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Let's Trade Options

  • #5,381
  • Oct 14, 2014 11:35pm Oct 14, 2014 11:35pm
Quoting stylinex
{quote} Are you looking at US oil? I think it will sit or stick at around $80
right, WTI, well yes, that's a nice round number. One reads a lot about the slump being the result of Saudi manipulation, they want to force the marginal producers out of the market, or they have a deal with the US to put the squeeze on Putin.

In the former case I have seen $76 suggested as a lower limit for acceptable profitability for the oil sands producers, not sure about the others - frackers & deep sea drillers, etc. At any rate, if any of the above be true, then they're not there yet & we can see sub $80.

No complaints here, I paid $3.15 at the pump today, lowest I've seen in a long time...

Are you trading oil futures, or what...?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,382
  • Oct 15, 2014 7:09am Oct 15, 2014 7:09am
Somewhere near the open I'm looking for a long put on AAPL. I'm looking to long a $98 put for under 30c if I can get it, if not I'll wait, yesterdays closing price was 77c ans appl closed 98.75, Earnings out Monday

AAPL Oct 2014 98.000 put (AAPL141018P00098000)
-OPR
0.77 https://s.yimg.com/lq/i/us/fi/03rd/up_g.gif 0.16(26.23%) 14 Oct 20:59

Apple Inc. (AAPL)
-NasdaqGS
98.75 1.06(1.06%) 14 Oct 21:15
|Pre-Market : 99.13 https://s.yimg.com/os/mit/media/m/ba...nt-1093278.png 0.38 (0.38%) 13:05 - Nasdaq Real Time Price
  • #5,383
  • Oct 15, 2014 8:17am Oct 15, 2014 8:17am
Quoting The Fool
At close I did a SPY Nov $197/$200 bear call spread for $0.51 credit, was afraid to go for the put side of an IC, will be watching, S&P may want 1,800, we'll see...
put side of SPY IC perhaps today
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,384
  • Oct 15, 2014 8:22am Oct 15, 2014 8:22am
Quoting The Fool
{quote} right, WTI, well yes, that's a nice round number. One reads a lot about the slump being the result of Saudi manipulation, they want to force the marginal producers out of the market, or they have a deal with the US to put the squeeze on Putin. In the former case I have seen $76 suggested as a lower limit for acceptable profitability for the oil sands producers, not sure about the others - frackers & deep sea drillers, etc. At any rate, if any of the above be true, then they're not there yet & we can see sub $80. No complaints...
I have been watching it on my Forex. I wish I was as it would have been great money shorting it from $100 to $80. I would be rich now
  • #5,385
  • Oct 15, 2014 8:29am Oct 15, 2014 8:29am
Quoting The Fool
I don't usually get diagonal spreads to do exactly what I want them to - more than 1/2 the time I end up rolling or closing before the front month expiry. But my Oct/Nov VALE diag call spread is looking good. I sold the $12.50 calls / bought the $13 calls on 9/23 for a $0.044 net debit, Oct calls look to have a good chance of expiring worthless. If VALE can rise into $12.xx next week the $13 calls will go over $0.20 and I might score a 5 bagger. I will take it if that happens, will probably close out b4 the runoff regardless. {image}
Perfect! So, now it is doubled, right (not including commissions) ?
Hope is dangerous in this game.
  • #5,386
  • Oct 15, 2014 8:45am Oct 15, 2014 8:45am
INTC

Intel's Q3 net income rose 12% to $3.3B as revenue grew 7.9% to $14.55B, helped by a surprisingly pleasing 15% increase in unit sales of PC chips. Sales of microprocessors and other products for notebook computers jumped 21%. Intel's (NASDAQ:INTC) revenue beat consensus, as did EPS of $0.66, while the company also gave Q4 sales guidance that topped forecasts as well.

So, all good and then Morgan Stanley downgrades it? And falling market drives it down...
Hope is dangerous in this game.
  • #5,387
  • Oct 15, 2014 9:00am Oct 15, 2014 9:00am
Quoting The Fool
{quote} put side of SPY IC perhaps today
missed my chance, SPY was down to $183.xx near the open....but I looked down puts <$165 and i.v. had ballooned, even a $5 spread was not paying well, may be better to wait or look elsewhere...

Need coffee....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,388
  • Oct 15, 2014 9:16am Oct 15, 2014 9:16am
Quoting StrayDog
{quote} Perfect! So, now it is doubled, right (not including commissions) ?
VALE short puts will expire worthless Friday & I'll be sitting on Nov $13 long puts at a $0.044 debit & they will worth around $0.12, so a little better than double. But I'd guess they have a chance of moving up next week, so I will wait & see...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,389
  • Oct 15, 2014 9:21am Oct 15, 2014 9:21am
wicked shakeout at the open....will they do it again?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,390
  • Oct 15, 2014 9:22am Oct 15, 2014 9:22am
Quoting The Fool
{quote} VALE short puts will expire worthless Friday & I'll be sitting on Nov $13 long puts at a $0.044 debit & they will worth around $0.12, so a little better than double. But I'd guess they have a chance of moving up next week, so I will wait & see...
calls, I mean...sorry...where's that coffee?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,391
  • Oct 15, 2014 9:30am Oct 15, 2014 9:30am
Quoting The Fool
...but I looked down puts <$165 and i.v. had ballooned, even a $5 spread was not paying well, may be better to wait or look elsewhere...
Yep, high VIX pumped the prices of options, more puts than calls, but it does not make much of a difference when trading spreads.
You can get $0.5 credit on some spread the same way with short 2$ option and long $1.50 option AND with short $10 option and long $9.50 option...
For selling single options, or strangles, or straddles it does make a huge difference.

Interesting comparison of option prices, from yesterdays email I got
TP SAYS
You want to know what VIX over 20 means? Back on April 21, 2014 when the SPX was roughly the same price it is now (1871 vs 1874), the VIX was 13.25. On that day, the SPX options had the same number of days to expiry as they did yesterday, so it makes this analysis easier. The SPX puts that were 10% OTM and had 32 days to expiry were $1.80 with the VIX at 13.25. They’re $10 with the VIX at 24. The 10% OTM calls were less than $.10 with the VIX at 13.25. They’re $.35 now. The difference in the puts is more dramatic than in the calls because of a steeper skew. But the point is that the richer prices are why we love high vol when we sell options. I don’t care if you’re bullish, bearish or neutral. If you’re a premium seller, now is the time to step up your trading activity. The VIX tends to be mean reverting, and could drop right back down in a few days taking option premium with it.
Hope is dangerous in this game.
  • #5,392
  • Oct 15, 2014 9:47am Oct 15, 2014 9:47am
Quoting StrayDog
{quote} Yep, high VIX pumped the prices of options, more puts than calls, but it does not make much of a difference when trading spreads.
not what I saw, lower strikes were elevated and a $5 spread was not paying enough - anyway, looking again - Nov SPY $170/$165 puts gets about $0.50, would rather get that for $3....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,393
  • Oct 15, 2014 10:14am Oct 15, 2014 10:14am
Maybe my coffee is no good.

Anyways, I am using the time to filter stocks and their options for future ER's plays. I am dividing them to 3 categories, and all of them are for defined risk strategies, no matter if they are buying or selling premium. I started on last ER's cycle and it will be finished with the end of this one. I look at bigger companies, stocks that I traded in the past, etc... On my list:
1) options of stocks that often move a lot (22 so far)
2) options of stocks that are likely to stay in their estimated move (38 so far)
3) no good options (like strikes on every $5, non-liquid, only monthlies etc... off course, most of them hard core sellers with large accounts and short strangles or straddles can do... (30 so far) )

Looking to increase number of chances, and in time I will switch like you on most liquid stuff for regular trading. Also I am very interested in futures options. Many months ago I traded DAX futures options, just long puts or calls, and I think futures options in general pays better to sell, compared to equities options. Will continue reading that book that njr recommended, I read more than one half so far.
Hope is dangerous in this game.
  • #5,394
  • Oct 15, 2014 10:35am Oct 15, 2014 10:35am
Quoting StrayDog
Looking to increase number of chances, and in time I will switch like you on most liquid stuff for regular trading. Also I am very interested in futures options. Many months ago I traded DAX futures options, just long puts or calls, and I think futures options in general pays better to sell, compared to equities options. Will continue reading that book that njr recommended, I read more than one half so far.
Sounds good - futures have better liquidity, tighter spreads, I want to head there myself, still climbing the learning curve.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,395
  • Oct 15, 2014 10:49am Oct 15, 2014 10:49am
Quoting The Fool
{quote} Sounds good - futures have better liquidity, tighter spreads, I want to head there myself, still climbing the learning curve.
That learning curve... as I said, my first option trades was just going long something... VIX call options, then some calls on EEM, calls/puts on indices ETFs... long straddles for ER's (I didn't even know about strangles). I didn't know anything about IV, or any of the greeks. I got lucky a few times, and burned also...

So I start reading about the spreads, it was about verticals, and I didn't understand a thing! I was just so confused... sell one, buy one... wtf I started to kick the book all around the room... . I learned 3 x more in the past 3 months than in all last year. I made so many mistakes - like adjusting something that do not need adjustments, closing naked options out of fear that would be winners, planed good trades that I didn't trade, poor closing... that I really wonder how come my account is still positive...
Hope is dangerous in this game.
  • #5,396
  • Oct 15, 2014 11:23am Oct 15, 2014 11:23am
Quoting The Fool
anyway, looking again - Nov SPY $170/$165 puts gets about $0.50, would rather get that for $3....
got filled at $0.60 credit. SPY $170 would wipe out all SPY gains for the last year...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,397
  • Oct 15, 2014 11:28am Oct 15, 2014 11:28am
Quoting StrayDog
{quote} Yep, high VIX pumped the prices of options, more puts than calls, but it does not make much of a difference when trading spreads. You can get $0.5 credit on some spread the same way with short 2$ option and long $1.50 option AND with short $10 option and long $9.50 option... For selling single options, or strangles, or straddles it does make a huge difference. Interesting comparison of option prices, from yesterdays email I got TP SAYS You want to know what VIX over 20 means? Back on April 21, 2014 when the SPX was roughly the same price...
Pretty amazing how we have gone from the SPX at 2000 plus highs to where we are today. Premium is certainly much richer with VIX at 27.5. Money to be made.....
  • #5,398
  • Oct 15, 2014 11:32am Oct 15, 2014 11:32am
Quoting StrayDog
{quote} That learning curve... as I said, my first option trades was just going long something... VIX call options, then some calls on EEM, calls/puts on indices ETFs... long straddles for ER's (I didn't even know about strangles). I didn't know anything about IV, or any of the greeks. I got lucky a few times, and burned also... So I start reading about the spreads, it was about verticals, and I didn't understand a thing! I was just so confused... sell one, buy one... wtf I started to kick the book all around the room... . I learned 3 x more in...
I'm right there with ya on that steep hill, buddy. just in the last few months have the greeks started to sink into the soft inside of my cranium, but that process has far to go, still.

My big weakness still is trade management: I'll be doing well and making good money and then end up letting one trade get past me and lose too much on it and give back hard earned gains. But I am getting better. I learned a lot from tastytrade vids and these days I try to focus on not leaving anything hanging, close out or roll losers earlier than I used to, take profits more proactively, etc...I have never had a live person around to help me in any way with trading, but those guys on tastytrade are the next best thing.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,399
  • Oct 15, 2014 11:34am Oct 15, 2014 11:34am
Quoting njr
{quote} Pretty amazing how we have gone from the SPX at 2000 plus highs to where we are today. Premium is certainly much richer with VIX at 27.5. Money to be made.....
get it, dog. I hope you have thought about putting a ski hill on the yacht. wouldn't want you to get rusty.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,400
  • Oct 15, 2014 11:53am Oct 15, 2014 11:53am
Quoting The Fool
wicked shakeout at the open....will they do it again?
yes, yes they will. close could be epic...
"If The Fool persists in his Folly he will become wise." - William Blake
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