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Let's Trade Options

  • #6,421
  • Dec 25, 2014 3:15am Dec 25, 2014 3:15am
a little margin goes a long way
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,422
  • Dec 25, 2014 3:23am Dec 25, 2014 3:23am
show me the kitty. May a long time to wait, though...
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,423
  • Dec 25, 2014 3:38pm Dec 25, 2014 3:38pm
http://www.businessinsider.com/jerem...growth-2014-11
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,424
  • Dec 25, 2014 8:17pm Dec 25, 2014 8:17pm
EBAY DD
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  • #6,425
  • Dec 26, 2014 2:35am Dec 26, 2014 2:35am
Fb dd
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,426
  • Dec 26, 2014 9:17am Dec 26, 2014 9:17am
Quoting The Fool
EBAY DD {image}
Symmetrical kitty . In this DD, all options expire after ER's (EBAY ER's Jan 21)... I thought you said that one would do DD with ER's in-between short and long strikes, or was that in Liz & Jenny show, can't remember now? Sorry, I can't concentrate on anything today...
Hope is dangerous in this game.
  • #6,427
  • Dec 26, 2014 9:44am Dec 26, 2014 9:44am
Quoting StrayDog
Symmetrical kitty . In this DD, all options expire after ER's (EBAY ER's Jan 21)... I thought you said that one would do DD with ER's in-between short and long strikes, or was that in Liz & Jenny show, can't remember now? Sorry, I can't concentrate on anything today...
"standard" way to do them is wrap the expiries around the ER, so front is pre-ER and back is post ER, and you are looking for front theta and back iv increase to bring a difference between the front/back option values over time. You can close the trade pre-ER. If you get in at a real low IVR, I think you can usually make money doing them that way. However, you tend to pay a lot for the spreads that way.

Some I have shown above have both options in the spread with expiries post-ER. You can get in these for a small credit. The two options in the spread both experience the iv run-up (maybe), it might be that pre-ER, they still have similar iv, front has lost a little more thru theta, the ER is less relevant, I suppose. If I am wrong and the front iv increases much more than the back, I could lose some money getting out. If I am right and the iv's stay relatively the same, and the u/l price moves to the right place in the spread, there could be good profit.

M/L still experimenting - I have made money doing them this way b4...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,428
  • Dec 26, 2014 1:18pm Dec 26, 2014 1:18pm
I have been doing RSX Feb verticals, $19/$20c and $14/$13p, for $0.20...filled on calls but not on puts...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,429
  • Dec 26, 2014 2:05pm Dec 26, 2014 2:05pm
UNG has bottomed, cold snap on the way...must turn up shock collar to 11
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  • #6,430
  • Edited 12:09pm Dec 27, 2014 3:59am | Edited 12:09pm
Quoting The Fool
Some I have shown above have both options in the spread with expiries post-ER. You can get in these for a small credit. The two options in the spread both experience the iv run-up (maybe), it might be that pre-ER, they still have similar iv, front has lost a little more thru theta, the ER is less relevant, I suppose. If I am wrong and the front iv increases much more than the back, I could lose some money getting out. If I am right and the iv's stay relatively the same, and the u/l price moves to the right place in the spread, there could be good...
What I have not done is hold these thru the ER, but that could work out, too. Another interesting thing I noticed about FB is that its IVR seems to peak in the 1-2 weeks before, then decline into the ER....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,431
  • Dec 27, 2014 12:33pm Dec 27, 2014 12:33pm
http://uk.businessinsider.com/russia...-union-2014-12

/CL ended Friday just above $55. Basing around $55 looks like basing around $75....no real challenge to the slide in months. Seasonal demand weak, won't improve for months...many producers up against the wall, must pump or die.

One wonders if the Saudis have further incremental moves to make? Further price cuts, turns of the screw...? Fat red candles taking it down towards $40...?
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  • #6,432
  • Dec 27, 2014 12:42pm Dec 27, 2014 12:42pm
Quoting The Fool
{quote} "standard" way to do them is wrap the expiries around the ER, so front is pre-ER and back is post ER, and you are looking for front theta and back iv increase to bring a difference between the front/back option values over time. You can close the trade pre-ER. If you get in at a real low IVR, I think you can usually make money doing them that way. However, you tend to pay a lot for the spreads that way....
Looking for setups this way in past week or so, but setups were not good because of the IVR spike, across the board, from the Early Dec slump in the indices, still manifest in the individual stocks. (With higher IVR persistent, just too expensive to do the setup calendars, forced to look at diagonals, which are undefined risk on the outside moves, riskier.) You have to look for the pre-ER setup calendars when IVR is scraping down at its long-term lows...

That may improve here on out if the indices keep levitating.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,433
  • Dec 27, 2014 6:16pm Dec 27, 2014 6:16pm
EFA calendar play like an ER setup around the 1/22 ECB announcement. Low IVR now may rise into the event horizon, spread the Jan against Jan4 calls @ $63 for $0.10 debit at the mid, return could be 100% easy if EFA ranges $62-$64 @ early Jan4 week
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  • #6,434
  • Edited Dec 28, 2014 1:16am Dec 27, 2014 6:45pm | Edited Dec 28, 2014 1:16am
Fiber likely to flatline ahead of ECB? FXE w/ 93% IVR @ iv=10% (?!), slim pickins...could still play the crush...
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  • #6,435
  • Dec 28, 2014 10:11pm Dec 28, 2014 10:11pm
EWJ doesn't move much, but note the IVR cycle, corresponds with monthly opex, tradeable...(?)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,436
  • Dec 28, 2014 10:25pm Dec 28, 2014 10:25pm
Quoting The Fool
EWJ doesn't move much, but note the IVR cycle, corresponds with monthly opex, tradeable...(?)
..
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  • #6,437
  • Dec 28, 2014 11:18pm Dec 28, 2014 11:18pm
Mexico etf will bounce into the new year if oil price gets back above $60/bbl
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  • #6,438
  • Dec 29, 2014 2:28am Dec 29, 2014 2:28am
I'd expect to see US indices squeak up in the coming thinly traded week. AAPL popped a nice $2+ move on Friday, I could see that continuing this week.

Weekly $116/117 vertical needs a move >$116 to make decent money back on a $0.19 debit...
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  • #6,439
  • Edited 10:10am Dec 29, 2014 9:57am | Edited 10:10am
Quoting The Fool
I'd expect to see US indices squeak up in the coming thinly traded week. AAPL popped a nice $2+ move on Friday, I could see that continuing this week. Weekly $116/117 vertical needs a move >$116 to make decent money back on a $0.19 debit... {image}
Yeah, me too. I was looking at bullish call spreads for QQQ. Thinking about QQQ Jan 105.50/106 or 106/106.50... maybe better to pay more, be closer to the price, and have a better chance to make some $. (Missed that today, when mofo was under $105...)

Could be the same scenario like first week this year, I remember that indices gained nicely in that first thin trading week. On most liquid names - QQQ, AAPL, included - it is easy to make spreads with weeklies also, like you suggested.
Hope is dangerous in this game.
  • #6,440
  • Dec 29, 2014 10:18am Dec 29, 2014 10:18am
Quoting The Fool
I have been doing RSX Feb verticals, $19/$20c and $14/$13p, for $0.20...filled on calls but not on puts...
I was looking for Jan put spreads, because I think it is more likely that it will go more down... I don't like bis/ask spreads and overall activity on options, so I gave up. There is good OI on some round strikes, but when I compare it with EWZ, Brazil is the winner.



Add-on
Generally I expect for the first weeks of new year just continuation of trends, nothing contrarian. Meaning more bullishness on US indices, more decline on Oil (that recent formation looks like a triangle - continuation pattern on daily chart), and more pain for RSX, EUR and so on (/GC also?)... Too early for changing that directions, so trending and flat, IMO.

IVR still high on some stocks, off course on retailers. (Didn't I said like 100 times before that I hate them? If I didn't - I hate them...)
Hope is dangerous in this game.
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