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Let's Trade Options

  • #5,901
  • Edited 6:35pm Nov 15, 2014 5:08pm | Edited 6:35pm
Quoting The Fool
We'll find out if the ToS P/L analyzer is accurate. The call diag I paid $0.02 for should be worth $0.76 on 11/18, fi the share price stays the same. If it moves up, more P. The put diag not as good, but still makes a small profit - maybe $0.10. No way will I hold this thru the ER... {image} {image} {image}
problem with what the analyzer indicates is the spreads in GMCR - they suck - $0.22/$0.55 on the $125 short put and $1.29/$1.64 on the $175 short call.....sucky spreads will eat the profit I may be due...I might lose money on the puts, in fact, as of Friday, my losses on the put side balanced out against the gains on the call side.

....so maybe I have to hold thru earnings and set some stop loss buy close orders at the b/e's...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,902
  • Edited 9:29pm Nov 15, 2014 7:39pm | Edited 9:29pm
http://www.optionseducation.org/stra...ar_spread.html (OIC site has good educational content)

http://www.optiontradingpedia.com/sh...ar_spreads.htm

... looking through the time and sales, sorting for calendar spreads for different stocks/etf's. I noticed that mostly short calendars are being traded. That's selling back month/buying front month, same strike, for net credit. You can see from a couple examples that this trade is put on in anticipation of a breakout, because max profit is retained when the underlying moves away from the calendar strike in either direction.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,903
  • Edited Nov 16, 2014 12:00am Nov 15, 2014 8:15pm | Edited Nov 16, 2014 12:00am
Quoting The Fool
You can see from a couple examples that this trade is put on in anticipation of a breakout
perhaps another way to trade ER's? One drawback is the high margin requirement for the cash-secured puts - that's why (I suppose) the position sizes I see are usually small, rarely see legs more than 50 contracts.

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"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,904
  • Nov 16, 2014 12:33am Nov 16, 2014 12:33am
SDog, not sure if you've seen this one - if you're into selling naked it looks like doing ratio spreads may be better.

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"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,905
  • Nov 16, 2014 12:49am Nov 16, 2014 12:49am
http://www.optionseducation.org/stra...ll_spread.html

OIC strategy summaries are excellent.

"
Summary

The initial cost to initiate this strategy is rather low, and may even earn a credit, but the upside potential is unlimited. The basic concept is for the total Delta of the two long calls to roughly equal the Delta of the single short call.

If the underlying stock only moves a little, the change in value of the option position will be limited. But if the stock rises enough to where the total Delta of the two long calls approaches 200, the strategy acts like a long stock position. "
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,906
  • Nov 16, 2014 10:08am Nov 16, 2014 10:08am
Operation Car Wash

http://www.ibtimes.com/biggest-corru...issued-1724340

I am the unluckiest trader that ever lived.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,907
  • Nov 16, 2014 10:41am Nov 16, 2014 10:41am
Quoting The Fool
SDog, not sure if you've seen this one - if you're into selling naked it looks like doing ratio spreads may be better. http://www.youtube.com/watch?v=xhmm2yQ22p4
I spent time modeling ratio spreads, not sure I see the advantage over simpler options plays. Considering a case where you "know" there's going to be a big move either way - let's say I "know" GLD is going to run up from $115 to $120 or higher in the next 3 weeks (Swiss "yes"). The ratio call spread is short the Dec $114 call (delta 0.54), 2x long the $119 call (delta 0.28) - gets put on for a $0.65 credit for $500/ea margin. P/L shows protection to the downside, true, but the trade is actually in loss from $114 to $123.36 at expiry. If GLD makes it above the $123.36 b/e, the gains are like "long stock" - i.e., +$1.00 for every $1.00 gain in the share price. Max loss is at $119 ($2.87). $114 to $123+ is almost a $100 pop in gold, if you didn't get all of that the ratio call spread would lose money, maybe a lot of money.
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  • #5,908
  • Nov 16, 2014 10:52am Nov 16, 2014 10:52am
If you think gold is gonna pop, a safer play is the vertical call spread below. Risk is only $20/ea, max P is $80, margin required: $0...safer and cheaper, what's not to love?
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  • #5,909
  • Edited 11:20am Nov 16, 2014 11:08am | Edited 11:20am
Quoting The Fool
If you think gold is gonna pop, a safer play is the vertical call spread below. Risk is only $20/ea, max P is $80, margin required: $0...safer and cheaper, what's not to love?
One might surmise that a floor is in for gold until the Swiss vote is done. I might safely finance the debit spread above with a Nov4 (expiry is pre-vote) put vertical spread for credit. I could ratio the put spread below 2:1 against the call debit spread for even money.

Anyway, this double vertical is at least one way I will trade GLD in the coming week.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,910
  • Nov 16, 2014 2:43pm Nov 16, 2014 2:43pm
Quoting The Fool
{quote} One might surmise that a floor is in for gold until the Swiss vote is done. I might safely finance the debit spread above with a Nov4 (expiry is pre-vote) put vertical spread for credit. I could ratio the put spread below 2:1 against the call debit spread for even money. Anyway, this double vertical is at least one way I will trade GLD in the coming week. {image}
If any of you can take a look at the quarterly USD$ chart, look back to 1999-2002 and check where the USD was, then check what price Gold was, we are in that transition of equilibrium of returning to prices before certain events that subsequently happened to change the economical balance, I would not be surprised to see $300 in GOLD, a lot lower than the $700-800 I mentioned over a year ago

below from post 132 from May 19 2013

Did some extensive work on GLD, Gold etc. I see GLD going deep deep, as monthlies are in play and broken down.
GLD has to get above 137.30 and stay above, if it can't then this can go well below $100 taking gold beyond the 1000$ level towards $707with a few bounces along the way. Sounds far fetched but benanke has 8 months left in office will he continue to pump money in sending equities higher and higher more $ strength. pull up a monthly chart in GLD and you will see
  • #5,911
  • Edited 3:51pm Nov 16, 2014 3:22pm | Edited 3:51pm
Hey CG. Fiber was under parity for much of that time. As of today, there's generally a deflationary monkey on world economy's back, and that's likely to sink gold further. I'm not sure if the Swiss repatriation vote has a chance, but if that flies I'm sure it could make things more interesting.
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  • #5,912
  • Nov 16, 2014 3:26pm Nov 16, 2014 3:26pm
bull market bearing down on Xmas looks unstoppable, but the below is the kind of obstacle that could slow/stop it. Throw in some bad news re: ISIS, riots in Ferguson, etc...nothing is guaranteed.

http://news.yahoo.com/republicans-we...-business.html
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,913
  • Nov 16, 2014 3:30pm Nov 16, 2014 3:30pm
Quoting The Fool
Hey CG. Fiber was under parity for much of that time. As of today, there's generally a deflationary monkey on world economy's back, and that's likely to sink gold further. I'm not sue if the Swiss repatriation vote has a chance, but if that flies I'm sure it could make things more interesting. {image}
thats why I'm not making a move until the swiss make up there minds, like that euro monthly chart. overlay a monthly gold and USD chart and see the coincidence
  • #5,914
  • Edited 8:57pm Nov 16, 2014 8:21pm | Edited 8:57pm
The end of Abenomics?

http://news.yahoo.com/third-quarter-...034827652.html
"Major media have reported that Abe will announce a snap election at a press conference on Tuesday, possibly for December 14."

I have family ties in Japan and I hear a lot about how unpopular Abenomics is among common people - the people that vote...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,915
  • Nov 17, 2014 1:43am Nov 17, 2014 1:43am
Quoting The Fool
{quote} problem with what the analyzer indicates is the spreads in GMCR - they suck - $0.22/$0.55 on the $125 short put and $1.29/$1.64 on the $175 short call.....sucky spreads will eat the profit I may be due...I might lose money on the puts, in fact, as of Friday, my losses on the put side balanced out against the gains on the call side. ....so maybe I have to hold thru earnings and set some stop loss buy close orders at the b/e's...
Usual problem is that ANY analyzer will calculate everything with ask price, not with median, not with what ever you get as a trader. It would be nice if you can manually enter the price you got for the combo.

Quoting The Fool
SDog, not sure if you've seen this one - if you're into selling naked it looks like doing ratio spreads may be better. http://www.youtube.com/watch?v=xhmm2yQ22p4
I am not sure either, definetely will look at it later, thanks bud. They usually do ratio spreads like 2 short and 1 long, in that way you have naked component and thus increased POP. I did that for YHOO, back in Sep, not on purpose, because I had bullish put spreads with extra naked short puts... and those were the exact strikes like those in put spreads, but I considered that as separate trades.
Hope is dangerous in this game.
  • #5,916
  • Nov 17, 2014 1:48am Nov 17, 2014 1:48am
Quoting The Fool
If you think gold is gonna pop, a safer play is the vertical call spread below. Risk is only $20/ea, max P is $80, margin required: $0...safer and cheaper, what's not to love? {image}
The thing I don't like with OTM debit spreads is that you really must have a continuing move in your direction to make money. A decisive move. If the price just slowly grinds in your direction, and IV drops on top of it, you may lose even if you are directionally right, if spread stays OTM.

Just thinking... I must read that stuff about Swiss and gold to be in the loop.
Hope is dangerous in this game.
  • #5,917
  • Edited 2:10am Nov 17, 2014 1:59am | Edited 2:10am
Quoting StrayDog
{quote} The thing I don't like with OTM debit spreads is that you really must have a continuing move in your direction to make money. A decisive move. If the price just slowly grinds in your direction, and IV drops on top of it, you may lose even if you are directionally right, if spread stays OTM. Just thinking... I must read that stuff about Swiss and gold to be in the loop.
Yep, that's true. You can try to fund your debit spread with a credit play (spread or naked) on the other end, but that is basically doubling down on your directional bias and you could end up losing twice as much if your bias was wrong...

Gold futures are flat, indices pointing to a gap down NY Monday. When I looked early in the Tokyo session /ES was down 13, not as much now. I am skeptical of any down move now, but I have positions that will pay if we get one, even better if we can get a nice >3% pullback. If we get some yakking in D.C. about shutting down the US govt, that'd probably do the trick all on its own.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,918
  • Nov 17, 2014 2:20am Nov 17, 2014 2:20am
Quoting StrayDog
I must read that stuff about Swiss and gold to be in the loop.
I am not enough of a gold trader to have a good feel for it. My hope is that the swiss vote would be a clear/strong binary event for gold - shoots up if yea, crashes if nay. Maybe not all that though. If we see njr maybe he will tell us what he thinks, I think he lives there.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,919
  • Nov 17, 2014 7:32am Nov 17, 2014 7:32am
Right, Wilbur, where else but equities?

http://finance.yahoo.com/video/marke...070000553.html
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,920
  • Nov 17, 2014 9:08am Nov 17, 2014 9:08am
Either you have to be very smart to understand these, or something is really wrong with these headlines... beats profit, which is halved... WTF
So, first they halved the profit, and than beat the s... out of it?

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Similar situation was with reporting for CSIQ ER's...
Everything is tabloid.
Hope is dangerous in this game.
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