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  • #5,201
  • Oct 6, 2014 6:38pm Oct 6, 2014 6:38pm
Everybody votes in Brazil. Back in olden times, you had to be a man of property to vote. Lots of people even now think that would be an improvement over the status quo. I'd have to bet against a Neves win inflating the Bovespa. If EWZ is going to rise it will have to do so on its own gas.

http://video.cnbc.com/gallery/?video...o%7c&par=yahoo#.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,202
  • Oct 7, 2014 8:18am Oct 7, 2014 8:18am
Just watched a tastytrade video, comparing short straddles with Iron Flies (straddle with the wings)... Good one, I will think about that also for ER's plays, for selling premium.

Defining Straddles 10/06/2014

When Implied Volatility (IV) is high, we will look to sell premium in order to take advantage of the volatility contraction. One of the best ways to do this is buy placing a Straddle. A Straddle is formed from selling an at the money (ATM) call and an ATM put. This strategy allows you to bring in a large amount of credit, which extends your break even points. The only negative about the trade is that you have undefined risk. This requires a large amount of buying power as well as a potential for large drawdowns. In order to reduce our buying power and protect ourselves against a large move in the underlying, we can buy out of the money (OTM) options to define our risk and create an Iron Fly. To compare these two strategies, Tom Sosnoff and Tony Battista take a look at a huge study. The guys go back to 2006 to see how the two trades stack up in terms of profits, win rate, return on capital (ROC) and the largest drawdown. They find out that while you give up some profits, you are protected from the large moves as the largest loss on the straddle was over 5x that of the Iron Fly! This makes the Iron Fly a great trade for a smaller account because you use less buying power, increase ROC and avoid large drawdowns!
Hope is dangerous in this game.
  • #5,203
  • Oct 7, 2014 9:52am Oct 7, 2014 9:52am
Quoting StrayDog
Just watched a tastytrade video, comparing short straddles with Iron Flies (straddle with the wings)... Good one, I will think about that also for ER's plays, for selling premium. Defining Straddles
Thanks for reminding me of that one, SDog, been wanting to look at it. I want to do some ER plays, will be looking into some for next week's names and beyond. Meanwhile, a little bit on overload, just managing large stack of trades I have on now. May be scarce for a while.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,204
  • Oct 7, 2014 10:04am Oct 7, 2014 10:04am
Quoting The Fool
{quote} Thanks for reminding me of that one, SDog, been wanting to look at it. I want to do some ER plays, will be looking into some for next week's names and beyond. Meanwhile, a little bit on overload, just managing large stack of trades I have on now. May be scarce for a while.
I clear up some of the stuff in my inventory . Yesterday I closed some LNKD spread for B/E (I missed the opp to close when I had 40% win in just 8 days... because I wanted 50% - lesson learned) and some AAPL spreads for a small loss. Free up some margin on that. I will probably skip YUM, because it is the only stock (from my list for this week) that actually gaps all the time for ER's, no wonder that you made money on it with long strangles. I will prefer to buy one in advance, so I will skip that.

For today I will probably enter Iron Condors for COST and MON, since their ER's are tomorrow BMO. Will take a closer look to charts etc, and if I enter it will be maybe 2 hours before close, since I noticed that bid/ask spreads tend to widen in last hour before ER's.
Hope is dangerous in this game.
  • #5,205
  • Oct 7, 2014 1:40pm Oct 7, 2014 1:40pm
Quoting njr
{quote} Ok - so i didn't have the "cojones" to keep the position open to next week and my order was just filled and I have taken the profit. It was the 1830 put strike which was due to expire on 31 Oct so I figured that I'll take the 49% profit now rather than waiting another 4 weeks. Plus I would expect at least a few more down days in October so I'll look to reload on the next drop! Have a good weekend all....
Happy I closed my position (and protected my 'cojones') when I did. Looks like this pullback will extend lower with the statements today from the IMF - SPX could test the 1900 level again. The positive to all this is that Vol is back up again so premium is looking very decent! Earnings kicking off tomorrow with AA so it'll be interesting if the general earnings season will slow/stop this pullback and SPX grinds back up to 2000 or if it accelerates the down-move and SPX breaks 1900....

My positions - Two new es mini put positions: Nov 21 expiry 1) @ 1750 and 2) @ 1780
  • #5,206
  • Oct 7, 2014 2:21pm Oct 7, 2014 2:21pm
Quoting Cecil Gee
{quote} got my finger on the button to long puts if AAPL closes below 99.49 Apple Inc. (AAPL) -NasdaqGS 99.49 {image} 0.13(0.13%) 20:51 - Nasdaq Real Time Price
took the long put trade on AAPL for Fridays expiration. long $98 put for 38c and AAPL price I got in was for 98.95

Apple Inc. (AAPL)
-NasdaqGS
98.95 https://s.yimg.com/os/mit/media/m/ba...nt-1093278.png 0.67(0.67%) 20:16 - Nasdaq Real Time Price

AAPL Oct 2014 98.000 put (AAPL141010P00098000)
-OPR
0.38 https://s.yimg.com/lq/i/us/fi/03rd/up_g.gif 0.06(18.75%)
  • #5,207
  • Oct 7, 2014 9:01pm Oct 7, 2014 9:01pm
EWZ still an interesting trade, i.v. rank 100%. The first time a poll comes out showing Rousseff leading Neves by a healthy margin (inevitable) the Bovespa will slide....

can do Nov/Jan $54/$55 diag for $0.00 debit, I am looking for cheap calendars....
Attached Image (click to enlarge)
Click to Enlarge Name: 2014-10-07_EWZ.png Size: 94 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,208
  • Oct 7, 2014 9:26pm Oct 7, 2014 9:26pm
http://blogs.barrons.com/emergingmar...rrons&ru=yahoo

The fortunes of no other stock swing as wildly on the Brazilian election results as those of Petrobras (PBR) - a Rousseff victory and PBR drops like 3-toed sloth dookie.

http://en.wikipedia.org/wiki/Dilma_Rousseff

Nobody really thinks Neves can win. Brasil has a large and relatively poor population and everyone who is old enough is required to vote, by law. The poor love Dilma. She was a protégé of the beloved former president Lula de Silva & before that, fought against the military dictatorship with a Marxist guerilla group in the early '70's, was imprisoned and tortured, etc, etc... There's just no way, no how she will lose to Mitt Romney Neves.

AFAIAC, trading the Brazilian volatility collapse is still the Trade of the Week, no, Trade of the Quarter. I am still waiting for your alternate nominations.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,209
  • Edited 10:14pm Oct 7, 2014 9:47pm | Edited 10:14pm
from Barrons article above...

"Handicapping Brazil’s Oct. 26 presidential runoff election is tough, but Purves thinks that if opposition candidate Aecio Neves is elected, Petrobras stock “could trade through the Sep. high tick of $20.94.” If incumbent Pres. Dilma Rousseff wins, Purves thinks “it is likely the stock retraces to the $12 level, and possibly through that. However, if Rousseff carries through on a “table rasa” with cabinet and policy, there is arguably a longer term bull case to buy PBR if/when it dips to those levels.”

There is a perfect storm brewing and it could blow right down PBR's deepest derrick: a Rousseff victory with resurging USD, Fed heads jawboning the rate hike - a anti-commodity, anti-emerging market, anti-PBR triple whammy. I want to see some risk-on sentiment set in, some pro-Neves poll numbers, and a run-up to near $20 for PBR.
Attached Image (click to enlarge)
Click to Enlarge Name: 2014-10-07_pbr.png Size: 92 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,210
  • Oct 7, 2014 11:56pm Oct 7, 2014 11:56pm
I like to look at the current day options time/sales as they come in. You can match trades in their spreads as they will have the same time of execution and same underlying price. PBR below...
Attached Image (click to enlarge)
Click to Enlarge Name: 2014-10-07_pbr2.png Size: 66 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,211
  • Edited 9:05am Oct 8, 2014 1:06am | Edited 9:05am
PBR 10/31 options trade at about a 30% i.v. premium over same strikes on 11/22.
Attached Image (click to enlarge)
Click to Enlarge Name: 2014-10-07_pbr-dough.png Size: 475 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,212
  • Edited 8:41am Oct 8, 2014 7:53am | Edited 8:41am
Quoting StrayDog
... For today I will probably enter Iron Condors for COST and MON, since their ER's are tomorrow BMO.
I didn't entered those trades, because market was too wide and I didn't have time to make IC's on my own. Low volume and OI.
YUM didn't move at all, well... I can see that MON is still in its EM.

But, I have possibly learned something interesting, which I will study more. Comparing Iron Condors with Iron Flies.

For COST, I wanted to do a 120/122 + 128/130 IC for like $0.50 - 0.52 CR, or $3 from current price ($125 at that time). It had IV of about 35% pre earnings, so obviously stock historical vol is low. That is candidate for high prob of success when selling premium, IMO. (I am aware that it is trading above $128 now, or above upper edge of estimated move but bare with me for this example). So, you can get about $0.50 for Chicken IC with $2 wide strikes. Premium can be up to $0.70 or more, for IC with $2 wide spreads, but IV must be higher (like NFLX for example).

So, you can do Chicken Iron Condor BUT - FOR NON-DIRECTIONAL TRADES what else premium selling thing you can do, if you don't want to go with naked short strangles or straddles?
How about a 119/125 + 125/131 Iron Fly? I must say dough is absolutely fantastic as it save time in experimenting with strikes, and all you do is just drag options left and right... UNTIL your profit area overlaps Estimated Move area. So I placed that Iron Fly on IB, and voila! Somebody sold 7 of these for $2.74 credit. So somebody else was thinking the same, AND it is much easier to make one, since you don't have to bother to squeeze every buck (50 or 55 for IC - that is a difference, but 274 or 270 or 280... not so much)

So, on one hand you have Chicken Iron Condor - max profit $50, max loss $150...
on the other hand you have Iron Fly - max profit $274, max loss $326 (since wings are $6 wide)
Things to consider - on Iron Condors you have a chance of reaching max profit, while on Iron Fly you don't, since you have a short straddle, so one of the options will be always ITM. Also, IC's will have higher POP, but since this is about ER's plays, I don't find it of much importance.

Iron Condor
Attached Image (click to enlarge)
Click to Enlarge Name: COST IC 120-122 128-130.png Size: 99 KB


Iron Fly
Attached Image (click to enlarge)
Click to Enlarge Name: COST Iron Fly $6 wide wings.png Size: 88 KB
Hope is dangerous in this game.
  • #5,213
  • Oct 8, 2014 8:11am Oct 8, 2014 8:11am
Quoting The Fool
... Nobody really thinks Neves can win. Brasil has a large and relatively poor population and everyone who is old enough is required to vote, by law. The poor love Dilma. ....
Is there any chance that candidate No. 3 speaks to her voters and ask them to back Neves?

I agree with you about EWZ... vol is high, IVR @ 100... Maybe choose some trades, use time until Dec26 for "bottom fishing" and squeeze some calendars for 0.00 debit, or diagonals like you proposed above. I will just have to read more about different scenarios for diagonals - max loss, max profit, breakeven... Pity that dough does not recognize them as strategies. I have something on IB - I think it is called "Possible Performance", it gives POP and max p/l, but no b/e.

For Trade of the Week... since YHOO I didn't have much bright ideas... did only verticals and IC's on some stocks... I still have to find my personal "sweet spot" for selling premium. Tastytrade guys are aggressive contrarians, and to take 1/3 or more of the spread, means that you must be pretty close to the price. Sometimes I don't feel well in such positions, and close them early, and they usually proves to be ok. I still have some problems with "risk more to make less", although I am ok with the concept for a very long time... (like in FX... when you put a 100 pips SL on EUR/USD while it ranges - well you probably will not be stopped)
Hope is dangerous in this game.
  • #5,214
  • Oct 8, 2014 10:28am Oct 8, 2014 10:28am
Quoting StrayDog
{quote} Is there any chance that candidate No. 3 speaks to her voters and ask them to back Neves?
Well, anything can happen. All of my EWZ calendars <$50 are at b/e ml. I paid too much for them ($0.15 m/l). I saw large blocks of the $50 Nov/Jan go for $0.04, but I never saw anything like that I could grab - musta been locals trades.

Good posts above, SDog - I will try to respond as I have time..
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,215
  • Oct 8, 2014 11:00am Oct 8, 2014 11:00am
Quoting The Fool
{quote} Well, anything can happen. All of my EWZ calendars <$50 are at b/e ml. I paid too much for them ($0.15 m/l). I saw large blocks of the $50 Nov/Jan go for $0.04, but I never saw anything like that I could grab - musta been locals trades. Good posts above, SDog - I will try to respond as I have time..
My "experience" with those calendars
So far I have seen that in order to get the best price both for entry and exit of this calendars, best is to carefully buy/sell each option separately, like in any other spread. I bought calendars just by placing my order for calendar, and later averaged, I had luck to buy other half for $0.05. You can get beautiful price if you time your exit by separately closing legs, but that is easier said than done. For instance, leftovers of my $50 Nov/Dec calendars - if I paid attention to them, I could sell Dec today right at open, and buyback Nov 3 hours later, after EWZ drops, and it would be a whooping $0.70 difference... But I didn't looked at it. But timing it incorrectly, and it could be a negative difference. That is a gamble.

Also, I closed majority of mine - 17 out of 20, right on Monday, because people were just CRAZY, just hitting the bid all the time, volume was high, spread was $0.15 - $0.20... so if you want to exit quickly - do it as soon as event is over. Much easier to close individually when you have big volume.
Hope is dangerous in this game.
  • #5,216
  • Oct 8, 2014 11:06am Oct 8, 2014 11:06am
keep an eye on the weekly close on the DOW a close below 16700 and held then I'm looking for a fall to 13700 just for the starters. Easy government money has in my view taking it high enough for a correction to take place without mass panic like 2008. NFP was good with unemployment figure lowering each quarter and real jobs adding into the US economy, everyone including me was looking for even higher highs instead we have gone the other way. it still may happen but looking at THE WEEKLY DOW chart its showing downward momentum for a few months to come. The fall maybe a steady one to stop hysteria but it will be healthier in the long run
  • #5,217
  • Oct 8, 2014 11:55am Oct 8, 2014 11:55am
Quoting The Fool
There is a perfect storm brewing and it could blow right down PBR's deepest derrick: a Rousseff victory with resurging USD, Fed heads jawboning the rate hike - a anti-commodity, anti-emerging market, anti-PBR triple whammy. I want to see some risk-on sentiment set in, some pro-Neves poll numbers, and a run-up to near $20 for PBR.
PBR down >5% today, Silva (Candidate #3) said she not backing Neves, all iBovespa down - poll out tomorrow will likely show what a long shot Neves is in the runoff, Brazil stocks will bleed more.

Anyway, I don't like cheap stock options...and I was interested in PBR if it had run up further, maybe not in the cards now.

As EWZ fell today also, my calendars are all in small profit. Still a volatile situation and anything can happen. So I am babysitting. My spreads are mostly too large to close unless both legs close at the same time ...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,218
  • Oct 8, 2014 11:56am Oct 8, 2014 11:56am
Quoting Cecil Gee
keep an eye on the weekly close on the DOW a close below 16700 and held then I'm looking for a fall to 13700 just for the starters. Easy government money has in my view taking it high enough for a correction to take place without mass panic like 2008. NFP was good with unemployment figure lowering each quarter and real jobs adding into the US economy, everyone including me was looking for even higher highs instead we have gone the other way. it still may happen but looking at THE WEEKLY DOW chart its showing downward momentum for a few months to...
Looking forward to correction.

I looked at weekly and daily chart. For a long time, daily MA 200 (or weekly 50) was holding. A few false breakouts, nothing much. Weekly close under it could be nice. Looked at various fibo levels also, like fibo 50 from 2011 lows to recent highs is close to 13700... Why do you find 16700 important? I don't trade DJIA at all, just asking generally...

Also I wonder are we gonna get some surprise statement in Fed Minutes today .
Hope is dangerous in this game.
  • #5,219
  • Oct 8, 2014 12:13pm Oct 8, 2014 12:13pm
Quoting StrayDog
{quote} Looking forward to correction. I looked at weekly and daily chart. For a long time, daily MA 200 (or weekly 50) was holding. A few false breakouts, nothing much. Weekly close under it could be nice. Looked at various fibo levels also, like fibo 50 from 2011 lows to recent highs is close to 13700... Why do you find 16700 important? I don't trade DJIA at all, just asking generally... Also I wonder are we gonna get some surprise statement in Fed Minutes today .
that 16700 is not a hard number but more of a guide should be 16621 so it can close beneath last weeks bounce of it. Makes me a little more confident
  • #5,220
  • Edited 1:46pm Oct 8, 2014 12:17pm | Edited 1:46pm
Quoting StrayDog
{quote} Looking forward to correction. Also I wonder are we gonna get some surprise statement in Fed Minutes today .
I think FOMC minutes will be m/l a non-event. But I could be wrong about that - teetery markets might seize upon any additional hawkish tone and sell off more.

I am in a IWM spread - Oct $105 short put/Dec $103 long put. In good profit now but could do better if IWM stays above $105 into next week but continues downtrend towards $103 thereafter. Earnings will show the way...
"If The Fool persists in his Folly he will become wise." - William Blake
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