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  • #5,981
  • Nov 22, 2014 10:12am Nov 22, 2014 10:12am
Well, with pretty much everyone but the US getting deeper in the QE/loose money business, I have to guess the USD is due for more strengthening. And I might have to bet that will nip the commod (oil n gold) rallies in the bud. So I am looking at gold n oil trades...

I see somebody got in this wide diag spread on XLE on Friday (x1,000). Looks like a bet that oil price will fall back in the next month but perhaps stage a rally into the Spring. A reasonable expectation based on seasonality. Not so sure about that rally, though. But the trade profits well if XLE goes to $89.50 at expiry (max P=$1.22) and is safe between $82 and $92, downside losses below b/e are small. Death slide on the upside, you'd have to be on guard against moves above $90.

I'll be watching this one for better entries and also look for cheaper debit, easier margin use...if the first spread worked out you could be set up well for subsequent time spreads.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,982
  • Edited 10:50am Nov 22, 2014 10:36am | Edited 10:50am
http://finance.yahoo.com/blogs/talki...234608384.html

So they be sayin gold $1,250 is the test. Lots going on in the gold trade and maybe too much: Swiss referendum, sovereigns repatriating/accumulating, ok, but no inflation, anti-deflation efforts (Japan) not working, USD strength not going away anytime soon....

Gold last at $1,250 on 9/10/14 - GLD @ $120....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,983
  • Nov 22, 2014 12:16pm Nov 22, 2014 12:16pm
Quoting The Fool
my trading job this weekend is to learn all about butterfly spreads. ........ thank you, tastytrade https://www.tastytrade.com/tt/learn/...d?locale=en-US ....

I have watched some of those earlier, and bookmarked that last one, it is very good:
>>> Premium | Buying Butterfly Spreads <<<

You can use butterflies for ER's plays also, here is example on BABA:
Attached Image


And closed for nice profit next day
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(She combined that with short strangle, which was also a winner)
Hope is dangerous in this game.
  • #5,984
  • Edited 10:12pm Nov 22, 2014 2:26pm | Edited 10:12pm
Quoting StrayDog
{quote} I have watched some of those earlier, and bookmarked that last one, it is very good: >>> Premium | Buying Butterfly Spreads <<< You can use butterflies for ER's plays also, here is example on BABA: {image} And closed for nice profit next day {image} (She combined that with short strangle, which was also a winner)
thanks bro, I will watch it....

...so I see a few possible "rules of thumb"

1) BWB = Big Wide Butterflies performed the best in their study - per wing 10% good, 15% better
2) P/L best when IVR high at expiry. So, you might time these so that trade expiry coincides with a known IVR run-up - i.e., IVR run-up pre ER?
3) You pay less for the spread if you buy it when IVR is high - that means you risk less, too.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,985
  • Nov 22, 2014 11:57pm Nov 22, 2014 11:57pm
Looking thru possible BWB's. FB IVR is low, but a Jan expiry would catch iv runup before the late Jan ER.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,986
  • Nov 23, 2014 12:22am Nov 23, 2014 12:22am
Quoting The Fool
3) You pay less for the spread if you buy it when IVR is high - that means you risk less, too.
and of course you pay less if you break one of the symmetrical long legs, the "wings", in which case I will call it a BrkWB - broken-wing butterfly. You do that, though and you lose the margin-neutral benefit of the plain butterfly. The BrkWB on FB eats $1,000/ea. Profit potential is high, $0.57 initial debit could get $3.56 profit if FB settles at $75 at expiry.

Watch the vid that runs thru day-by-day P/L from end to start. Use the b/e locations thru the life of the trade to help with trade management decisions.

I'm not sure if this is a good BrkWB for FB, will have to trial/error many more.

http://screencast.com/t/WmQ2Xb1r
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,987
  • Nov 23, 2014 12:28am Nov 23, 2014 12:28am
I have not been able to find a BWB that works with the 10% or 15% wing sizes suggested in the tastytrade vid above, will look more.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,988
  • Nov 23, 2014 12:43am Nov 23, 2014 12:43am
gapology

http://www.marctomarket.com/2014/11/...ars-again.html

"The S&P 500 gapped higher before the weekend, arguably lifted by Draghi's sense of urgency and the PBOC's rate cut. That gap exists between 2053.84 (Thursday's high) and 2057.46 (Friday's low). This gap is technically significant, and short and medium-term traders will monitor it. Just as nature abhors a vacuum, so do prices, and if it is a "normal" gap it will be filled over the next few sessions. It could be a breakaway gap, suggesting an acceleration of the advance. It might turn out to be an exhaustion gap, typically at the end of an advance, a last hurrah, if you will, before a correction unfolds."
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,989
  • Nov 23, 2014 12:59am Nov 23, 2014 12:59am
Quoting The Fool
I have not been able to find a BWB that works with the 10% or 15% wing sizes suggested in the tastytrade vid above, will look more.
AAPL
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,990
  • Nov 23, 2014 1:57am Nov 23, 2014 1:57am
Quoting The Fool
...so I see a few possible "rules of thumb"
1) BWB = Big Wide Butterflies performed the best in their study - per wing 10% good, 15% better
2) P/L best when IVR high at expiry. So, you might time these so that trade expiry coincides with a known IVR run-up - i.e., IVR run-up pre ER?
3) You pay less for the spread if you buy it when IVR is high - that means you risk less, too.


Yihaaa, page 300!
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Hope is dangerous in this game.
  • #5,991
  • Nov 23, 2014 2:36am Nov 23, 2014 2:36am
Quoting StrayDog
Yihaaa, page 300!
lol, it's been fun buddy. We could use a few more posters, though. Damn I wonder what happened to Wulfgar?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,992
  • Nov 23, 2014 2:47am Nov 23, 2014 2:47am
check my post count - I will hit 10,000 before long.

I remember when PayTheLimit hit 23,000 he said goodbye forever. Stopped posting for months or more. Then he came back. Bwaahahaha....

In truth this thread is all I really care about here anymore. FF is the best trader's forum, though, imho. I have thought about starting a webpage. It would probably attract more options traders. idk.....
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  • #5,993
  • Nov 23, 2014 5:49am Nov 23, 2014 5:49am
Quoting StrayDog
{quote} Yihaaa, page 300! {image}
congrats tooo T.F. and others to make 300
  • #5,994
  • Nov 23, 2014 6:07am Nov 23, 2014 6:07am
Quoting Cecil Gee
{quote} congrats tooo T.F. and others to make 300
Hey CG, you have been around from the very first page...
(I read all pages prior to my first comment on this thread, so I know)
Hope is dangerous in this game.
  • #5,995
  • Edited 10:56am Nov 23, 2014 10:33am | Edited 10:56am
Quoting The Fool
{quote} VIX could sit down at 10 or below for months or even years, I think we'll see S&P 2,200 this year. Only sneaking caveat is the US mid-term elections...I have posted chart somewhere far above....historically US markets dip in the summer months preceding the mid-terms. And the continuing taper...although the ECB looks to take up the slack there....

Above from 6/6/14. I am surprised that ^VIX has not dipped to new lows along with the successive new highs in the SnP. You could say there's room for it to fall. I guess....

http://online.barrons.com/articles/c...uts-1416209023

Many are saying PBOC will do further rate cuts. ECB to follow? What happens when the race to the bottom ... hits bottom? What's down there?

And the pundits say no reason for Fed to raise rates when all the other CB's are in full anti-deflation mode. But, really, what better time? Sure looks like they are all in cahoots, no? Fed finally ends QE3 and the next day BoJ springs new QE. Perhaps the Fed will give solid forward guidance for first rate hike at the 12/18 FOMC and the ECB announces new QE measures the same week? CB's are running the show, I just need money for popcorn...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,996
  • Nov 23, 2014 11:29am Nov 23, 2014 11:29am
Quoting The Fool
gold $1,250 is the test. Lots going on in the gold trade and maybe too much: Swiss referendum, sovereigns repatriating/accumulating, ok, but no inflation, anti-deflation efforts (Japan) not working, USD strength not going away anytime soon.... Gold last at $1,250 on 9/10/14 - GLD @ $120....
http://www.bloomberg.com/news/2014-1...nitiative.html

Gold looks like it may keep running regardless what Swiss voters say. How about a golden Christmas calendar? 0.50 risked gets >$1.00 between GLD $120 and $124 at 12/19 expiry...
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,997
  • Nov 23, 2014 11:37am Nov 23, 2014 11:37am
Quoting Cecil Gee
{quote} congrats tooo T.F. and others to make 300
thanks CG, thanks for hangin around. What are you doing with GDX now - anything?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #5,998
  • Nov 23, 2014 1:36pm Nov 23, 2014 1:36pm
Quoting The Fool
{quote} thanks CG, thanks for hangin around. What are you doing with GDX now - anything?
GDX now is ideal for spread traders because of its price, the movements should narrow so those theta players are looking to capitalise. For me I'm a gamma player so I'm looking at nasdaq stocks with large one day movements. I should take the time to learn more about spreads. The only one I like to discuss are strangle shorts at earnings season
  • #5,999
  • Nov 23, 2014 2:11pm Nov 23, 2014 2:11pm
Quoting Cecil Gee
{quote} GDX now is ideal for spread traders because of its price, the movements should narrow so those theta players are looking to capitalise. For me I'm a gamma player so I'm looking at nasdaq stocks with large one day movements. I should take the time to learn more about spreads. The only one I like to discuss are strangle shorts at earnings season
CG I thot I remembered you posting you were getting interested in butterflies? Well anyway there's a spread for everybody - I have been trying a little bit of everything, with mixed results.

I like credit spreads but you have to know how/be ready to manage them right or your losers can wipe out your winners pretty fast. I am drawn to some of the defined risk spreads specifically because I suck at trade management. the latter mostly because I am working during market hours...

I like calendars and I am always looking for opps to get in those cheaply. The Nov EWZ calendars I am in will payout >5:1 easy if EWZ will move towards $47 in the next couple weeks. Maybe a tall order, we'll see.

Butterfly variations are cool and can pay very well. If you like to catch big moves simple debit spreads are good, you limit your reward but you lower the price and so can enter with more size.

So you think GDX will consolidate for a while?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,000
  • Nov 23, 2014 2:32pm Nov 23, 2014 2:32pm
any credit spread comes with the potential for large/progressive loss - that's the trade-off - you borrow money (trade on margin to get the credit) and you face the prospect of big loss.
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"If The Fool persists in his Folly he will become wise." - William Blake
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