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Let's Trade Options

  • #6,261
  • Dec 15, 2014 12:55am Dec 15, 2014 12:55am
Quoting The Fool
So, FOMC week, could be epic. I have to see what I want to do to get ready....
Some things I need to close out pre-FOMC. This GLD DD will do well if GLD will freeze up and trade $110-$117 by Wed morning, will try to hold til then.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,262
  • Dec 15, 2014 1:18am Dec 15, 2014 1:18am
EEM bearish calendar started out with ditm calls, back a few weeks when EEM traded around $41. Put on for $120, now worth $270, I am looking to close soon. Ideally by Wed morning EEM could move to $37 strike and be worth $325, I may not wait. EEM likely sensitive to any Fed rate hike risk, sensitive to USD strength. I 'd like to see it freeze or slide down Monday, time nigh to get out of it...
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,263
  • Dec 15, 2014 1:49am Dec 15, 2014 1:49am
ORCL $42 call calendar cost $5 & can be worth near $15 if ORCL will go to $42 by Wed close. ORCL sitting at $40 now and calendar is at break even. Need to close Fed day pre-ER.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,264
  • Dec 15, 2014 2:22am Dec 15, 2014 2:22am
FOMC day kinda like a binary event for UST's, hawkish effect could put a limp in UST's stride, see IVR on TLT rising while price doing the same. Check TBT options, too. Hawkish Fed might sink UST's hard, but possibly not, if attended by steep market selloff, flight to safety to UST's might ensue. Otoh, dovish Fed might not push up UST's, as they are already pushed up. So....

Look at a DD? The call diag the safer, assuming the preceding is right: the Dec/Dec4 $127.5/$128 costs $0.04 and is safe out to $129.5 by Friday, max P almost $0.40 at $127.15 on Friday. Might not be valid to look out past Wed, IV likely drop hard after the FOMC, but you might still get 2-4x return holding only til Wd...
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,265
  • Dec 15, 2014 2:38am Dec 15, 2014 2:38am
add put diag to make the DD, put options don't give up as much, might not be worth it, will need to look at all again Monday...
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,266
  • Dec 15, 2014 3:08am Dec 15, 2014 3:08am
TBT is interesting
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,267
  • Dec 15, 2014 3:09am Dec 15, 2014 3:09am
hey, Buenos Dias, SDog - what do you see for the coming week?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,268
  • Dec 15, 2014 3:11am Dec 15, 2014 3:11am
Quoting The Fool
........The Fed is gonna come out in the middle of a deflationary shitstorm and say, "Yup, everything looks good, be raising that funds rate pretty soon, no more punch for you!?!?" Seriously? Bullshit. JY is gonna dress up like domina Santa Claus and drive her sleigh right up Wall Street handing out considerable time to all good traders..........
Yeah, but first the boat loaded with cookies will carry her to the other side, crossing the Milky river...

Quoting The Fool
Was looking over week's results, saw this, surprised - it's the VXX bear put vertical I said was a mistake. Even tho VXX was well up, this trade made some money on the day, now I will have to figure out why, but glad to see some help & if I had seen it during market hrs I would have gladly taken that $35-$40 loss.... {image}
Rising IV ?


Futures well up so far... I will look your other posts later, my friend.
Hope is dangerous in this game.
  • #6,269
  • Edited 3:53am Dec 15, 2014 3:18am | Edited 3:53am
Quoting The Fool
TBT is interesting
looking at Fri Time/Sales, I see lots of bullish TBT spreads with decent size. An interesting one is this diag with deep itm puts Jan 15/Jan 17 $62/$57 for $1.25 credit. TBT closed $46.50. Open interest on Fri was nill in these strikes but somebody did 343x. Idk, shorting the Jan 15 $62 puts...?
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,270
  • Dec 15, 2014 3:21am Dec 15, 2014 3:21am
Quoting StrayDog
Rising IV ?
most def, I was just surprised at the iv increase difference between the two strikes, as it is only $0.50. Looks like that may reverse tomorrow, we'll see, VIX may float well until the FOMC...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,271
  • Dec 15, 2014 3:32am Dec 15, 2014 3:32am
risky trade for Red Hat ER, 12/18
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,272
  • Dec 15, 2014 4:07am Dec 15, 2014 4:07am
Quoting The Fool
{quote} looking at Fri Time/Sales, I see lots of bullish TBT spreads with decent size. An interesting one is this diag with deep itm puts Jan 15/Jan 17 $62/$57 for $1.25 credit. TBT closed $46.50. Open interest on Fri was nill in these strikes but somebody did 343x. Idk, shorting the Jan 15 $62 puts...? {image}
easier to understand, somebody bought 1000x this diagonal to get a cheap stake in the March $57 calls, $0.07 debit, but look at that death slide.....
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,273
  • Dec 15, 2014 4:15am Dec 15, 2014 4:15am
I might try something more prosaic on TBT, like this vertical that risks $14 to return >$80 if TBT will bounce above $52.30 by Jan opex...
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,274
  • Dec 15, 2014 8:54am Dec 15, 2014 8:54am
Quoting The Fool
{quote} there are some advantages to putting ditm options in your spreads http://www.optiontradingpedia.com/fr...put_spread.htm
Thanks, I will read the article now.
Hope is dangerous in this game.
  • #6,275
  • Dec 15, 2014 8:58am Dec 15, 2014 8:58am
Quoting The Fool
hey, Buenos Dias, SDog - what do you see for the coming week?
I will probably keep a low profile until FOMC... for now I can't see anything, soo tired after weekend... drinking coffee, I fell asleep today before opening... Just have to consolidate myself. I will read again about diagonals to catch up, pity that dough doesn't have them in strategies. I can put everything on IB, but the process is much slower, and I as a rookie, prefer dough for it visual content.
Hope is dangerous in this game.
  • #6,276
  • Dec 15, 2014 8:59am Dec 15, 2014 8:59am
Quoting The Fool
EEM bearish calendar started out with ditm calls, back a few weeks when EEM traded around $41. Put on for $120, now worth $270, I am looking to close soon. Ideally by Wed morning EEM could move to $37 strike and be worth $325, I may not wait. ...
closed for $0.41 credit, paid $0.12, good way to start the week
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,277
  • Dec 15, 2014 9:04am Dec 15, 2014 9:04am
Quoting The Fool
{quote} closed for $0.41 credit, paid $0.12, good way to start the week
+
ABC my friend... good job.



VIX is just crazy today.... losing and gaining $2 in seconds... just 20 seconds ago it was $22+, and now it is below $20.... and that is the 3rd time that I am noticing that for today, in this 34 minutes of RTH so far... And I don't look at just VIX all the time. So, option activity around SPX then must be massive?
Hope is dangerous in this game.
  • #6,278
  • Dec 15, 2014 9:38am Dec 15, 2014 9:38am
Quoting StrayDog
{quote} Thanks, I will read the article now.
Hey TF!
About that deep ITM bullish put spread... I understand it like this: since it requires a large move to the upside to actually make money, that could be the play for Oil (and related stuff) bounce... just moving from $60 to $70 is a 15% move, it doesn't have to go near $100... If the spread could be done for credit larger than width of the strikes, to eliminate possible losses, that could be a pundits way to play the bounce. If there is no bounce, well tough luck, nothing lost, you just tied some of the margin to that.

Did I get it right?

I imagine POP is like on all "to good to be true" strategies... just kidding, but in all cases when you want a large positive risk/reward, that means that your timing must be excellent. Direction and timing. But if you can do it in the way to eliminate loss, then, sure... Interesting stuff. I find that your OTM debit spreads like the ones that are just $0.50 wide is something that is easier to be done, and time correctly. I am still very much a rookie, not only in options, but in US markets in total, that is why I have chosen to experiment more with the "dark side", i.e. option selling strategies, while I try to see if I can time the market. But I am open to all things that make money, don't care about the names. Just show me the money .

Just so many stuff, it blows ones mind, really. I have to put some of those spreads to dough to see how they are looking.
Hope is dangerous in this game.
  • #6,279
  • Dec 15, 2014 9:41am Dec 15, 2014 9:41am
Quoting The Fool
TBT is interesting
trying to fill a Jan TBT bull call vertical, $50/$51 for $0.13, no luck yet, wouldn't want to pay more, tough to gamble against long bonds
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,280
  • Dec 15, 2014 9:57am Dec 15, 2014 9:57am
Quoting StrayDog
..blah, blah..... while I try to see if I can time the market. ......
I had put spreads on QQQ... Dec 104/103, but I closed them too soon... on Thursday ($0.37 to $.50 ).
Note to myself: Patience, man...

Spread is ITM now, trading for ~$0.70... spread will have its maximum $1.00 only at expiration, something that beginners often forget, at least I didn't realized that in advance with my first spreads that was ITM...

Maybe I should just closed that AAPL strangle today, when it was at b/e. That thing is trading all over the place... the other one on BBY - like frozen. No matter what happens with VIX, bid/ask is the same. That is the case when market is pretty wide in equity options. Plus, u/l is not moving much.
Hope is dangerous in this game.
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