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Let's Trade Options

  • #6,141
  • Dec 4, 2014 2:22pm Dec 4, 2014 2:22pm
Not to mention the commissions... If you buy that DC for $0.10 - a 4 option combo - is there going to be any profit left if you sell it for $0.20.... ? On paper it is 100% gain, but what about reality? OK, when the time comes to sell it, probably one of the calendars would be worthless, so you will let one side to expire...

Good thing about ORCL is that it have decent bid/ask spreads.

Probability OF profit and probability FOR profit - I often think about that. But that is broader discussion, not just for this idea about calendars.
Hope is dangerous in this game.
  • #6,142
  • Dec 4, 2014 2:41pm Dec 4, 2014 2:41pm
Quoting StrayDog
Not to mention the commissions...
yup, I get raped on those on the trades in my IRA's at the "discount" brokerages. I will say, though, at TDA I do get filled at the mid nearly always & usually don't have to wait long. I get filled faster at TDA than I do at IB.

Anyway, I see why the tt gals say they want to get paid to take on some risk. Even if the risk is very low, it'd still be nice to get paid. Problem is, if you insist on getting paid to take on some risk, you have usually actually increased your risk. Not a problem if you're skilled at trade management. For me, I like trades I can live with and not have to worry too much about. I can live with a nickel risked on the ORCL calendar, $0.20 risked on LULU. I'll check on those next week...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,143
  • Dec 5, 2014 12:11am Dec 5, 2014 12:11am
https://www.tastytrade.com/tt/daily_...4?locale=en-US

Sheridan's VXX Jade Lizard. I like the idea of cutting off risk on one end, like the credit delivery. But the bp hit on my IRA cash account is $2,500, as opposed to $890 on Sheridan's margin account. Right, I'm gonna tie up $2,500 in a <$10k account to make $50-$100.
Attached Image (click to enlarge)
Click to Enlarge Name: 2014-12-JLVXX.png Size: 63 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,144
  • Dec 5, 2014 9:31am Dec 5, 2014 9:31am
Quoting The Fool
https://www.tastytrade.com/tt/daily_...4?locale=en-US Sheridan's VXX Jade Lizard. I like the idea of cutting off risk on one end, like the credit delivery. But the bp hit on my IRA cash account is $2,500, as opposed to $890 on Sheridan's margin account. Right, I'm gonna tie up $2,500 in a <$10k account to make $50-$100. {image}
Yes, naked selling only on margin accounts... $890 ?

On my Reg-T account margin requirement is EUR 412 or ~ $507 per one Jade Lizard. There are some volume for the combo, for $1.10 credit.

------------------------------------------------------

Well, nothing happened yesterday, nothing today... I closed all my 3 positions before all that NON-EVENTS (twtr, aapl, amzn)
Attached Image

Being too cautious.
Still the biggest issue for me is patience with options trading - milking the good positions. Slowly I am getting there...
Hope is dangerous in this game.
  • #6,145
  • Dec 5, 2014 9:58am Dec 5, 2014 9:58am
Quoting StrayDog
{quote} Yes, naked selling only on margin accounts... $890 ? On my Reg-T account margin requirement is EUR 412 or ~ $507 per one Jade Lizard.Being too cautious. Still the biggest issue for me is patience with options trading - milking the good positions. Slowly I am getting there...
In IRA accounts I can sell puts naked, cash secured, but not sell calls naked at all, why you see me doing call spreads. Yeah, there's a line there between patience and ruthlessness, any trader has to find a balance. I am on the bubble on AAPL Dec call vertical now, was up $100 early yesterday, now near b/e, not liking what I see in AAPL, will probably close it soon. Thinking about a VXX or UVXY long play of some kind, I think FOMC could shake things up next week, indices are looking starved for some long red candles...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,146
  • Dec 5, 2014 10:02am Dec 5, 2014 10:02am
Quoting The Fool
.... Problem is, if you insist on getting paid to take on some risk, you have usually actually increased your risk. Not a problem if you're skilled at trade management....
Exactly. I did some ER's trades - short strangles - on x2.5 estimated move away, in order to reduce risk first, and getting paid later, because I am a options rookie. IMHO - skill at trade management is really essential if you want to come closer to the price, increasing credit received AND risk.
It is up to you, me, everybody... to find their own comfort zone. I have a nice winning streak now, but I am fully aware of things that I don't know, and will keep my feet firmly to the ground. It takes a lot of trading to be really confident - but not overconfident.

I will keep doing such trades, first to look at POP, then ROC and so on, because my current account size, I don't want to be involved in months of rolling, rolling, rolling... of the same position. Hopefully Dec would be as good (or better?) than Nov, so I will add some cash to the acc starting from Jan'15...
Hope is dangerous in this game.
  • #6,147
  • Dec 5, 2014 10:05am Dec 5, 2014 10:05am
Quoting The Fool
...Thinking about a VXX or UVXY long play of some kind, I think FOMC could shake things up next week, indices are looking starved for some long red candles...
Ah, the color of blood, BWAHAHAHAHAHA!!!!
FOMC is our last chance... indices in consolidation... VIX hovering around 12 - boooooooooriiiiiing....

Better to find some trades...
Hope is dangerous in this game.
  • #6,148
  • Dec 5, 2014 10:14am Dec 5, 2014 10:14am
Quoting StrayDog
It takes a lot of trading to be really confident - but not overconfident....
like Robyn on tt - 250 trades/week - are you kidding me? But it's just mechanical for her, like picking apples. Pick an apple, put it in the bag, do it again....

Things would be different if we were not up against the pdt limit, maybe...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,149
  • Dec 5, 2014 10:36am Dec 5, 2014 10:36am
Quoting The Fool
{quote} I did a UNG $23 long call calendar, Jan/Apr, for $0.62 debit {image}
natgas been moving, UNG down 4+% yesterday, back up 4+% today....maybe I caught the bottom.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,150
  • Dec 5, 2014 10:59am Dec 5, 2014 10:59am
Quoting The Fool
{quote} like Robyn on tt - 250 trades/week - are you kidding me? But it's just mechanical for her, like picking apples. Pick an apple, put it in the bag, do it again.... Things would be different if we were not up against the pdt limit, maybe...
-----------------------------------------------------------
What is a day trader?
FINRA and the NYSE define a Pattern Day Trader (PDT) as one who effects four or more day trades (same day opening and closing of a given equity security ("stock") or equity option) within a five business day period.
Note that Futures contracts and Futures Options are not included in the SEC Day Trade rule.
-----------------------------------------------------------

Lots of futures scalping, I guess... I will add - CFDs and FX are not included also.
Whole document:
Attached File(s)
File Type: doc What is a day trader.doc   25 KB | 463 downloads
Hope is dangerous in this game.
  • #6,151
  • Dec 5, 2014 11:03am Dec 5, 2014 11:03am
Quoting StrayDog
What is a day trader?
right, and a day trade is one you open & close on the same day. As I've said before, I don't daytrade options much, I could on my largest account, I just never got into the habit. I often enter trades at the close and close early in the following day, though...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,152
  • Dec 5, 2014 11:05am Dec 5, 2014 11:05am
Quoting StrayDog
... Better to find some trades...


I have scanned high IVR stocks in dough - ER's excluded, and IVR 50 - 70... all above 70 are oil, gold, yen etc related stocks and ETFs which I don't trade or understand enough. Between 50 and 70 there are 5 stocks: POT, BRCM, T, WMT and UTX. Since I can't get any good credit on none of them, I will look elsewhere... Waiting for IVR jump on some of the good old Nasdaq stocks...
Hope is dangerous in this game.
  • #6,153
  • Dec 5, 2014 11:13am Dec 5, 2014 11:13am
Quoting The Fool
{quote} right, and a day trade is one you open & close on the same day. As I've said before, I don't daytrade options much, I could on my largest account, I just never got into the habit. I often enter trades at the close and close early in the following day, though...
Yes, I don't day-trade much also (last time 3-4 months ago), but really a pain in the ass is when you must close something on the same day (you made a mistake or something happened) ... every spread is calculated as TWO trades...

On the other hand if you do day-trade... you can partially close, like closing 9 out of 10, and remaining 1 contract leave for tomorrow - BUT only if you trade those trades big way. I am still trading 1 - 3 contracts / spreads usually, more than 10 just twice - cheap calendars and some long weekly puts that was very cheap...
Hope is dangerous in this game.
  • #6,154
  • Dec 5, 2014 11:14am Dec 5, 2014 11:14am
Quoting StrayDog
{quote} I have scanned high IVR stocks in dough - ER's excluded, and IVR 50 - 70... all above 70 are oil, gold, yen etc
I think you could sell calls in the oil related stocks pretty easily in the near term. In the new year I won't be surprised to see oil bottom out and maybe the Saudis tighten supply (OPEC members with less means will be moaning) maybe demand picks up, too.

Natgas I bet will pick up in the coldest months to come. Gold is doing what I want it to do for the DD I am in, just need it to keep it up for another week+...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,155
  • Dec 5, 2014 11:41am Dec 5, 2014 11:41am
VXX vertical could pay if the old fear of the Fed sets in, VXX was trading at $28 just a few days ago. You could probably get a better setup next week, though...
Attached Image (click to enlarge)
Click to Enlarge Name: 2014-12-05_vxx.png Size: 56 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,156
  • Dec 5, 2014 12:39pm Dec 5, 2014 12:39pm
Quoting The Fool
VXX vertical could pay if the old fear of the Fed sets in, VXX was trading at $28 just a few days ago. You could probably get a better setup next week, though... {image}
Nice!
Hope is dangerous in this game.
  • #6,157
  • Dec 5, 2014 2:50pm Dec 5, 2014 2:50pm
Quoting StrayDog
{quote} Nice!
didn't do anything in VIX options yet, might get more slide next week. Just management trades today, rolled SPY Dec $213 short calls out to Jan $215 short calls, so now I made a diagonal into a Jan SPY $214/$215 vertical @ $0.05 credit net. Was in a PBR Jan/Apr $14 calendar & bought the Jan calls for $0.02, so now I own the Apr $14 calls for $0.18 - PBR has ER on 12/12, maybe something good will happen then, I will wait...

AAPL vertical I decided I would wait til Monday & see, sitting at $0.06 loss now....

Have a good weekend....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,158
  • Edited 6:36pm Dec 6, 2014 6:24pm | Edited 6:36pm
Quoting The Fool
... AAPL vertical I decided I would wait til Monday & see, sitting at $0.06 loss now........
Shoulda closed that AAPL trade when I had a small profit. One good thing about trading 250 times a week would be: you're closing trades. ABC: Always Be Closing. See a profit, close a trade. I think it is better to trade a lot instead of a little; pdt rules are no impediment, really. Enter at the close and exit the next day - or the next month - whatever, just keep the stream of fabulous profits flowing. Trade not moving, obviously wrong, see a loss - close it. ABC....

Another problem with those P/L analyzers: oh, hey, that AAPL vertical has a max P of 10x! If I'm not hanging in for that 10-bagger, then I must be a loser. But probability of that big fast move low. See a profit, close it. Rinse, repeat.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,159
  • Dec 6, 2014 6:36pm Dec 6, 2014 6:36pm
Relatively light econ data calendar in the coming week. I need to see some bullish action in the indices. To fade before the FOMC. Toward the end of the week might start making sense to get in some durational calendars on stocks with ER's out in the Jan4 week.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,160
  • Dec 7, 2014 12:12pm Dec 7, 2014 12:12pm
Quoting The Fool
Relatively light econ data calendar in the coming week. I need to see some bullish action in the indices. To fade before the FOMC. Toward the end of the week might start making sense to get in some durational calendars on stocks with ER's out in the Jan4 week.
I wasn't gonna look at calendars on the banks (big US banks start off the Q4 ER season around week of Jan 12. But I might, because the banks are going to run up on any kind of FOMC indication that the 2015 rate hike is coming sooner, a sure thing, etc - any kind of positive change in forward guidance. If Dec FOMC does not deliver that mail then banks should fall back, all else being equal. Dec FOMC on 12/17, markets thinned, fireworks likely...

Dec FOMC is a binary event for markets as a whole, then with banks ER's 3-4 weeks out from that, not quite sure if that's an exploitable scenario or not, looking..
"If The Fool persists in his Folly he will become wise." - William Blake
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