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  • #4,581
  • Aug 25, 2014 10:17am Aug 25, 2014 10:17am
Hey TF,
you have been busy over weekend... I am having some issues with my charting software, so I just watched another nice vid from tastytrade.

August 22, 2014: Managing Put Credit Spreads & Iron Condors

It is about a hypothetical situation when you have an IC 42.50/45 + 55/57.50 on a stock that currently trades for $50, and what are you going to do in different scenarios.
Hope is dangerous in this game.
  • #4,582
  • Aug 25, 2014 12:35pm Aug 25, 2014 12:35pm
Quoting StrayDog
Hey TF, you have been busy over weekend... I am having some issues with my charting software, so I just watched another nice vid from tastytrade. August 22, 2014: Managing Put Credit Spreads & Iron Condors It is about a hypothetical situation when you have an IC 42.50/45 + 55/57.50 on a stock that currently trades for $50, and what are you going to do in different scenarios.
Thanks, StrayDog, I will check that out....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,583
  • Aug 25, 2014 12:52pm Aug 25, 2014 12:52pm
Quoting Cecil Gee
{quote} had a look at it and is bullish, my system would have got me in at $36, like to see if it hits or even gets close to 42$
Hey CG, I just took a look at that YHOO call butterfly again... and the volume on that fly is HUGE.... today again about 25,000.
That makes about 50k or more of those butterflies so far...

Guys, are we missing something here? YHOO must climb over 13% in order to make max profit on this.

Reminder: it is a YHOO Oct17 40/43/46 CALL butterfly. It is a huge bullish bet. 50k times 37-39 bucks.

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot - 25.8.2014 , 19_49_35.png Size: 94 KB
Hope is dangerous in this game.
  • #4,584
  • Aug 25, 2014 2:21pm Aug 25, 2014 2:21pm
Quoting StrayDog
{quote} ... Guys, are we missing something here? YHOO must climb over 13% in order to make max profit on this. Reminder: it is a YHOO Oct17 40/43/46 CALL butterfly. It is a huge bullish bet. 50k times 37-39 bucks. {image}
idk, StrayDog, I stopped following Yahoo a while back. Obviously a bet on YHOO stock to pop on a huge response to the Alibaba IPO, but one might say that is baked in already? Anyway, good luck if you take it I am laying off individual stocks, for the most part....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,585
  • Aug 25, 2014 3:06pm Aug 25, 2014 3:06pm
Quoting njr
{quote} Hey TF, You know my trading style and I consistently make anywhere from about 3 -7% per month. The 3% is during the low vol months and the 7% is when there has been higher vols (predominately vol spikes thereby increasing premium followed by a short contraction after). I haven't had a loosing month since using this trading method. I've done similar modelling in excel with various performance scenarios and it helps with setting and achieving monthly targets - Always a good thing to have goals and targets. I recall from the Karen Supertrader...
Wow - This market is certainly getting difficult for me to trade using this style of trading. If it continues this way for the rest of the week, this'll be a 2% month! VIX is ridiculously low and consequently premium is also low! Has anyone seen any black swans recently?
  • #4,586
  • Aug 25, 2014 3:07pm Aug 25, 2014 3:07pm
Quoting The Fool
{quote} idk, StrayDog, I stopped following Yahoo a while back. Obviously a bet on YHOO stock to pop on a huge response to the Alibaba IPO, but one might say that is baked in already? Anyway, good luck if you take it I am laying off individual stocks, for the most part....
Yeah I know... that is why I have a bullish put spread on YHOO (34/36 Sep19)....
This fly is far away, but on the other hand - stranger things happened than a 13% price increase.. And it has almost 2 months to do that.

A few days ago, someone bought 1,000 of a bullish call spreads for this week expiry on ANF. It was a 44.50 / 48 for $0.75 debit. Obviously a ER's play, it was bought at the open, 4 x 250 of those spreads.

I just like to see that high volume bets on something, then keep that on platform to wait and see what happens at the end.
Hope is dangerous in this game.
  • #4,587
  • Aug 25, 2014 3:10pm Aug 25, 2014 3:10pm
Quoting StrayDog
{quote} Yeah I know... that is why I have a bullish put spread on YHOO (34/36 Sep19).... This fly is far away, but on the other hand - stranger things happened than a 13% price increase.. And it has almost 2 months to do that. A few days ago, someone bought 1,000 of a bullish call spreads for this week expiry on ANF. It was a 44.50 / 48 for $0.75 debit. Obviously a ER's play, it was bought at the open, 4 x 250 of those spreads. I just like to see that high volume bets on something, then keep that on platform to wait and see what happens at the end....
I'm gonna wait until september to do that trade, hope forl a little dip if it comes, certainly yahoo is on the rise as are some other old time nasdaq stocks
  • #4,588
  • Aug 25, 2014 3:14pm Aug 25, 2014 3:14pm
Quoting njr
{quote} Wow - This market is certainly getting difficult for me to trade using this style of trading. If it continues this way for the rest of the week, this'll be a 2% month! VIX is ridiculously low and consequently premium is also low! Has anyone seen any black swans recently?
this rise will knock out all those who have huge long term neutral delta positions
  • #4,589
  • Aug 25, 2014 3:34pm Aug 25, 2014 3:34pm
Quoting njr
{quote} Wow - This market is certainly getting difficult for me to trade using this style of trading. If it continues this way for the rest of the week, this'll be a 2% month! VIX is ridiculously low and consequently premium is also low! Has anyone seen any black swans recently?
Black swan just a speck on the horizon, could be a bug on the windshield. We might see some fear set in if the data keeps printing on the upside & then next FOMC we get the right words from JY. In a little longer tf, maybe USD strength could weigh on US equities. Need the ECB to come along with more QE for that.

I did a TLT debit spread today, Sep/Oct calls, $121 short/$122 long, $0.17 debit. I'm looking for more upwards grind for the UST's. I wanted to do something similar for GLD puts, but decided to wait.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,590
  • Aug 25, 2014 4:33pm Aug 25, 2014 4:33pm
Quoting The Fool
{quote} just scrolled thru first 20 pages, looking for the trader StrayDog was trying to recall. There have been some good traders check in, the above guy seemed to know his stuff, he's still around. I miss Wulfgar, never knew what happened to him. And there was pipple, it was great to see him come through here. Cecil Gee has been here from the beginning - thanks bro. Problem with the thread is it was started by a rank beginner. But I keep bumbling towards competency. And I have learned a lot from those who come through and the regulars - thanks...

any options related question i`d be more than happy to answer, e.g. gamma scalping, option spreads trading, volatility arb, etc
Thank you Malcolm, Belekas, Jim, raczekfx and Ryanmcd !
  • #4,591
  • Aug 25, 2014 4:45pm Aug 25, 2014 4:45pm
You guys are very knowledgeable. Thank you for sharing.
  • #4,592
  • Aug 25, 2014 7:08pm Aug 25, 2014 7:08pm
Quoting djambazov84
{quote} any options related question i`d be more than happy to answer, e.g. gamma scalping, option spreads trading, volatility arb, etc
Hi djambazov84, good to see you here. I am doing ok trading spreads the way I do, still working out the best way to manage both winners and losers, also working out how to trade a pile of options in the same instrument at the same time - where I have multiple spreads across a range of strikes and expiries. No way around having to be able to model the range of possible outcomes, within reason, so that is what I'm working on.

Otherwise, I just wish I had much much larger accounts - trading options gets easier with better capitalization.

What are you up to lately?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,593
  • Aug 26, 2014 9:05am Aug 26, 2014 9:05am
After missing a couple of opportunities to trade the so called Iron Condors as ER's plays, I finally did one yesterday for BBY.
It is a good strategy, where you put your short strikes at the very edge of expected move, but I missed some because I did not like the max amount of premium relative to strike width. After some thinking, logical conclusions were that you can expect more rich premium when IV is higher, of course... and that you cannot compare Netflix and Disney... And one more important thing, related to commissions, and IC's in general - is to trade with wider strikes. So I did a $2 wide IC this time. It was a Chicken Iron Condor for this Friday expiry, like on the pic bellow, 27/29 + 33.5/35.5... for $0.54 credit (put side $0.26 and call side $0.28... it was made when BBY was @ $31.30)

Attached Image (click to enlarge)
Click to Enlarge Name: BBY ER CIC.png Size: 100 KB


It worked fine, and I allready closed the put side, since BBY is sinking... I will leave the call side to expire worthless.

Note to myself - WAIT, just WAIT a bit longer to close. Because I closed the put credit spread, for $0.15, which was sold for $0.26... a few minutes later, I could bought it back for $0.08...
Hope is dangerous in this game.
  • #4,594
  • Aug 26, 2014 9:22am Aug 26, 2014 9:22am
Congrats on a successful trade---thank you for sharing your strategy.
  • #4,595
  • Aug 26, 2014 9:47am Aug 26, 2014 9:47am
Quoting StrayDog
Note to myself - WAIT, just WAIT a bit longer to close. Because I closed the put credit spread, for $0.15, which was sold for $0.26... a few minutes later, I could bought it back for $0.08...
It always helps to know your prey: i.e., illiquid stock options will retain buy-back value even when they are far otm - often like $0.05 or more. This is maddening if you are looking to roll out at something below that value. So, if you know going in that your otm option is going to bottom at $0.10 or $0.05, then that helps you make the decision to get out as soon as you are getting close to that. You probably already knew this, but it's something I have learned through bitter experience, and another reason I avoid trading options on illiquid names....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,596
  • Aug 26, 2014 10:28am Aug 26, 2014 10:28am
Quoting The Fool
{quote} It always helps to know your prey: i.e., illiquid stock options will retain buy-back value even when they are far otm ...
Well said TF, that is true.

Many, many stocks have very bad options... illiquid, only monthlies, strikes on every $2.5... not worth a shot on those. I am working on a list for ER's plays that will help me in the future. There are 3 categories: "possible large movers", "probably stays in estimated move", and "don't bother with these"... Slowly I am filling that list with new names.

I know you don't do many of those trades any more, but I need these kind of trades, because I will learn a lot about managing good or bad positions, since these trades are short lived. I mean, you quickly see the result, so deal with it... I just need many trades to sharpen my skills, I still do not have many option trades behind me, and I am struggling to find a good trade for credit spreads or IC's now.
Hope is dangerous in this game.
  • #4,597
  • Aug 26, 2014 5:22pm Aug 26, 2014 5:22pm
looking to take a gamma trade on GDX tomorrow for Fridays expiration, GDX closed $26.19 today and if we trade below that at the open then I'm looking to long puts $26 puts for 12c or lower or even $25.50 for 2c, I'm thinking gold wants to break 1277 and 72 to the downside

Market Vectors Gold Miners ETF (GDX)
-NYSEArca
26.19 https://s.yimg.com/lq/i/us/fi/03rd/up_g.gif 0.57(2.22%) 21:00
|After Hours: : 26.14 https://s.yimg.com/lq/i/us/fi/03rd/down_r.gif 0.05 (0.19%) 23:11 - Nasdaq Real Time Price
  • #4,598
  • Aug 26, 2014 7:30pm Aug 26, 2014 7:30pm
Quoting Cecil Gee
looking to take a gamma trade on GDX tomorrow for Fridays expiration, GDX closed $26.19 today and if we trade below that at the open then I'm looking to long puts $26 puts for 12c or lower or even $25.50 for 2c, I'm thinking gold wants to break 1277 and 72 to the downside Market Vectors Gold Miners ETF (GDX) -NYSEArca 26.19 {image} 0.57(2.22%) 21:00 |After Hours: : 26.14 {image} 0.05 (0.19%) 23:11 - Nasdaq Real Time Price

what do you mean as "gamma trade" ?
Thank you Malcolm, Belekas, Jim, raczekfx and Ryanmcd !
  • #4,599
  • Aug 26, 2014 11:43pm Aug 26, 2014 11:43pm
Quoting Cecil Gee
I'm thinking gold wants to break 1277 and 72 to the downside
I'm with you there, CG. I like trading GLD on it though, more room to maneuver, plenty to the downside. Gold has a $150 1-month drop coming, I was just hoping we could see another wave at or above $1,300, but prolly won't happen.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #4,600
  • Aug 27, 2014 12:41am Aug 27, 2014 12:41am
http://finance.yahoo.com/news/euro-c...004436605.html

if Mario doesn't come through, we could see a down day. It could happen....
"If The Fool persists in his Folly he will become wise." - William Blake
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