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Let's Trade Options

  • #5,961
  • Nov 19, 2014 8:17pm Nov 19, 2014 8:17pm
Quoting The Fool
I might do a Dec $11/Apr $13 call diagonal spread ($.23/$.38) it gets on for a $0.15 debit. After the Dec expiry I'd hope to spread again, depending on where PBR is.... the trade b/e between $8.80 and $11.75 at expiry. You could close it for max P=$0.35 if it is near $10.80 at expiry.
If you want to try to catch a December slump in PBR, the Dec/Jan $7 put calendar gets put on for $0.08 debit, no additional margin. It b/e at $8.75 and $5.75 with a max P of $0.31 at $7.00....put the two trades together in a combo for $0.23 debit....
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,962
  • Nov 19, 2014 11:19pm Nov 19, 2014 11:19pm
Quoting StrayDog
Exactly that is my personal MAIN takeaway from my own trading. Yesterday I watched a tt video about delta and theta efficiency, and really no matter how you trade selling premium, spreads or naked, or combos or whatever, it must be efficient. For example - you see a far OTM option on AMZN, witch has 95% chance for expiring OTM... is is about $0.50... Is that really a efficient trade for me? Well hell no, because margin req is way to high for that - 3x higher than that BABA strangle for $2.07 credit I did. So I have learned to wage all that. I........
I am glad you're getting that, SDog, it is slowly getting engrained in me, too. That's a crucial step, too. You can line up dozens & hundreds of trades that might work but the key is balancing risk/reward with efficient margin utilization to enter the best ones.

I keep looking at calendars for their easy margin requirements and will try to leg into them for best result, or use them set up 1-month front 3-months back to plan subsequent spreads. Getting in a calendar cheap on something that promises to move well is a gift. I am still p.o.'d about my EWZ calendars, as I have said I am notoriously unlucky...however those moved to about b/e today as EWZ came up near $41.

Also I am getting away from credit spreads, same old story - been hurt too many times by the one out of 5-10 that blows by me & I close too late & give back way too much gains. I would rather play longer odds with debit spreads and keep my a$$ from getting shot off...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,963
  • Nov 20, 2014 1:26am Nov 20, 2014 1:26am
AAPL $110/$120 Dec/Jan DC is safe between $108 and $122.65. Nice profit range, no margin hit, but expensive to put on - $2.08 net debit w/ max P = $0.58 or $0.75. Poor r/r....
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,964
  • Edited 2:55am Nov 20, 2014 2:24am | Edited 2:55am
I discovered something I like about butterflies: watch the video on the AAPL fly as I click from present day to expiry day - note the downside break-even level. The b/e on the downside never really overshoots by much, i.e., if you set a stop loss at the expiry b/e ($109.75) on the downside, you are never very deeply in loss during the life of the trade - about -$0.10 at the most. No risk of loss for AAPL move to the upside. AAPL next ER is last week of Jan (after Jan monthly opex).

http://screencast.com/t/rXMTlTCrv1

...let me know if you can view the vid in the link, thanks.
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,965
  • Nov 20, 2014 5:50am Nov 20, 2014 5:50am
Quoting The Fool
{quote} I am glad you're getting that, SDog, it is slowly getting engrained in me, too. That's a crucial step, too. You can line up dozens & hundreds of trades that might work but the key is balancing risk/reward with efficient margin utilization to enter the best ones. ...
Yes, exactly. Especially for small(ish) accounts.

Quoting The Fool
I discovered something I like about butterflies: watch the video on the AAPL fly as I click from present day to expiry day - note the downside break-even level. The b/e on the downside never really overshoots by much, i.e., if you set a stop loss at the expiry b/e ($109.75) on the downside, you are never very deeply in loss during the life of the trade - about -$0.10 at the most. No risk of loss for AAPL move to the upside. AAPL next ER is last week of Jan (after Jan monthly opex). http://screencast.com/t/rXMTlTCrv1 ...let me know if...
I can see the video... Broken Wing Butterfly eh... will look at it later again.
Hope is dangerous in this game.
  • #5,966
  • Nov 20, 2014 1:06pm Nov 20, 2014 1:06pm
I have noticed that sometimes dough and IB differs significantly when calculating POP - Probability of profit, especially when options are close to expiration...

In this example is ADSK Nov 52.5 / 65 short strangle... I can see there is some volume already on that combo, for $0.52 - $0.58 credit...

dough gives only 53% POP, but both options has 82-84% expiry OTM :nerd:

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While IB gives 84% Profit probability...

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Hope is dangerous in this game.
  • #5,967
  • Nov 20, 2014 1:55pm Nov 20, 2014 1:55pm
I looked at GME, ADSK, GPS, SPLK and FL for earnings plays... I liked only GME and ADSK. I was not quick enough to enter that ADSK trade above.

I only did a GME Nov 37 / 51 short strangle for $0.55 credit, when U/L was trading at $44.08.
GME have IVR of 100, with estimated move about $4.2 or up to 10%. My short strikes are $7 wide on each side, plus/minus 16%...

Add-on: Margin req for me is few bucks less than $500, that is why I did the trade, OK margin/credit for 16% away strikes on relatively cheap stock.

I didn't found much big moves in the past except in Aug 2013 - plus 13.3% at open...

Game on! Traders bet on massive GameStop move

In this article and video, E.M. is 11%, double of historical average...
Hope is dangerous in this game.
  • #5,968
  • Nov 20, 2014 2:02pm Nov 20, 2014 2:02pm
Trades I'm considering for end of week expiration only, GDX and HAL straddles and if FB looks to close under $74 then its puts for me

GDX is trading at $19.78 so will look for the nearest strike on both sides for 5c or below, straddle

HAL is trading at $49.19 and again will look for the nearest strike that's under 8c on both sides, straddle

FB is trading $73.52 so as long as its under 74 so will take the put side on this

Market Vectors Gold Miners ETF (GDX)
-NYSEArca
19.78 https://s.yimg.com/lq/i/us/fi/03rd/up_g.gif 0.59(3.08%) 19:55 - Nasdaq Real Time Price

Halliburton Company (HAL)
-NYSE
49.19 https://s.yimg.com/lq/i/us/fi/03rd/up_g.gif 0.76(1.57%) 19:57 - Nasdaq Real Time Price

Facebook, Inc. (FB)
-NasdaqGS
73.52 https://s.yimg.com/lq/i/us/fi/03rd/up_g.gif 0.19(0.26%) 8:00PM GMT - Nasdaq Real Time Price
  • #5,969
  • Nov 20, 2014 9:41pm Nov 20, 2014 9:41pm
http://www.cnbc.com/id/102199614#.

"On Tuesday, one firm executed a complex, multimillion-dollar trade that will profit if the GDX is between $21.25 and $26 at the beginning of 2016....The specifics of this trade shed a bit more light on the trader's thesis. The trader bought 39,000 January 2016 20/26 call spreads for $1.75 per share or $6.6 million in total, and financed that trade by selling 13,000 January 2016 13-strike puts for $0.8 million and 26,000 January 2016 12-strike puts for $1.3 million.

If the GDX is still between $13 and $21.25 come January 2016, then the trader will lose the $4.5 million they paid. The trader's maximum profit is $19 million, and that is enjoyed if the GDX rises to or above $26. In the unlikely scenario that the GDX falls below $13, the trader will be obligated to buy the GDX at that level, and buy more at $12 if it falls below there. (This means that the trade technically risks $52.5 million dollars, as the trader will see additional losses of $48 million if the GDX falls to 0.)"
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,970
  • Nov 21, 2014 8:02am Nov 21, 2014 8:02am
Quoting The Fool
PBR might hit major turbulence in December when they finally release their Q3 ER. I expect they will survive and shares will trade above $20 again when the oil price comes back. As always, the big question is: when will that be? I might do a Dec $11/Apr $13 call diagonal spread ($.23/$.38) it gets on for a $0.15 debit. After the Dec expiry I'd hope to spread again, depending on where PBR is.... the trade b/e between $8.80 and $11.75 at expiry. You could close it for max P=$0.35 if it is near $10.80 at expiry.
I took a chance yesterday on PBR and legged into the PBR Apr $14 calls, paid $0.29. Now the PBOC juices equity markets with a rate cut and PBR looks to trade above $10 today. People are talking about a short squeeze possible for Brazilian stocks, but I'm doubtful - there is a steady stream of bad news still coming out, need some good news and resolution to scandal issues. But I will be looking to sell a Dec or Jan $13 or $14 call today if PBR can make a good move up above $10...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,971
  • Nov 21, 2014 8:31am Nov 21, 2014 8:31am
Quoting The Fool
{quote} I bought/closed UVXY Nov $20.50 puts here right before the minutes. Would've been my luck for SnP to rocket up to another new high on dovish Fed - and what else can one expect?....anyway, got $0.25 out of $0.36 possible against the $0.03 lost on the $17 Nov puts, which are still there and could be spread on again, I suppose, in a fit of stupidity...
One of a short list of good trades I made this week, with UVXY making new lows today and maybe dipping below $20.50. Not gonna pay to be long vol with war on deflation QE-forever onslaught from CB's everywhere in effect
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,972
  • Nov 21, 2014 8:39am Nov 21, 2014 8:39am
Quoting StrayDog
....... I only did a GME Nov 37 / 51 short strangle for $0.55 credit, when U/L was trading at $44.08...
Closed puts for $0.13, and since GME is trading now bellow $39, I will leave calls to expire worthless - they are 30% away from the current price.
So a nice win this time, I consider that closed for $0.13.

Even better was ADSK trade idea, but I was too late, they started to widen bid/ask spreads...
Hope is dangerous in this game.
  • #5,973
  • Nov 21, 2014 8:54am Nov 21, 2014 8:54am
Quoting The Fool
One of a short list of good trades I made this week........
That SPY Nov 207/207.5 debit spread is kicking ass today.
Hope is dangerous in this game.
  • #5,974
  • Nov 21, 2014 10:55am Nov 21, 2014 10:55am
Quoting StrayDog
{quote} That SPY Nov 207/207.5 debit spread is kicking ass today.
not quite, but I made a little, SPY was too late getting up and didn't go far enough. Win washed against the $201.5/$201 m/l

I have a Dec/Jan SPY $213/$214 debit spread that I had been thinking looked kinda dumb but now I'm not so sure. I think the next hope for the bears is the Dec FOMC, >3 weeks away, maybe they shake things up with the old rate hike booger
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,975
  • Nov 21, 2014 10:58am Nov 21, 2014 10:58am
Quoting The Fool
{quote} I took a chance yesterday on PBR and legged into the PBR Apr $14 calls, paid $0.29. Now the PBOC juices equity markets with a rate cut and PBR looks to trade above $10 today. People are talking about a short squeeze possible for Brazilian stocks, but I'm doubtful - there is a steady stream of bad news still coming out, need some good news and resolution to scandal issues. But I will be looking to sell a Dec or Jan $13 or $14 call today if PBR can make a good move up above $10...
I sold Jan $14 calls for $0.14 today, now in Jan/Apr $14 calendar for $0.15 debit. My EWZ calendars are looking better, I just need a lucky streak and EWZ run up >$45 soon...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,976
  • Nov 21, 2014 1:27pm Nov 21, 2014 1:27pm
Quoting The Fool
{quote} I sold Jan $14 calls for $0.14 today, now in Jan/Apr $14 calendar for $0.15 debit. My EWZ calendars are looking better, I just need a lucky streak and EWZ run up >$45 soon...
Holy Moly, I shoulda waited, PBR up 12%, short squeeze I doubted but it came through....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,977
  • Nov 21, 2014 1:47pm Nov 21, 2014 1:47pm
Quoting The Fool
{quote} Holy Moly, I shoulda waited, PBR up 12%, short squeeze I doubted but it came through....
That is one crazy mofo...

Attached Image


Talk about gamma risk... this was buy of the day.
Hope is dangerous in this game.
  • #5,978
  • Nov 21, 2014 2:08pm Nov 21, 2014 2:08pm
Brazil big trading partner of China, PBOC rate cut happy news for Brazil. Also, news leaking out Rousseff is naming a new Finance Minister, someone that the markets approve of. All my Nov/Jan calendars are in dope profits today. $47's and $48's are in 4-figure gains, $49's almost there, $50's and up let's hope. I'll hold til next week and see if I can get some more love.

I have time ...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,979
  • Nov 21, 2014 2:27pm Nov 21, 2014 2:27pm
Quoting The Fool
....... All my Nov/Jan calendars are in dope profits today. ....
excellent!
Hope is dangerous in this game.
  • #5,980
  • Edited Nov 22, 2014 9:51am Nov 21, 2014 10:50pm | Edited Nov 22, 2014 9:51am
my trading job this weekend is to learn all about butterfly spreads. I need strategies I can use to put on defined-risk trades in various scenarios, trades that I can walk away from for days or weeks but that can still make good returns. I have been dabbling with various fly trade setups as I suspect some of them can meet the latter requirements...

thank you, tastytrade

https://www.tastytrade.com/tt/learn/...d?locale=en-US

The ladies show how to think of getting into a BWB by looking at the ratio spreads first. They look for credit, saying they want to get paid to take on the downside risk. I say: just be fully aware of what/where/when that risk is (it's large) and have a plan about how you get out of the trade if you have to face that risk.

play a call BWB when you think your ul is topping, setting up to range (?) (I'm not saying that about GLD...)
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"If The Fool persists in his Folly he will become wise." - William Blake
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