:14pm Aug 20, 2014 10:14pm
Gold might run down to last Dec/Jan lows. GLD $119 might be too high. I might do 9/20 $118 / 12/20 $113 for a $0.56 debit...
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,527
  • Aug 20, 2014 10:24pm Aug 20, 2014 10:24pm
Quoting The Fool
Gold might run down to last Dec/Jan lows. GLD $119 might be too high. I might do 9/20 $118 / 12/20 $113 for a $0.56 debit... {image}
I could be wrong, though.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,528
  • Aug 20, 2014 10:45pm Aug 20, 2014 10:45pm
bond rally can't go on forever....or can it?
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,529
  • Aug 20, 2014 10:54pm Aug 20, 2014 10:54pm
the GLD & TLT spreads above can be entered on the upside and downside at the same time - the double diagonal. I have not figured out yet the best way to trade these. Nevertheless, I have done well with them. The long horizon gives one the chance to manage the trade, even if one is not that savvy about time spread management.

Generally, any losses have been very small, and, in the case that the underlying moved just right and never threatened my short legs, subsequent multiple legs (or even share price movement to the original long strike) have piled up into good gains....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,530
  • Aug 20, 2014 11:44pm Aug 20, 2014 11:44pm
http://blog.sfgate.com/energy/2014/0...-1-per-gallon/

one of these days (or years) US nat gas prices are gonna ramp up, and they will keep going up. New stateside lng facilities are coming online in 2015 (16?) and that will be a game changer.

But Cramer says natgas is going down.

http://video.cnbc.com/gallery/?video...o%7c&par=yahoo
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,531
  • Aug 21, 2014 6:21am Aug 21, 2014 6:21am
Quoting The Fool
{quote} I will use diagonals sometimes when I am thinking I want to catch a directional move & I want a early short leg to fund a later long leg. .....
Hey TF,
Thanks for explanations, I appreciate that. I will look at it, and also find some good stuff on the net... Ah, and double diagonals as well... They look similar to Iron Condors on a first sight... Soo many strategies ...
Hope is dangerous in this game.
  • #4,532
  • Aug 21, 2014 7:03am Aug 21, 2014 7:03am
For today I am interested in following:

VIX bullish call spread 12/14 Sep16, I am trying to get a fill for $0.80 debit (pffffffff... vix just jumped over 13)

YHOO bullish put spread 34/36 Sep19 for $0.64 credit

I cant believe LNKD is on such a run, but instead of bear call spread, I am thinking of Iron Condor 195/200 + 235/240 for Sep19 expiry, for about $1.50 credit at least. Was thinking of something similar for BIDU, but the bid/ask spread there is a large one...
Hope is dangerous in this game.
  • #4,533
  • Aug 21, 2014 7:13am Aug 21, 2014 7:13am
Quoting StrayDog
YHOO bullish put spread 34/36 Sep19 for $0.64 credit
Just got filled for that @ $0.64 credit... 34 put for $0.42 debit, and 36 put for $1.06 credit.... Idea is that the stock will go higher in anticipation of Alibaba IPO, plus IV rank is 60.

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Hope is dangerous in this game.
  • #4,534
  • Aug 21, 2014 8:59am Aug 21, 2014 8:59am
Hey @straydog, nice idea on Yahoo.... but... I was thinking of something similar few weeks ago, but then came to conclusion that it is very likely that all alibaba happening is already included into the price as it is (so i agree, that it is hard to be bullish) + IV will drop like a stone, once anything is official... What do you think?


My idea for today is the following reverse iron condor on AAPL... with story behind the trade as follows: apple will announce new idevices (prob. larger screen iphone) on sept9. By then price might fluctuate a bit (early exit opportunity), and IV will rise in days before event (another exit opportunity?). But last year (sept 2013), aapl dropped almost 10% day after event + IV dripped like a stone (another possible exit scenario?). Still, I am more bullish (it is a larger iPhone - a big change I think), hence larger spread on call side - as I think we'll jump beyond $105... (perfect exit). What do you think?

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  • #4,535
  • Aug 21, 2014 9:25am Aug 21, 2014 9:25am
Quoting weirdgod
Hey @straydog, nice idea on Yahoo.... but... I was thinking of something similar few weeks ago, but then came to conclusion that it is very likely that all alibaba happening is already included into the price as it is (so i agree, that it is hard to be bullish) + IV will drop like a stone, once anything is official... What do you think?
I am counting on that IV drop. That is why I am selling that spread.


Quoting weirdgod
My idea for today is the following reverse iron condor on AAPL... with story behind the trade as follows: apple will announce new idevices (prob. larger screen iphone) on sept9. By then price might fluctuate a bit (early exit opportunity), and IV will rise in days before event (another exit opportunity?). But last year (sept 2013), aapl dropped almost 10% day after event + IV dripped like a stone (another possible exit scenario?). Still, I am more bullish (it is a larger iPhone - a big change I think), hence larger spread on call side - as I think...
I don't have any experience with reverse ICs, I traded only the regular ones. But there will definitely be a drop in IV after that announcement, just like after any so called "binary event", IMHO. But I am just a rookie in a options world...
Hope is dangerous in this game.
  • #4,536
  • Aug 21, 2014 9:41am Aug 21, 2014 9:41am
Quoting StrayDog
VIX bullish call spread 12/14 Sep16, I am trying to get a fill for $0.80 debit ...
Made that, but had to go for separate fills. Bought 12 Sep16 call for $1.80 debit, and sold 14 Sep16 call for $1.00 credit.
So now I have a bullish call spread 12/14 Sep16 for $0.80 debit.
Just in case VIX go wild... and there will be at least one wild day in that period... 27 DTE
Hope is dangerous in this game.
  • #4,537
  • Aug 21, 2014 10:37am Aug 21, 2014 10:37am
Quoting StrayDog
{quote} Made that, but had to go for separate fills. Bought 12 Sep16 call for $1.80 debit, and sold 14 Sep16 call for $1.00 credit. So now I have a bullish call spread 12/14 Sep16 for $0.80 debit. Just in case VIX go wild... and there will be at least one wild day in that period... 27 DTE
Hey SD,

I don't normally buy options but I think this is a pretty good trade considering the market is at all time highs and the Yellen and Draghi show will kick off tomorrow! I am considering doing the same - perhaps I'll just buy the 12 CALLs. I think you're right that between now and the 27DTE there should be a spike somewhere which should net a nice profit. Good luck with the trade....
  • #4,538
  • Aug 21, 2014 10:37am Aug 21, 2014 10:37am
Does anybody know how low gold is going to go, and on what day that low will be?

Thanks in Advance,

The Fool
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,539
  • Edited 11:18am Aug 21, 2014 11:00am | Edited 11:18am
Quoting njr
{quote} Hey SD, I don't normally buy options but I think this is a pretty good trade considering the market is at all time highs and the Yellen and Draghi show will kick off tomorrow!
I am looking for a huge dovish boost to smash SnP 2k on Friday, then a near vertical continuation next week.

The SPY calls 9/5 $202.50 short/ 9/20 $205 long still nets $0.03 credit, sitting on hands....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,540
  • Aug 21, 2014 11:40am Aug 21, 2014 11:40am
For all the 'Karen Supertrader' fans, another interview......

Now managing almost 300 mio. 11% profit YTD which is lower than other years due to the lower volatility. Still trading the same methodology but closer to the ATM strike for the PUTs

https://www.tastytrade.com/tt/
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