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Let's Trade Options

  • #6,901
  • Jan 27, 2015 3:04pm Jan 27, 2015 3:04pm
Quoting StrayDog
Interesting idea... {image} EM for AAPL is about 6%... this lose money if stock breaches EM to the upside...
think aapl gonna get a large move
  • #6,902
  • Jan 27, 2015 3:33pm Jan 27, 2015 3:33pm
Quoting Cecil Gee
{quote} think aapl gonna get a large move
APPL share $3.06 versus $2.60 estimate, awesome !!
  • #6,903
  • Jan 27, 2015 3:37pm Jan 27, 2015 3:37pm
Quoting Cecil Gee
{quote} APPL share $3.06 versus $2.60 estimate, awesome !!
If it will stick <$116 or so my diagonal is gonna make boocoo!
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,904
  • Jan 27, 2015 5:05pm Jan 27, 2015 5:05pm
Quoting StrayDog
Interesting idea... {image} EM for AAPL is about 6%... this lose money if stock breaches EM to the upside...
Do you have a link to the page that screen shot comes from? Much obliged ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #6,905
  • Jan 27, 2015 5:18pm Jan 27, 2015 5:18pm
Quoting StrayDog
Interesting idea... {image} EM for AAPL is about 6%... this lose money if stock breaches EM to the upside...
Never mind ... . Just found it, Stray ... . Got's some learnin' to do ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #6,906
  • Jan 27, 2015 5:31pm Jan 27, 2015 5:31pm
If you like trading bond futures or TLT, Rick has regular commentary & analysis.

http://finance.yahoo.com/video/sante...143900867.html
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,907
  • Jan 27, 2015 10:17pm Jan 27, 2015 10:17pm
what is that option strategy where you make money on a large move either direction? something like buy OTM calls and put at the same time? strangle??
  • #6,908
  • Jan 27, 2015 10:25pm Jan 27, 2015 10:25pm
Quoting charron
Thinking of GE mar20 Call spread, buy strike 24 @.68 and sell strike 25 @.23, for total debit of 0.45 Let me know what you guys think
Here's your trade as it sits after today's close. I see some things I don't like: You're risking $0.48 to make $0.52 max profit - to get that max P, GE will have to move above $25.30 or so by Mar expiry. Doesn't seem like much, GE lt at $24.50, so less than $1 to get up. But GE has a range of $23.40 to $27.50 for the last 52 weeks. It just doesn't move much. I don't like the low r:r. Given the low movement rate for GE, you might need all of that 52 days to get the move you need. Kind of a long time for a vertical spreaqd, it seems to me. But in a bull market resurgence GE will surely get up to your max P, so as usual a directional play will likely depend on the general bull/bear move of the market. So, if you are essentially betting on the bullish/bearish performance of the market, there are better ways to play that. Just my $0.02....
Attached Image (click to enlarge)
Click to Enlarge Name: 2015-01-27_ge.png Size: 50 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,909
  • Jan 27, 2015 10:42pm Jan 27, 2015 10:42pm
Quoting charron
what is that option strategy where you make money on a large move either direction? something like buy OTM calls and put at the same
time? strangle??
right, long strangle
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,910
  • Jan 27, 2015 11:11pm Jan 27, 2015 11:11pm
After the ER dust settles, I check on stocks for cheap calendar opps. I love cheap calendars. Have I said that before? Anyway, post-ER the IV will be scudding along the low range and that is good for option buying strategeries. Long calendars are defined risk &, if you get in cheap, offer some high r:r potential. And they are margin neutral, which is great because I am trading small accounts and my margin gets maxed on just a few trades, usually.

Rules of thumb, as I can think of them: 1. The wider the time between the calendar strikes, the wider the profit range between b/e's will be, but also, the more you will pay to get in. 2. Calendars are an end-game play: profit is maximized as you hold the trade (given good cooperation from the underlying) to near expiry.

Here's a JNJ call calendar 24d out, risks $0.10 to make $0.37, JNJ IVR @ 30%...
Attached Image (click to enlarge)
Click to Enlarge Name: 2015-01-27_jnj.png Size: 56 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,911
  • Jan 28, 2015 1:25am Jan 28, 2015 1:25am
man I would not be surprised to see a hyperdovish FOMC kick off a massive QE circlejerk bull rally on Wed. Of course, I am anxious to see what AAPL will do in next few days - I have $115/$116 and $116/$117 bull call Jan5/Feb1 diagonals, need AAPL to not tear past my upside b/e's.

I have nice SPY Feb1/Feb2 diagonals working, I paid almost nothing @ $208/$209 - if I hear doves cry tomorrow I will be looking to do more and I would be looking to get in Feb2/Feb bull spreads up around new high territory.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,912
  • Jan 28, 2015 5:50am Jan 28, 2015 5:50am
Quoting StrayDog
...... YHOO could move big, if they disclose their intentions on remaining BABA shares... Bullish? hm... steeping in front of a train with selling the Jan30 47/46.5 put spread? For like $0.23 credit... .

I will tap myself over shoulder for this YHOO bullish put spread idea, since I didn't get a fill.

Two lessons learned:
1) prepare trading ideas earlier
2) use wider spreads, on round numbers, so you can get filled easier
(sometimes this $0.5 strikes is harder to fill, so instead of 47/46.5 better choice was 47/46 put spread... just sell less of them)
Hope is dangerous in this game.
  • #6,913
  • Jan 28, 2015 6:06am Jan 28, 2015 6:06am
Quoting charron
what is that option strategy where you make money on a large move either direction? something like buy OTM calls and put at the same time? strangle??
That is Long Strangle. Best results with it is when you buy it a few days before earnings, so that IV is still lower than on ER's day, and because of that, options are cheaper. For that strategy the main thing is choice of stocks, since majority of them doesn't move much, i.e. outside of their expected move. So, in order to make money with it, stock got to move LARGE. Use it on momentum stocks only, on those that you think will move big time... I made money like that on some stocks, but have more losers than winners. Sometimes it pays very well, like on NFLX now and previous ER's... AMZN... TWTR had 2 outlier moves also, like -20% and +30%... that is a rare thing. It can be done around other "binary events" also... presentation of new products (AAPL), same store sales or other information for retailers, and so on. A lottery ticket, you must have a good idea, "feeling" or whatever, to make money like that, but if you do, than it is party time...

Disclaimer:
I am just a option trading rookie, so that is only my own opinion.
My previous trading experience doesn't count for options.
Hope is dangerous in this game.
  • #6,914
  • Edited 9:37am Jan 28, 2015 9:24am | Edited 9:37am
Quoting The Fool
man I would not be surprised to see a hyperdovish FOMC kick off a massive QE circlejerk bull rally on Wed. Of course, I am anxious to see what AAPL will do in next few days - I have $115/$116 and $116/$117 bull call Jan5/Feb1 diagonals, need AAPL to not tear past my upside b/e's. I have nice SPY Feb1/Feb2 diagonals working, I paid almost nothing @ $208/$209 - if I hear doves cry tomorrow I will be looking to do more and I would be looking to get in Feb2/Feb bull spreads up around new high territory.
Looked at platform this morning and AAPL $115/$116 (close order) had been filled yesterday at the close (for a $0.05 net gain) - which is odd because I sat there at the close and watched it expire unfilled, and late last night it showed up on the platform as an expired, unfilled order. Not sure now if I care, maybe a blessing in disguise, since AAPL has shot up beyond the b/e on that trade. The $116/$117 call spreads are on another platform and are almost at the upper end b/e - I need AAPL to fall back $2 by Friday, if it keeps going up I will have to close to keep it off the death slide. A few minutes after I close, of course, it will reverse and go back to the maxP sweet spot of the trade at expiry. These things are not easy to trade, very dynamic....
Attached Image (click to enlarge)
Click to Enlarge Name: 2015-01-28_aapl.png Size: 63 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,915
  • Jan 28, 2015 10:30am Jan 28, 2015 10:30am
trying to fill a JNJ Feb/Feb4 $106 call calendar for $0.05 - long shot
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,916
  • Jan 28, 2015 12:05pm Jan 28, 2015 12:05pm
Quoting StrayDog
Interesting idea... {image} EM for AAPL is about 6%... this lose money if stock breaches EM to the upside...
That was AAPL Jan30 Call Ratio Spread 114/117 (long 1x114, short 2x117) ... it could be filled yesterday for $0.05 - 0.10 credit...
It trades right now for $0.87 debit...

Wide short strangle also was good choice, Jan30 100/120 was about $1.00, it trades now for $0.33...


Well, lets see something for FB tonight, anybody interested in suggestions?
Hope is dangerous in this game.
  • #6,917
  • Jan 28, 2015 12:13pm Jan 28, 2015 12:13pm
Another interesting concept, with no downside risk, but with defined risk strategy

Attached Image (click to enlarge)
Click to Enlarge Name: FB-idea.PNG Size: 71 KB
Hope is dangerous in this game.
  • #6,918
  • Jan 28, 2015 12:35pm Jan 28, 2015 12:35pm
Quoting Cecil Gee
Taken another trade in anticipation of the FOMC on TLT. Will the Fed steam roll ahead with its planned rate hike later this year or push it further back, i don't know but looking at TLT its had quite a run up and I found a long put spread that gives me a low entry level as I'm looking for a pullback from these current highs long $133 put and wrote 132.50 put for net 5c or $5 per contract as below iShares 20+ Year Treasury Bond (TLT) -NYSEArca 134.54 {image} 0.18(0.13%) 19:29 - Nasdaq Real Time Price TLT Jan 2015 133.000 put (TLT150130P00133000)...
above trade will end up a loser, TLT does not want to come down yet
  • #6,919
  • Jan 28, 2015 12:58pm Jan 28, 2015 12:58pm
well let's see what the Fed can do....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6,920
  • Jan 28, 2015 1:30pm Jan 28, 2015 1:30pm
Quoting The Fool
well let's see what the Fed can do....
aaah...no more considerable time. Do you think markets will turn down for a considerable time? Doubt it.
"If The Fool persists in his Folly he will become wise." - William Blake
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