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  • #7,041
  • Feb 3, 2015 9:37am Feb 3, 2015 9:37am
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?
http://screencast.com/t/FisBkbJf

Hey SDog, I put a shot of your trade up - b/e at expiry is $211 and maxP is $206.50...to my eye that is a little tight, but it may work out great, we'll see. I like the good credit, that helps push the upside b/e out a bit. Good Luck!
Attached Image (click to enlarge)
Click to Enlarge Name: 2015-02-03_SPY.png Size: 71 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,042
  • Feb 3, 2015 9:53am Feb 3, 2015 9:53am
Quoting Cecil Gee
{quote} 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 {image} 0.28(39.44%) 2 Feb 21:14 write 207 call 27 feb exp SPY Feb 2015 207.000 call (SPY150227C00207000) -OPR 1.15 {image} 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...
that'd be a short diagonal, gets on for small credit and has steep P/L beyond the b/e at expiry, which is about $208.40. Note zone of loss below that.
Attached Image (click to enlarge)
Click to Enlarge Name: 2015-02-03_spyx.png Size: 25 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,043
  • Feb 3, 2015 9:58am Feb 3, 2015 9:58am
Quoting The Fool
{quote} that'd be a short diagonal, gets on for small credit and has steep P/L beyond the b/e at expiry, which is about $208.40. Note zone of loss below that. {image}
thx, I'm not doing them, I'm researching other spreads
  • #7,044
  • Feb 3, 2015 9:58am Feb 3, 2015 9:58am
Quoting The Fool
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. {image}
trying to fill $78 calendar for $0.04
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,045
  • Feb 3, 2015 10:34am Feb 3, 2015 10:34am
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
CG, in case of U/L going right trough your spread (TF would say "death slide" here ):
- if you done it for debit, total loss is debit + wide of the spread + comms
- If you did it for credit, than max loss = wide of the spread + comms - credit received...

If you are directionally wrong, you lose your debit, OR keep the tiny credit received.


Like on this picture, here is the Diagonal I did...
Attached Image (click to enlarge)
Click to Enlarge Name: SPY_diagonal.png Size: 47 KB


Note the bid/ask, since this analyzer doesn't calculate midpoints, but bid and ask only. So, in this case it uses -0.07 ask... So, $1 wide spread is $100 minus credit received, or $7, gives $93 as max loss... (In my case, $100 - $13 = $87 as max loss). And $160 as max profit.

In case SPY drops like a brick, I will keep the credit, in case it shoots to the sky, I will lose... If it approaches $207 in given time - profits. At least that is how I understand this.
Hope is dangerous in this game.
  • #7,046
  • Feb 3, 2015 10:47am Feb 3, 2015 10:47am
Quoting StrayDog
{quote} CG, in case of U/L going right trough your spread (TF would say "death slide" here ): - if you done it for debit, total loss is debit + wide of the spread + comms - If you did it for credit, than max loss = wide of the spread + comms - credit received... If you are directionally wrong, you lose your debit, OR keep the tiny credit received. Like on this picture, here is the Diagonal I did... {image} Note the bid/ask, since this analyzer doesn't calculate midpoints, but bid and ask only. So, in this case it uses -0.07 ask... So, $1 wide...
understood, thanks. At the moment I'll carry on with short directional plays and bull/put/verticals. I'll be working on diagonals to get a better understanding. like anything the optimal profit received is at expiry with these but you can close anytime before?
  • #7,047
  • Feb 3, 2015 10:59am Feb 3, 2015 10:59am
Quoting Cecil Gee
{quote} understood, thanks. At the moment I'll carry on with short directional plays and bull/put/verticals. I'll be working on diagonals to get a better understanding. like anything the optimal profit received is at expiry with these but you can close anytime before?
Yeah, you can close 'em any time you want. I like verticals better, since they are easy to understand, nothing "dynamic" on them, you got fixed b/e points and everything. I just want to try Diagonals for directional plays, since they are much cheaper than vertical debit spreads, and carry a big reward potential.

SPY has this resistance around $208, and I doubt it can go through it easy. That is why I choose 207/208...
Hope is dangerous in this game.
  • #7,048
  • Feb 3, 2015 12:11pm Feb 3, 2015 12:11pm
Quoting The Fool
{quote} http://screencast.com/t/FisBkbJf Hey SDog, I put a shot of your trade up - b/e at expiry is $211 and maxP is $206.50...to my eye that is a little tight... {image}
Yeah, imagine relief rally if all this with Greece ends in a good-for-market way... I was thinking about it, and I did an exact copy of your trade.

I just got filled for SPY Call Diagonal March 210 / March31 211 for $0.03 credit. So I got both versions now, 207/208 and 210/211... 2 of each.... fook it.
Hope is dangerous in this game.
  • #7,049
  • Feb 3, 2015 12:15pm Feb 3, 2015 12:15pm
Good video by tastytrade... and here is an answer why NFLX is the worst choice for short strangle...

>>> Annualized Expected Moves <<<

We have often shown that the SPX will stay within its 1 Standard Deviation 68% of the time. This proves that the option market correctly prices how much the market will move each year. However, do these probabilities hold up when you look at an individual underlying?
Hope is dangerous in this game.
  • #7,050
  • Feb 3, 2015 12:47pm Feb 3, 2015 12:47pm
Quoting StrayDog
{quote} Yeah, imagine relief rally if all this with Greece ends in a good-for-market way... I was thinking about it, and I did an exact copy of your trade. I just got filled for SPY Call Diagonal March 210 / March31 211 for $0.03 credit. So I got both versions now, 207/208 and 210/211... 2 of each.... fook it.
Well, SPY is up $5.50 in the last 1-1/2 trading days! I know I don't have to remind you how vicious these index melt-ups can be. So, Mar expiry is just a long ways off, and if we crash up thru $210 well before then, the $210/$211 call diagonal will be in loss. If SPY keeps going up and goes out beyond the b/e, you are on the death slide & have to make a decision about what to do. That's the major risk. I like to play these with less dte, or more room, or both. My Feb1/Feb2 $207/$208 diagonal is looking good, though.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,051
  • Feb 3, 2015 2:04pm Feb 3, 2015 2:04pm
Are you doing anything else for earnings trades, SDog? I am looking around for some more action, but mostly at oil and bonds and index trades. Not sure if I got filled on my YUM calendar, gotta go to Starbucks to steal a painless internet connection.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,052
  • Feb 3, 2015 2:10pm Feb 3, 2015 2:10pm
Quoting StrayDog
{quote} Yeah, you can close 'em any time you want. I like verticals better, since they are easy to understand, nothing "dynamic" on them, you got fixed b/e points and everything. I just want to try Diagonals for directional plays, since they are much cheaper than vertical debit spreads, and carry a big reward potential. SPY has this resistance around $208, and I doubt it can go through it easy. That is why I choose 207/208...
I think verticals are a good way to go if you are a good chartist and can catch decent moves off TA, or if you are catching a move off a binary event of some kind. My history with them so far has been not so great, though - that's because I have gotten into the value trap, where I get in those far otm verticals for small small debit, but end up losing that since the b/e for the trade was too far away, or I was directionally wrong, anyway. So, no big deal if the debit was truly very small, but sometimes it should been smaller and death by a thousand cuts is still death, after all....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,053
  • Feb 3, 2015 2:54pm Feb 3, 2015 2:54pm
Quoting The Fool
Are you doing anything else for earnings trades, SDog?
GILD, CMG and DIS in AH. I don't like any of those... DIS was good past 2 times for IC... I think... today I lacked time for any on these stocks, to prepare myself...

Quoting The Fool
.... So, no big deal if the debit was truly very small, but sometimes it should been smaller and death by a thousand cuts is still death, after all....
Yeah, you do tend to be over optimistic sometimes... . Sometimes paying more makes a difference between loser and a scratch / small winner. Tough to find a balance.
Hope is dangerous in this game.
  • #7,054
  • Feb 3, 2015 3:09pm Feb 3, 2015 3:09pm
Quoting The Fool
My Feb1/Feb2 $207/$208 diagonal is looking good, though.....
Had a close order for a $0.20 net gain in there on this today, noticed it was getting close near the close, hope it hit....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,055
  • Feb 3, 2015 3:14pm Feb 3, 2015 3:14pm
Quoting StrayDog
{quote} GILD, CMG and DIS in AH. I don't like any of those... DIS was good past 2 times for IC... I think... today I lacked time for any on these stocks, to prepare myself... {quote} Yeah, you do tend to be over optimistic sometimes... . Sometimes paying more makes a difference between loser and a scratch / small winner. Tough to find a balance.

tough to find a balance, yeah, that's a psychological hurdle, one I am trying to overcome, but if one just looks at the probabilities...even if you are spending $0.45 to make $0.65 max, or whatever....compared to oooohlala a $0.05 debit to maybe make $0.50 max, but the probs are way in favor of the first trade, well you should take that first trade all day over the second one...but most dumfuks like me won't do it.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,056
  • Feb 3, 2015 4:38pm Feb 3, 2015 4:38pm
I get these "cherry bombs" in the email every day or so - I kinda like the idea mentioned below, will look for actual trade examples to share....

"TP Says...
Tuesday February 3, 2015

With 30-year Treasury yields (TYX) the lowest they’ve been in over ten years, and 10-year yields (TNX) the lowest in almost two years, the homebuilders index ITB is at levels it hasn’t seen since 2007 before the mortgage debacle took away about 2/3 of its value. But for this level of interest rates, stocks like DHI, PHM and TOL aren’t as high as when 10-year rates tanked in May 2013. Even LEN is only about $.50 higher than 2013, and is lower than what it was a few months ago. ITB options themselves don’t have enough liquidity to be good for trading at this point. Vol ranks are low in the homebuilders, so I’m looking at long put verticals with a few weeks duration in those stocks that have decent liquidity -- DHI, PHM and LEN – as a bet on higher rates and weaker stocks."

"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,057
  • Feb 3, 2015 9:22pm Feb 3, 2015 9:22pm
Quoting The Fool
{quote} Had a close order for a $0.20 net gain in there on this today, noticed it was getting close near the close, hope it hit....
closed Feb1/Feb2 SPY $208/$209 call diagonal for net $0.21 gain, this was a "never let a winner turn into a loser" close & a bet SPY may sell off or move sideways in the remaining trade days. If SPY gains another $3 by Friday and I confirm that I traded out at $325 instead of $725, I promise I will not bitch and moan.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,058
  • Edited 10:05pm Feb 3, 2015 9:35pm | Edited 10:05pm
http://screencast.com/t/zNDaybYoJSU

TLT hit a multi-year high last Fri, $138.85, and is down $4.75 in 3 trading days since then. If TLT is gonna crash $5-$10 per week, then this Feb/Feb4 $130/$129.5 put diag is SOL, but I have some time to enjoy the pain anyway...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,059
  • Edited 10:59pm Feb 3, 2015 10:45pm | Edited 10:59pm
http://screencast.com/t/iZwOpvyrfrj

3 dte for this EXPE $94/$79 double calendar. Watch the 5-second vid: is it magic? If I take this trade at the close on 2/3, and nothing changes over the next 2 days, (EXPE ER is after hours on 2/5)..no change in the share price, no change in IV of the options...The P/L is at b/e m/l at trade inception on 2/3, and on 2/5, near close of trading, pre-ER, the P/L is +$582....

Is that real?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #7,060
  • Feb 3, 2015 11:06pm Feb 3, 2015 11:06pm
Quoting The Fool
Not sure if I got filled on my YUM calendar, gotta go to Starbucks to steal a painless internet connection.
No fill on YUM, may roll the bones on an earnings trade or 2, maybe not.
"If The Fool persists in his Folly he will become wise." - William Blake
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