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Let's Trade Options

  • #5,441
  • Oct 16, 2014 8:29am Oct 16, 2014 8:29am
Quoting The Fool
Quiz for novice options traders: IWM held its own in selloff day, actually gained $2.40 on the day. I'm in a Nov/Dec put spread, $96 short/$103 long. I have been waiting to buy back the $96 puts and sell another leg at something closer to the $103's. The Dec $103 puts lost $0.15 today, but the Nov $96 puts, $7 further otm, gained $0.03. Why? {image}
I think rising IV did that, usually further OTM option would be less sensitive to price changes of U/L, but it also has higher IV, that now got even more higher?
Hope is dangerous in this game.
  • #5,442
  • Oct 16, 2014 8:51am Oct 16, 2014 8:51am
For non-directional selling premium tactics - AXP and BAC didn't move so far, there would be profitable trades, I have numbers for AXP Iron Fly 76/80 + 80/84... nice. EBAY would be doable with Iron Condor. And NFLX would be a total loss on non-directional selling premium tactics.

Note to myself: avoid those kind of stocks for non-directional ER's trades. You got lucky last time on NFLX. They sometimes do not move much, these crazy stocks... Like YUM this turn, didn't move at all. Stay with the big numbers. The ones that usually move much and the ones that don't.
Hope is dangerous in this game.
  • #5,443
  • Oct 16, 2014 9:00am Oct 16, 2014 9:00am
hi all ,
options is a good choice to lose your money.
why, because the options brokers have the upper hand on the chart ou are monitoering for our trade and at the same time it depends on the last second as have tried options with few brokers and i have opened the same hourly trades by mt4 on my regulated broker to compare apple to apple and the pointer in most of the times was to lose the trade by options while my mt4 trade is a wining at the same closing time.

i have read many articles about options and non of them have pointed to proceed .......all are going to say " it is a way of gambling !! "

so i am out - pals ----- no options with such brokers.....................again it might be great system ( options ) but for sure it is not for me..
GUYS BE AWARE FROM HUNTING YOUR STOP LOSSES BY YOUR BROKER & BY "GHOSTS"
  • #5,444
  • Oct 16, 2014 9:01am Oct 16, 2014 9:01am
Quoting StrayDog
{quote} I think rising IV did that, usually further OTM option would be less sensitive to price changes of U/L, but it also has higher IV, that now got even more higher?
yes, confusing...need iv to drop so I can roll up the $96 short put....
Attached Image (click to enlarge)
Click to Enlarge Name: 2014-10-16_IWM.png Size: 8 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,445
  • Oct 16, 2014 9:57am Oct 16, 2014 9:57am
Quoting The Fool
{quote} yes, confusing...need iv to drop so I can roll up the $96 short put.... {image}
Well, rolled up IWM Nov $96 to Nov $103 put for $2.20 credit, so now I have a Nov/Dec $103 calendar, I have to trace back thru the various rolls on this one but I think I'm making money.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,446
  • Oct 16, 2014 10:00am Oct 16, 2014 10:00am
Little study of how rising VIX influence the price of SPY options

In this example I will use SPY Iron Condor that I had before, with 2 other IC from today. All 3 of them have $3 wide spreads.
In all examples we have 43 DTE.
This will show difference of credit received for Iron Condor and Short Strangle when IVR and VIX rise.


SPY Iron Condor 1. Price is on the pic, SPY @ 192.20, Oct 10
Attached Image (click to enlarge)
Click to Enlarge Name: spy-ic1.png Size: 49 KB


SPY Iron Condor 2. SPY @ ~185 Oct 16. Same distances from short strikes to the price like in previous example.
IVR jumped from 69 to 100, and VIX jumped 40%, from 20 to 28.
Notice how credit for IC is up 51% (from $0.76 to $1.15) - off course as VIX jumped, bid/ask spread are also increased, so credit could be $0.05 lower/higher.
POP for Iron Condor is LOWER, because Volatility is higher.
Short Strangle credit jumped 83%, from $2.30 to $4.20...
Attached Image (click to enlarge)
Click to Enlarge Name: spy-ic2.png Size: 48 KB


SPY Iron Condor 3. SPY @ ~185 Oct 16.
In this one I am mimicking the POP for Iron Condor from the first one, and PROB OTM. Notice that difference from the short strikes in first example is $19, and in this one, in order to get same POP, it is $23.50.
SPY price, IVR, VIX, Date, everthing the same like No. 2.
And again, due to higher VIX, we have higher credit received for both Iron Condor and Short Strangle, than in first example.
Attached Image (click to enlarge)
Click to Enlarge Name: spy-ic3.png Size: 48 KB
Hope is dangerous in this game.
  • #5,447
  • Oct 16, 2014 10:23am Oct 16, 2014 10:23am
Quoting Samer1970
hi all , options is a good choice to lose your money. why, because the options brokers have the upper hand on the c....
You are obviously speaking of binary options, which NOBODY on this thread trades.
Hope is dangerous in this game.
  • #5,448
  • Oct 16, 2014 12:25pm Oct 16, 2014 12:25pm
Last night, I was thinking for hours about how IV influence option prices... made that little "study"... and now watched a video from tastytrade about the same exact thing! They compared credit received for Iron Condors and Short Strangles on IWM, QQQ and SPY - same prices of U/L but different IV and IV rank.

Pumpedkin Spice Premium | Rich Options 10/15/2014 (skip the first 6.5 minutes of chit-chat )

When selling premium, we always want to take advantage of high Implied Volatility (IV) and high IV Rank. This allows us to get further away from the at the money strikes for the same amount of credit or collect a larger amount of credit if we want to use the same strikes. This is most clear when we are trading naked options such as a Strangle but can also be seen when trading spreads. Since smaller accounts are unable to trade naked options, Tom Sosnoff and Tony Battista highlight the importance of a high IV Rank using spreads. Today, the guys show you the amount of credit that you can receive when an underlying is at the same price, with approximately the same days until expiration and the only difference being IV and IV Rank. They clearly show why waiting for high IV is better whether you are trading naked options or using spreads to define your risk!
Hope is dangerous in this game.
  • #5,449
  • Oct 16, 2014 12:34pm Oct 16, 2014 12:34pm
Quoting Samer1970
hi all , options is a good choice to lose your money. why, because the options brokers have the upper hand on the chart ou are monitoering for our trade and at the same time it depends on the last second as have tried options with few brokers and i have opened the same hourly trades by mt4 on my regulated broker to compare apple to apple and the pointer in most of the times was to lose the trade by options while my mt4 trade is a wining at the same closing time. i have read many articles about options and non of them have pointed to proceed .......all...
Some people on this forum actual make a living from trading options....Good luck with whatever you move on to....
  • #5,450
  • Oct 16, 2014 12:38pm Oct 16, 2014 12:38pm
Quoting StrayDog
Last night, I was thinking for hours about how IV influence option prices... made that little "study"... and now watched a video from tastytrade about the same exact thing! They compared credit received for Iron Condors and Short Strangles on IWM, QQQ and SPY - same prices of U/L but different IV and IV rank. Pumpedkin Spice Premium | Rich Options 10/15/2014 (skip the...
Hey SD - Yup, this high vol environment is great for selling options. This year has been a bit of a struggle to find some decent vol and premium. However, now that vol is higher, the premium even as far out at 2 sigma or 2.5 sigma is very reasonable. I guess you have also seen the various MM studies done by the TT team that show the p/l on 1 sigma and 2 sigma when vol is high - if not, they are worth a watch to see how profitable this can be based on number of occurrences, etc,etc...
  • #5,451
  • Oct 16, 2014 1:12pm Oct 16, 2014 1:12pm
Quoting njr
....... I guess you have also seen the various MM studies done by the TT team that show the p/l on 1 sigma and 2 sigma when vol is high - if not, they are worth a watch to see how profitable this can be based on number of occurrences, etc,etc......
Yeah, I watch minimum 5 of those videos per day, excellent data base.

Quoting The Fool
{quote} Will NFLX point the way on GOOGL, AAPL, YHOO, AMZN...? I'm looking for a dip to buy in YHOO.
Hey TF, I was thinking the same, YHOO is holding very good compared to other internet stocks...

Their site - not so much...
Attached Image


What?
Say what again!!!
Hope is dangerous in this game.
  • #5,452
  • Oct 16, 2014 2:55pm Oct 16, 2014 2:55pm
Quoting StrayDog
Hey TF, I was thinking the same, YHOO is holding very good compared to other internet stocks...
They are sitting on too much cash not to be a buyout target - when the markets heat up again. Won't be long. QE4 on the way.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,453
  • Edited Oct 17, 2014 6:41am Oct 16, 2014 3:26pm | Edited Oct 17, 2014 6:41am
The Russell (IWM) has held up well under the last days of stress tests - looks to have found a bottom around $104. In getting down there it just gave up the last 13-months gains. Who else has been beat down hard and might catch a strong bounce unto the end of the year?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,454
  • Oct 16, 2014 10:15pm Oct 16, 2014 10:15pm
fuck ebola
Attached Image (click to enlarge)
Click to Enlarge Name: 2014-10-16_ebola.png Size: 97 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,455
  • Oct 16, 2014 10:57pm Oct 16, 2014 10:57pm
YHOO Nov $35/$30 bull put spread gets $0.60
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,456
  • Edited 11:46pm Oct 16, 2014 11:21pm | Edited 11:46pm
EWZ i.v. still apeshit. 10/31 / 11/22 $54/$55 bear call runs $0.10 debit; $54/$56 is $0.00

Same dates bull put $38/$37 runs $0.11 debit; $38/$36 is $0.07 credit

Wonder what i.v. will do next week? Dilma dizzy spell at tonight's debate may seal the deal for Neves...
Attached Image (click to enlarge)
Click to Enlarge Name: 2014-10-16_ewz.png Size: 87 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,457
  • Oct 17, 2014 6:32am Oct 17, 2014 6:32am
http://www.businessweek.com/news/201...qe-taper-delay

" U.S. policy makers “have a clear card we can play,” Bullard said. “We can delay the tapering program” which would put off an interest-rate increase as well. “That would change the entire timing of the exit program.” "

Bullard's jawboning calls a halt to the deflationary freefall. Yellen on tap in an hour or so & we'll see if she continues the call. The next FOMC is just a couple weeks away (10/29). That's the Oct meeting where the Fed has been expected to announce the end of the taper, the end of QE3, the punchbowl....omg...finally empty. Right before the elections? Right before the Great Pumpkin comes? right before Turkey Day and Xmas? Do you really think the Fed will kill Santa Claus?

Not me. But we'll see. Markets catch a whiff of more punch & watch them run (up). If the Fed pulls the plug on what remains of QE3 on 10/29...oh shit...look out below.
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,458
  • Oct 17, 2014 6:40am Oct 17, 2014 6:40am
Quoting The Fool
Right before the elections? Right before the Great Pumpkin comes? right before Turkey Day and Xmas? Do you really think the Fed will kill Santa Claus? Not me. But we'll see...
Of course, this 10/29 end date for QE3 was planned all along, so the Fed could hold up/reverse, stoke a Santa Claus rally and stuff a hoho in the yap of the teaparty republicans.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,459
  • Oct 17, 2014 10:04am Oct 17, 2014 10:04am
Quoting The Fool
........ That's the Oct meeting where the Fed has been expected to announce the end of the taper, the end of QE3, the punchbowl....omg...finally empty. Right before the elections? Right before the Great Pumpkin comes? right before Turkey Day and Xmas? Do you really think the Fed will kill Santa Claus? .....
Yep. Imagine some chap explaining his son that Santa Claus does not exists, just because he lost all of his money buying the top of stock market on margin, and therefore can't buy him presents? I don't think so. There must be at least a pullback up for Christmas.

Example of NO ER's play for me is this stock... what a bid/ask spread, (like UVXY)... you can't get out of position.

Attached Image (click to enlarge)
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Hope is dangerous in this game.
  • #5,460
  • Oct 17, 2014 10:13am Oct 17, 2014 10:13am
Quoting The Fool
EWZ i.v. still apeshit. 10/31 / 11/22 $54/$55 bear call runs $0.10 debit; $54/$56 is $0.00 Same dates bull put $38/$37 runs $0.11 debit; $38/$36 is $0.07 credit Wonder what i.v. will do next week? Dilma dizzy spell at tonight's debate may seal the deal for Neves... {image}
I did a 10/31 / Nov $54/$56 call spread for $0.08 credit
"If The Fool persists in his Folly he will become wise." - William Blake
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