Let's Trade Options

put & call legs of this GLD DD were entered separately, will yield positive returns between $116-$120 (calls) and $114-$119 (puts) --- so anything from $116 to $119 by next Friday is my happy place

what, are bonds just gonna go up forever? Options on /ZB are liquid. Mar 147/146 bear put vertical is just one strike otm, max P returns 3.5x, 42 dte...

IV on /ZB is almost always low, down around 10-15%. Have a look at the weekly chart - a big candle wick-to-wick ends is a little over $5, usually less than half that. Good liquidity all up/down the strikes - hey what do those traders know that I don't?

oh my goodness gracious gosh, dare I give away the Holy Grail....? (Note: 0"000 @ mid, 2"000 at market - Holy Grail does not come with Free Lunch, sorry)

futures lead the market. That /ZB is a biggun...but Sosnoff notes /ZN (the 10yr notes) trades 5x the volume of /ZB

https://www.tastytrade.com/tt/shows/...4?locale=en-US

https://www.tastytrade.com/tt/shows/...5?locale=en-US

bond super bear, huh? watch out for kryptonite, bear! I see dead bears....

Seriously, Idk what it will take to turn the long bond bull train. Probably QE4? The Fed could start hiking and the long end of the curve could pretty much stay flat. Do you smell that? Smells like systemic risk. Bad bad smell. We always knew the stock bull train and the bond bull train would not, could not keep pace with each other forever. One of em had to run out of coal. Which one dya think?

Pew!

http://uk.businessinsider.com/russia...ollapse-2015-1

I'd have to bet on new legs down, until seasonal demand picks up in Q2....

http://www.bloomberg.com/news/2015-0...ince-1991.html

"While rigs are sliding, the U.S. is still on track to yield the most oil this year in more than three decades. Production averaged 9.13 million barrels a day in the four weeks ended Jan. 2 and will increase to 9.5 million this year, York said.
“You won’t start seeing a slowdown in growth until the second half of 2015, and it takes until 2016 before you really start seeing the effect,” he said."

you got my interest in this

will be trading them, /ZB & /ZN, all comes down to where you can get filled on them, how cheap you can get in, we'll see

You can (?) fill atm vertical spreads on /6E for 7 pips

...b/e @ $1.1843 and fiber lt @ $1.1850....a drop to $1.17 within the next month gets $500 return on a $88 risk

The Fool has found a reasonable substitute for fx spot that he can trade in his IRA accounts....

Later, when I have had enough coffee, I will do the 4th grade math to compare fx spot at max 50:1 leverage to de facto leveraged fx trade via /6E options

tick tock
http://uk.businessinsider.com/the-oi...ossible-2015-1
"The last time the Fed faced this problem was in the 1980s, when low oil prices spurred runaway growth. The Fed took its eye off the ball at the time, leading to nearly 5% inflation by 1990."

Hey TF!

I didn't trade Gold for ages, but that DD looks nice. You said that the large move of the u/l is the biggest enemy of the diagonal. But if you keep a close eye on them, you could close position in time and run for the hills? Plain Iron Condor must have some results if Gold didn't move much, considering the IV there?

About future options - be aware that multiplier on them is not 100 like on stocks, but very different, from future to future. I have only traded DAX futures options, they have 5 multiplier. But check multiplier of EUR futures, I think it is 125,000 or on GBP futures (I think 62,500). So the same multipliers goes for those options... not easy to understand what exactly is the price of those in $ terms on first glance. I remember once a friend told me to buy puts of CAD futures options, and when I saw the bid/ask I was like - "what is this"...

that tt vid I posted above - on "Futures Math" - goes into the details on futures options contracts -just takes a little study, especially for the bond futures.

On the diagonals, I have posted those vids b4 showing time-lapse day-to-day change of P/L, you see that the b/e point moves out over time - that is good, but when I say the outsized move is the enemy, I mean the move that overshoots the b/e of the trade. I think a good rule of thumb is to find the b/e at expiry and consider that your "line in the sand" - if the u/l price goes beyond, you bail. But if it goes beyond that b4 expiry it will mean that you are in loss, maybe considerable loss. (the diagonal death slide is a mofo, yo.)

So, the diagonals are very dynamic and need regular checking. It's all about the endgame on them, too, best to hold till expiry day, if you can. I like the short-duration ones for that reason.

CME FX Options Traders Handbook

StrayDog, have you traded the CBOE VIX options? Some real fat liquidity in there. They expire Wednesdays. The put spread below for Jan 20, prolly a long shot...but I'm thinking the coming week will be calm before the storm of ECB/Greek elections/FOMC all coming in Jan4/Jan5...

VIX to elevate in Feb? This VIX DD goes on for just comms, has a max P of $1.80 if you settle around $22 on the 2/18 expiry. Main danger is the downside death slide, just have to guard against moves below $14....

(What, no weeklies?)

VIX options volume very large, I looked at the time/sales, it's almost all spreads...

Looked at setting up a comparable trade on VXX, could not even come close to getting low debit/credit on Feb/Mar - full month spreads...at first glance the CBOE VIX options look to be a better value, just too bad no weeklies. Below are the top Friday VIX options trades...

Yeah, I trade them occasionally, I posted above (on previous page) that I entered VIX Jan 19/20 call spread for $0.22...

Yes, good volume, European style, cash settled options... But no weeklies, and 0.05 increments on single options... You can be filled at midpoint which is not on 0.05 easily, usually for spreads.