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Let's Trade Options

  • #5,341
  • Oct 12, 2014 10:17pm Oct 12, 2014 10:17pm
Quoting The Fool
so, I have $48, $49, $50, and $53 Nov/Jan calendars on EWZ
so, practically, the above scenario can not play out for all of my calendars as they are set up at various strikes. I will have to manage them as best I can. I think that will mean I have to watch what happens to EWZ over the coming weeks and be ready to close the short calls as the share price gets near the calendar strike. I almost closed the $48's on 10/9 when EWZ was trading around $47.50 and I saw around $0.40 profit for a short time. But I think it will be better to wait for a i.v. collapse that should occur after the elections drama is over - the week of 10/27. Time is my friend and that i.v. drop is my bff, so I hope she shows up.

EWZ could drop hard over the next month(s). The front month calls would expire worthless and I would have to see what I had left on the back month calls. The nice thing about doing a 2-month calendar is after the first short leg expiry I could then still do another short leg against the 60 dte long calls.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,342
  • Oct 13, 2014 5:47am Oct 13, 2014 5:47am
TF, thanks for your explanations. You confirmed everything that I learned AND I learned even more from you now. Thanks again for your time. I did read a lot about calendars, diagonals etc, but yours explanations with real live examples are the best!

So, when front leg expires, and you have as you said 60 dte for long legs, you can then make whatever you want with it... you can use it to make another calendar, or diagonal, or vertical - what ever that you think at that time is the best, since it gives you plenty of time. Good concept to have 60 days between the legs. Now I understand the concept of "selling multiple short legs" against longer term long option...
Hope is dangerous in this game.
  • #5,343
  • Oct 13, 2014 5:56am Oct 13, 2014 5:56am
Exactly. So occasionally we get the opportunity to find a front month/back month calendar spread at just a few cents debit - very nice. I am trying to write a scanner that will churn through all the 1-month or 2-month spreads and find those.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,344
  • Oct 13, 2014 6:06am Oct 13, 2014 6:06am
futures were pointing well down when I went to bed a few hours ago. Turning up now. BTFD too hard to resist. Fed heads talking down the USD, talking back the rate hike, hell they've done everything but announce QE4.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,345
  • Oct 13, 2014 6:09am Oct 13, 2014 6:09am
Quoting The Fool
{quote} watch for PBR & EWZ bounce on Monday, buy back month calls early, sell front month calls into strength (knock on wood)
PBR up >$1.00 pre-market....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,346
  • Oct 13, 2014 6:19am Oct 13, 2014 6:19am
http://finance.yahoo.com/news/exclus...095520702.html

"With most other members of the cartel unable or unwilling to reduce their own output, the group's next meeting on Nov. 27 is set to be its most difficult in years."

"Omair said that prices should stop falling at around $76 to $77 a barrel, citing production costs in places like the United States..."
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,347
  • Oct 13, 2014 6:28am Oct 13, 2014 6:28am
According to the FF calender the US has a bank holiday today, can someone confirm this
  • #5,348
  • Oct 13, 2014 6:34am Oct 13, 2014 6:34am
Quoting Cecil Gee
According to the FF calender the US has a bank holiday today, can someone confirm this
banks and bond market are closed but all the exchanges are open. business as usual for stock/futures/options traders
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,349
  • Oct 13, 2014 6:36am Oct 13, 2014 6:36am
Quoting The Fool
http://finance.yahoo.com/news/exclus...095520702.html "With most other members of the cartel unable or unwilling to reduce their own output, the group's next meeting on Nov. 27 is set to be its most difficult in years."
I am surprised OPEC has hung together for this long & also will not be surprised to see it implode.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,350
  • Oct 13, 2014 6:36am Oct 13, 2014 6:36am
Quoting The Fool
{quote} banks and bond market are closed but all the exchanges are open. business as usual for stock/futures/options traders
Thanks, though I was seeing things on my futures platform
  • #5,351
  • Oct 13, 2014 6:37am Oct 13, 2014 6:37am
Quoting The Fool
{quote} I am surprised OPEC has hung together for this long & also will not be surprised to see it implode.
Transfer of wealth back to the US
  • #5,352
  • Oct 13, 2014 7:05am Oct 13, 2014 7:05am
Quoting Cecil Gee
After a bearish last week I'm expecting a short term rally back up to 1950/60ish on the S/P before we see a continuation of this bear that in my view may last a year or two, certainly to test 2008.9 levels. As more and more of the Fed easing is cut the greater the acceleration of this bear. To many it may not make sense until its over because of the bullish economc data that will continue coming out of the US but its the step back to real normality
we might get a correction - hey we're almost halfway there - but I don't see the onset of a bear market. Even if things continue to suck in the Eurozone, yieldseeking capital flows will target US equities & probably select em's. Only some exogenous forces would bring on the kind of bear you suggest - war, global recession, etc...

Anything can happen, though - we'll see.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,353
  • Oct 13, 2014 7:16am Oct 13, 2014 7:16am
Parts from Seeking Alphas Wall Street Breakfast

Economy
Saudi Arabia has reportedly been telling oil-market investors and analysts that it is ready to accept oil prices below $90 per barrel, and even as low as $80, for up to a year or two. If true, it would represent a major change in policy for Riyadh, which may be looking to slow the expansion of rivals such as the U.S. Oil was -1.45% at $84.57 at the time of writing.

Chinese exports blew past forecasts and accelerated to +15.3% on year in September from +9.4% in August. Imports recovered to +7% from -2.4% and vs consensus of -2.7%. The positive figures provide some cheer amid concerns about a slowdown in the economy, although the data isn't wholly reassuring. "The breakdown of the import data suggests that demand growth in China’s own economy remains weak," says RBS economist Louis Kuijs.

............

Stocks
Shares in Fiat Chrysler Automobiles are due to begin trading under the symbol FCA on the NYSE this morning, after which they'll debut in Milan as well. Fiat is viewed as being weaker than Ford (NYSE:F) and GM (NYSE:GM), although it is seen as having a strong premium portfolio.
Hope is dangerous in this game.
  • #5,354
  • Oct 13, 2014 7:30am Oct 13, 2014 7:30am
Quoting The Fool
{quote} we might get a correction - hey we're almost halfway there - but I don't see the onset of a bear market. Even if things continue to suck in the Eurozone, yieldseeking capital flows will target US equities & probably select em's. Only some exogenous forces would bring on the kind of bear you suggest - war, global recession, etc... Anything can happen, though - we'll see.
Yes we are... From 2000+ to 1900... I will really be surprised if this correction goes any lower than 1800 on SnP. Like CG I also think there will be pullback, I think it is logical that when market is at its firs major support like now on 1900 AND in major earnings week, that this week is going to be a pause and/or a failed rally and then another leg down, and if 1900 breaks SnP goes down to supports at 1850/1840 and 1800... IMHO. I could be totally wrong.

In order to have a real bear market, we would need a real recession... I don't know... What I do know is that market sentiment changes rapidly, and last week all talking heads were raging bulls and now they are all awakened bears... Best is not to listen any of the analyst and to adapt to situation at the field.

We all got what we wanted - higher VIX, lots of volatility, more opportunities. Now use that. CG used that beautifully on Friday.
Hope is dangerous in this game.
  • #5,355
  • Edited 9:23am Oct 13, 2014 9:02am | Edited 9:23am
Preparing for some ER's plays - will study charts and behavior of C, WFC, JPM and JNJ. All of them have ER's tomorrow BMO, hence one should enter positions today for strategies that involves premium selling.

TSLA is going down hard again.

Edit - and everything else is ugly now ... sitting in cash, and since I missed some good entries last week, will turn my attention to this weeks earnings - plenty of them. Question is - how much will this negative sentiment affect ER's statements?
Hope is dangerous in this game.
  • #5,356
  • Oct 13, 2014 10:51am Oct 13, 2014 10:51am
I did a Nov/Jan PBR $21/$22 diagonal for $0.08 debit
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,357
  • Oct 13, 2014 11:41am Oct 13, 2014 11:41am
Quoting StrayDog
Edit - and everything else is ugly now ... sitting in cash, and since I missed some good entries last week, will turn my attention to this weeks earnings - plenty of them. Question is - how much will this negative sentiment affect ER's statements?
Earnings to the rescue, the S&P low for Oct (for rest of 2014?) is in @ 1,890.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,358
  • Oct 13, 2014 12:11pm Oct 13, 2014 12:11pm
Quoting The Fool
I did a Nov/Jan PBR $21/$22 diagonal for $0.08 debit
did that when PBR was $17.05 or so, it's at $17.26 now. If I had legged in, I would have been able to get in the spread for less, maybe a credit.

BUT, if I enter the spread - both legs at the same time - my margin is much less & I can get in a larger position...I did the latter.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,359
  • Oct 13, 2014 12:14pm Oct 13, 2014 12:14pm
Quoting StrayDog
Preparing for some ER's plays - will study charts and behavior of C, WFC, JPM and JNJ. All of them have ER's tomorrow BMO...
All of the above stocks moves max 3% on ER's. Also, no matter of IV rank of 100 on all of them, since they are not moving much in general, credit received for Iron Condors or just one sided credit spreads are quite low. So, if I want to take risk on them, I will do Iron Fly.

When JNJ traded right on $101, few moments ago, I did a Iron Fly on it. It is 96/101 + 101/106 for $2.46 credit. Max loss on this is $5.00 minus credit received, i.e. $2.54... My profit zone is about 98.50 - 103.50, so JNJ has to stay there in order for this Iron Fly to profit.
Hope is dangerous in this game.
  • #5,360
  • Oct 13, 2014 12:15pm Oct 13, 2014 12:15pm
Quoting The Fool
{quote} did that when PBR was $17.05 or so, it's at $17.26 now. If I had legged in, I would have been able to get in the spread for less, maybe a credit. BUT, if I enter the spread - both legs at the same time - my margin is much less & I can get in a larger position...I did the latter.
Exactly. Not to mention that price can reverse and you can possibly pay more than you wanted.
Hope is dangerous in this game.
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