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Let's Trade Options

  • #6,221
  • Edited 8:44am Dec 11, 2014 8:33am | Edited 8:44am
Quoting StrayDog
{quote} I will skip LULU... Just an observation - inverted skew on it, equidistant calls are much more expensive than puts.
Well, LULU 40/53 weekly short strangle (which I considered and chicken out ) would be a nice winner... Market makers really did an excellent job with expected move...


Add-on...
In first 15min after open - VIX is down 10%, everything is up, good thing I exited both QQQ bearish positions... timing for exit good, for entering shitty, but I will take minimal gains instead of loss anytime.
Hope is dangerous in this game.
  • #6,222
  • Edited 9:25am Dec 11, 2014 9:15am | Edited 9:25am
I did a short strangle on AAPL again... Jan 102.14/124.29 for $1.33 credit, slightly more than 1 SD wide, 37 DTE.

Attached Image (click to enlarge)
Click to Enlarge Name: AAPL_SS.png Size: 77 KB


IVR 58 is nice, looking at options IV on chart - I think IV will drop... Will manage position sooner rather than later.
Hope is dangerous in this game.
  • #6,223
  • Dec 11, 2014 9:24am Dec 11, 2014 9:24am
Quoting StrayDog
... In first 15min after open - VIX is down 10%,
lotsa good US econ data out, natgas storage up in a few, but /CL still looking weak - it dropped almost to $60.00 early today and bounced, maybe $60 will break on one more try, bottom not in for oyul stocks...

short calls AAPL look good
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,224
  • Dec 11, 2014 9:35am Dec 11, 2014 9:35am
Quoting The Fool
{quote} lotsa good US econ data out, natgas storage up in a few, but /CL still looking weak - it dropped almost to $60.00 early today and bounced, maybe $60 will break on one more try, bottom not in for oyul stocks... short calls AAPL look good
Yeah, Saudis mean business... The Empire Strikes Back... (I was in primary school when I watched that Star Wars movie, I can't explain my excitement with it, back then, ah good times in childhood... Star Wars then, short strangles now )
Hope is dangerous in this game.
  • #6,225
  • Dec 11, 2014 10:07am Dec 11, 2014 10:07am
Maybe....I could get in this cheaper if BP could nudge up to $38....risks $50 to gross $220
Attached Image (click to enlarge)
Click to Enlarge Name: 2014-12-11_bp.png Size: 54 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,226
  • Edited 10:38am Dec 11, 2014 10:26am | Edited 10:38am
Hey TF!
BP Broken Wing Put Butterfly... just check bid/ask and commissions on it...

I did BBY short strangle yesterday, and bid/ask suck there, commissions are small. Yes I get the fill at midpoint immediately, but I traded that just because I couldn't find anything else. In my archive - I traded BBY before, it was ER's Iron Condor, and I had to buy/sell each of the 4 legs individually, a pain in the ass. I will note that trading BBY options - only if nothing else is available.


I just watched another tt video >>> Position Sizing & Margin <<<
and this (what I have circled) is a main takeaway for me:
Attached Image (click to enlarge)
Click to Enlarge Name: Prob-of-los-in-a-row.png Size: 118 KB


POP of 75% is basically a 1 SD short strangle, something that I think is in Top 3 of their trades. So, losing 3 times in a row is 1 out of 64 chance.

Yeah, I know that statistic is not always what happens in real life, mainly because trader is a human being, not a machine, guided by feelings, emotions, fear, greed, etc... mistakes... But, nevertheless, it gives you another statistical reason why they do it all the time.
Hope is dangerous in this game.
  • #6,227
  • Dec 11, 2014 10:43am Dec 11, 2014 10:43am
Quoting StrayDog
Hey TF! BP Broken Wing Put Butterfly... just check bid/ask and commissions on it...
Hey SDog, yeah BP spreads not great but not bad. If oil slides a bit more in the coming week (I think it will) BP will drop some more and maybe get in my happy zone on the BrkWB. It's a gamble, why I'm not risking much, still have not filled...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,228
  • Dec 11, 2014 2:22pm Dec 11, 2014 2:22pm
Quoting The Fool
{quote} Hey SDog, yeah BP spreads not great but not bad. If oil slides a bit more in the coming week (I think it will) BP will drop some more and maybe get in my happy zone on the BrkWB. It's a gamble, why I'm not risking much, still have not filled...
never got filled on BP, might wait for the oil crash train to slow down now....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,229
  • Dec 11, 2014 2:32pm Dec 11, 2014 2:32pm
Hi TF... I am sitting with just those 2 positions, BBY & AAPL... wanted to do ADBE ER's play, but options were much more juicier yesterday.


Last paragraph from the article

Could The Fed Trigger A Deflationary Slide In Stocks?

is:

"Rather than attempting to anticipate the market's reaction to next week's Fed statement, our approach will be to remain patient and wait to see the actions of market participants after the release of the Fed's December 17 statement. If considerable time is dropped, will the market take the "this is bad news because rates will be moving higher" approach or "this is good news because the economy is gaining positive momentum" approach? Time will tell."
Hope is dangerous in this game.
  • #6,230
  • Dec 11, 2014 3:17pm Dec 11, 2014 3:17pm
VXX bear put vertical was a mistake - I shoulda known VXX would stay up pre-FOMC. I might rollup the short puts and pare down my loss but then, of course, with my luck, Fed will dove it up next week and VXX would crash & I'd be in a deeper hole after all. Will see what tomorrow brings...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,231
  • Dec 11, 2014 3:24pm Dec 11, 2014 3:24pm
Quoting StrayDog
will the market take the "this is bad news because rates will be moving higher" approach or "this is good news because the economy is gaining positive momentum" approach? Time will tell."
Market freak-out waiting to happen is in the high-yield (junk) bonds - spook there is the crashing oil taking down the junk-leveraged frackers. HYG down today. If Fed signals rate rise, that could deflate high-yield even more. That combined with general stock market reaction - tighter money=risk averse - I'd have to bet on a good pullback in equities. IF the Fed takes away the considerable period punch. That's a crap shoot but I'd have to lean towards yes they will.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,232
  • Dec 11, 2014 8:27pm Dec 11, 2014 8:27pm
will we get a natgas bounce this winter? Risk $13 to make $87, but need a strong reversal.
Attached Image(s) (click to enlarge)
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Click to Enlarge Name: 2014-12-11_ung.png Size: 57 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,233
  • Dec 11, 2014 8:39pm Dec 11, 2014 8:39pm
Quoting The Fool
will we get a natgas bounce this winter?
Maybe not. CONTAGION!
http://wolfstreet.com/2014/12/11/oil...and-the-banks/
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,234
  • Dec 12, 2014 3:08am Dec 12, 2014 3:08am
Quoting The Fool
will we get a natgas bounce this winter?.
Another way to speculate on a natgas bounce, selling this dotm UNG put diagonal - sell Apr $21p, buy Jul $20p, nets $0.40 credit, max P=$1.53 if UNG trades at $21 at the Apr opex. The b/e to the downside ranges from $18.50 early down to $16.75 late....See the screencast.

http://screencast.com/t/c3e33qyCR
Attached Image (click to enlarge)
Click to Enlarge Name: 2014-12-12_ung.png Size: 71 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,235
  • Dec 12, 2014 3:29am Dec 12, 2014 3:29am
solar stocks should bounce, Jan too early though, I spec....SPWR weekly chart looks like it wants to see <$20...

http://www.cnbc.com/id/102207905?__s...&doc=102207905#.
Attached Image (click to enlarge)
Click to Enlarge Name: 2014-12-12_spwr.png Size: 108 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,236
  • Dec 12, 2014 3:32am Dec 12, 2014 3:32am
Dec 12, 2014 is the 100-yr anniversary of the largest 1-day drop in the Dow - 24% on 12/12/1914...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,237
  • Dec 12, 2014 8:21am Dec 12, 2014 8:21am
Quoting The Fool
Dec 12, 2014 is the 100-yr anniversary of the largest 1-day drop in the Dow - 24% on 12/12/1914...
If I knew that, I would bake a cake to celebrate... Just kidding... interesting. Can it drop like 2.4% today?


What about this (from tt cherry bomb):
"...Just out of curiosity, how many times in the past 5 years has the SPX been up on the day with the VIX up over 8%?
Just once. Yesterday. Try that for a black swan event. ..."
Hope is dangerous in this game.
  • #6,238
  • Edited 8:45am Dec 12, 2014 8:33am | Edited 8:45am
If QQQ could get up at least to $103.50, to try to fill a gap, I would consider long weekly puts on it, for today expiration, strikes 103 or 102.50

Add-on
I bought few contracts of QQQ Dec12 103 puts for $0.22 debit.


And gap is filled, this could be bought for $0.14... but never mind the price, the mofo must go down after the gap is filled, or this lotto ticket ain't gonna make profit...
Hope is dangerous in this game.
  • #6,239
  • Dec 12, 2014 9:22am Dec 12, 2014 9:22am
Interesting idea... I personally do not like USO, because of its drag to /CL.

Attached Image


But, generally, I like the idea of selling 1 naked put in order to finance 2 debit spreads...
You really must have a decisive move to make a profit on entire combo, but if the u/l just going up like a snail, or doing nothing in consolidation, you want lose, because you did that for a credit.
Hope is dangerous in this game.
  • #6,240
  • Edited 10:04am Dec 12, 2014 9:44am | Edited 10:04am
Quoting The Fool
{quote} Another way to speculate on a natgas bounce, selling this dotm UNG put diagonal - sell Apr $21p, buy Jul $20p, nets $0.40 credit, max P=$1.53 if UNG trades at $21 at the Apr opex. The b/e to the downside ranges from $18.50 early down to $16.75 late....
Trying to get filled on a $22/$21 diagonal, same expiries, for $0.43 credit. I have not done many of these ditm time spreads. options are thin in these strikes, maybe impossible to get filled
"If The Fool persists in his Folly he will become wise." - William Blake
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