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  • #7,021
  • Feb 2, 2015 8:15am Feb 2, 2015 8:15am
Quoting StrayDog
...... Here is my SPX daily chart... I use TV because it is free and very good. Level 1975 on SPX CFDs correspond to 1982 for /ES... ..
That is a mistake, sorry. Level 1982 was good for shorter term trading, that is why I mentioned it, but 1975 on CFDs - thick dotted red line on my chart - is actually about 1969/68 on /ES. I got confused trading DAX and Snp... and price differs, /ES and /NQ price is 6-7 points bellow CFD value, and opossite goes for DAX.

Attached Image (click to enlarge)
Click to Enlarge Name: SPX-4h.PNG Size: 159 KB
Hope is dangerous in this game.
  • #7,022
  • Feb 2, 2015 10:36am Feb 2, 2015 10:36am
And yet ANOTHER "V" reversal... on /ES and /NQ... with breakout on DAX, that crazy s.o.b... approaching ATH.
(and that is on bad news, just imagine reaction on good news..)
Hope is dangerous in this game.
  • #7,023
  • Feb 2, 2015 3:12pm Feb 2, 2015 3:12pm
Today just did SPY spreads, bullish, Mar/Mar5 $210/$211 calls, for $0.01 debit. Probably not far enough out for 45 dte, but we'll see.

Tried to fill bearish Feb/Feb4 TLT put spreads but could not get filled...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,024
  • Feb 2, 2015 6:38pm Feb 2, 2015 6:38pm
Quoting The Fool
Today just did SPY spreads, bullish, Mar/Mar5 $210/$211 calls, for $0.01 debit. Probably not far enough out for 45 dte, but we'll see. Tried to fill bearish Feb/Feb4 TLT put spreads but could not get filled...
super super, you don't realize yet what you have uncovered, great set up

and yes it is far enough and to be really honest it doesn't matter, light bulb gone off
  • #7,025
  • Feb 2, 2015 6:49pm Feb 2, 2015 6:49pm
Quoting Cecil Gee
{quote} super super, you don't realize yet what you have uncovered, great set up and yes it is far enough and to be really honest it doesn't matter, light bulb gone off
well I hope you're right, I think we will see some hot moves up in US indices on the back of Eurozone equities, ECB QE, all dependent on Greece fading back to sideshow status. Ascending oil prices look like a good bet, too, and that will float US stocks, too. I still think SPY $210-212 in 5-6 weeks may be too tight, but we'll see.

Diagonals are all about walling off one end and giving yourself enough room on the other.

I tried to fill TLT put diagonals @ shorter dte today, but no luck - will keep shooting at that.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,026
  • Feb 2, 2015 6:53pm Feb 2, 2015 6:53pm
Quoting The Fool
{quote} well I hope you're right, I think we will see some hot moves up in US indices on the back of Eurozone equities, ECB QE, all dependent on Greece fading back to sideshow status. Ascending oil prices look like a good bet, too, and that will float US stocks, too. I still think SPY $210-212 in 5-6 weeks may be too tight, but we'll see. Diagonals are all about walling off one end and giving yourself enough room on the other. I tried to fill TLT put diagonals @ shorter dte today, but no luck - will keep shooting at that.
How would you describe that strategy, as I see you buy the closer option and selling the week 5 option, and what are the transaction cost, i haven't done it this way before.
  • #7,027
  • Feb 2, 2015 7:01pm Feb 2, 2015 7:01pm
Quoting The Fool
{quote} well I hope you're right, I think we will see some hot moves up in US indices on the back of Eurozone equities, ECB QE, all dependent on Greece fading back to sideshow status. Ascending oil prices look like a good bet, too, and that will float US stocks, too. I still think SPY $210-212 in 5-6 weeks may be too tight, but we'll see. Diagonals are all about walling off one end and giving yourself enough room on the other. I tried to fill TLT put diagonals @ shorter dte today, but no luck - will keep shooting at that.
just looked at TLT options, the 50k options have not added to the open interest meaning the were open and closed the same day
  • #7,028
  • Feb 2, 2015 7:12pm Feb 2, 2015 7:12pm
Quoting Cecil Gee
{quote} How would you describe that strategy, as I see you buy the closer option and selling the week 5 option, and what are the transaction cost, i haven't done it this way before.
got it, Diagonal Debit Spread
  • #7,029
  • Feb 2, 2015 9:15pm Feb 2, 2015 9:15pm
Quoting Cecil Gee
{quote} just looked at TLT options, the 50k options have not added to the open interest meaning the were open and closed the same day
good eye Cecil, I see the 50k sold calls are gone in Feb but they did show up in the OI for March....not sure what gives there.

I did fill a TLT Feb/Feb4 $130/$129.5 bear put diagonal spread today, for $0.08 debit. 15 lot trade risks $150 to make maxP $730 with a downside b/e of $127.80. It's underwater! Diagonals are often underwater - the profit potential is realized in the last days of the trade. So they're all about timing
Attached Image(s) (click to enlarge)
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Click to Enlarge Name: 2015-02-02tl2.png Size: 40 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,030
  • Feb 2, 2015 9:49pm Feb 2, 2015 9:49pm
Quoting Cecil Gee
{quote} How would you describe that strategy, as I see you buy the closer option and selling the week 5 option, and what are the transaction cost, i haven't done it this way before.
no, I'm selling the front month (or week) and buying the back. The spread is diagonal because the there's a difference between the front/back strikes. I am looking to get in for small debit or small credit. The front/back spread can be as little as a week, but can be anything you like longer, although I usually will only look at a month or maybe sometimes 2, at the most. If you can find a 2 month spread that you can get into for small debit, you have probably found a situation where the front option IV is much higher than the back - this is something to look out for as those are situations where it is very easy to set up profitable trades.

Anyway, the wider the time spread, the more you will have to pay for the combo - BUT, the wider the time spread is, the wider the profit zone will be on the P/L. Transaction costs are simply the net difference between sold options and bought options, plus typical comms. Margin required will be based on the spread between strikes - if you do a $205.50/$206.00 weekly SPY spread, for instance, the margin required will be $50/contract.

Hope the above helps, let me know if you have more questions.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,031
  • Feb 2, 2015 9:58pm Feb 2, 2015 9:58pm
Quoting The Fool
Diagonals are often underwater - the profit potential is realized in the last days of the trade. So they're all about timing {image} {image}
this is the tricky part of trading diagonals: not only do you have to be right, directionally, but you also need to be able to bracket a price range for the u/l at expiry for the front week option. Easier said than done. How to mitigate that difficulty:

1) get in the spread for very small debit or small credit: this will limit you r risk to near nothing in one direction. So, if you are wrong directionally, you don't lose anything (except your time and the opportunity cost of the margin you tied up);
2) give the trade plenty of room to run. If you are directionally right, you want to see the u/l finish near the peak of the P/L line at expiry. But if you get there, you are also close to the dangerous "Death Slide" of the P/L line, the steep decline in profit that can sink the trade into loss quickly relative to moves in the u/l. Better to be safe than sorry.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,032
  • Feb 2, 2015 10:45pm Feb 2, 2015 10:45pm
I got in this SPY call spread Feb1/Feb2 $108/$109 several weeks ago, for $0.01 credit. It expires Friday and I need to make a decision about what to do. I see I should have closed it today, when it was about $150 up. If SPY falls over the next day or so, the trade will make less. If Spy can finish on Friday @ $203.40 or above the trade will make > $200. I doubt it can do much better than it was today..... The short vid shows the change in P/L over the last few days of the week.

So, this was not a very profitable trade, but it will make something. SPY just did not get up enough by the end week....

http://screencast.com/t/06tZHdaka
Attached Image (click to enlarge)
Click to Enlarge Name: 2015-02-02_spyold.png Size: 62 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,033
  • Feb 3, 2015 12:14am Feb 3, 2015 12:14am
YUM ER 2/4, EM ~ $3.5.....a Feb1/Feb2 $77 calendar for $0.03? Nothing like it on the put side. Will try to get filled there, prolly a snipe hunt.
Attached Image (click to enlarge)
Click to Enlarge Name: 2015-02-02_yum.png Size: 13 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,034
  • Feb 3, 2015 2:32am Feb 3, 2015 2:32am
Quoting The Fool
{quote} no, I'm selling the front month (or week) and buying the back. The spread is diagonal because the there's a difference between the front/back strikes. I am looking to get in for small debit or small credit. The front/back spread can be as little as a week, but can be anything you like longer, although I usually will only look at a month or maybe sometimes 2, at the most. If you can find a 2 month spread that you can get into for small debit, you have probably found a situation where the front option IV is much higher than the back - this...
thx and got it now, I need to do one or two. Its the profit potential that has me excited, the loss can be controlled to a very acceptable level. So your paying $1+ on a diagonal spread if you purchase for $0.01 plus putting up margin and comms and if you lose I'm assuming you lose your debit plus comms but not the margin unless it death slide hits you
  • #7,035
  • Feb 3, 2015 4:26am Feb 3, 2015 4:26am
Quoting Cecil Gee
{quote} thx and got it now, I need to do one or two. Its the profit potential that has me excited, the loss can be controlled to a very acceptable level. So your paying $1+ on a diagonal spread if you purchase for $0.01 plus putting up margin and comms and if you lose I'm assuming you lose your debit plus comms but not the margin unless it death slide hits you
yes, they're tricky, very dynamic - trade a few and start small. You have to understand that the trade may be in loss in the first half of the time spread but that is ok, up to a point...you have to give yourself plenty of room.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,036
  • Feb 3, 2015 6:49am Feb 3, 2015 6:49am
Quoting The Fool
{quote} yes, they're tricky, very dynamic - trade a few and start small. You have to understand that the trade may be in loss in the first half of the time spread but that is ok, up to a point...you have to give yourself plenty of room.....
so if you were to long the closer term option and sell the further out one, same scenario what would the be? e.g. as follows

long 206 call 20 feb exp

SPY Feb 2015 206.000 call (SPY150220C00206000)
-OPR
1.13 https://s.yimg.com/lq/i/us/fi/03rd/up_g.gif 0.28(39.44%) 2 Feb 21:14

write 207 call 27 feb exp


SPY Feb 2015 207.000 call (SPY150227C00207000)
-OPR
1.15 https://s.yimg.com/lq/i/us/fi/03rd/up_g.gif 0.18(21.18%) 2 Feb 21:08

ok I know there is a 2c credit on this but lets say it was a 2c or a 1c debit, is this doable, I've stayed away from spreads for a long long time but I'm seeing real potential in what I'm looking at
  • #7,037
  • Feb 3, 2015 8:37am Feb 3, 2015 8:37am
Quoting The Fool
Today just did SPY spreads, bullish, Mar/Mar5 $210/$211 calls, for $0.01 debit. Probably not far enough out for 45 dte, but we'll see. Tried to fill bearish Feb/Feb4 TLT put spreads but could not get filled...
Hi TF... I did a copy/paste trade from your idea .

SPY Call Diagonal 207 March20/208 March 31 for $0.13 credit.

What do you think about that?
Hope is dangerous in this game.
  • #7,038
  • Feb 3, 2015 8:41am Feb 3, 2015 8:41am
Quoting StrayDog
{quote} Hi TF... I did a copy/paste trade from your idea . SPY Call Diagonal 207 March20/208 March 31 for $0.13 credit. What do you think about that?
if it clears the 50 then its a winner winner
  • #7,039
  • Feb 3, 2015 8:47am Feb 3, 2015 8:47am
Quoting StrayDog
{quote} Hi TF... I did a copy/paste trade from your idea . SPY Call Diagonal 207 March20/208 March 31 for $0.13 credit. What do you think about that?
take out 204.10 and its heading to the highs over the month
  • #7,040
  • Feb 3, 2015 9:28am Feb 3, 2015 9:28am
Big Idea right now is the rising crude price. If it keeps going it foretells a steep bull rally for stocks. Big moves for UST's, USD sliding....the experts all say there will be further weakness in oil prices. The supply glut persists. But there are strikes going on - US refinery workers, fires at some of the refineries...a volatile situation.
"If The Fool persists in his Folly he will become wise." - William Blake
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