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Let's Trade Options

  • #8,881
  • May 31, 2015 3:54pm May 31, 2015 3:54pm
Quoting ZebraSquirl
{quote} See ... . Rules are made to be broken ... . I would tend to agree with a lower threshhold for ETF's; IVR is, after all, relative; they rarely experience the kind of IVR expansion that individual underlyings do ... .
And this kind of highlights what I don't like about Tom's communication skills ... . He needs to be clearer as to what research supports what ... . 50+ IVR applies to individual underlyings; 35+ to ETF's ... . Naturally, if you strangle an ETF at 50+, all is good ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #8,882
  • May 31, 2015 3:57pm May 31, 2015 3:57pm
Quoting StrayDog
{quote} Like this {image} Or similar, because this guy did 2x the call side
Fuck, didn't notice that ... . It's more like a ratio spread ... . Was wondering what the hell that trade was about ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #8,883
  • May 31, 2015 3:57pm May 31, 2015 3:57pm
Quoting ZebraSquirl
I keep returning to USO ... . Right now, the bitch is at a resistance level again (20.30-ish), and I've got no directional bias here going into the next cycle's expiration ... . Looked at various IC set-up's, but they don't look productive from a credit standpoint ... . The alternative would be a July 15 long call 17/23/20 butterfly for a 1.38 debit (BE's: 18.32 and 21.62). My gut feeling is that I should be bullish going into summer, so I'm not really hot on the butterfly ... . Looked at the July 15 17/19 short put vert, too, but the BE's somewhat...
USO is too cheap....messes with its usefulness for options trading...leaves much to be desired. XLE will track oil but will also track equities too when macro effects move the markets.

I am watching this week for the inevitable can kick for Greece, plus US jobs, can't get into it on a nice Sunday, though....later.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #8,884
  • May 31, 2015 4:13pm May 31, 2015 4:13pm
Quoting The Fool
{quote} USO is too cheap....messes with its usefulness for options trading...leaves much to be desired. XLE will track oil but will also track equities too when macro effects move the markets. I am watching this week for the inevitable can kick for Greece, plus US jobs, can't get into it on a nice Sunday, though....later.
This is where my not trading futures is a drawback ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #8,885
  • Jun 1, 2015 6:16am Jun 1, 2015 6:16am
Quoting The Fool
In the coming week I just have SPY $215/$216.50 short calls expiring. Sold for $0.44 and will buy out for <$0.10 early in the week, if the market cooperates. For Jun2 week I have short SPY calls $215/$217, sold for $0.35, will buy out in the coming week if I can get out for < $0.10 debit. And so on out every week until Jun5 - lots of $215//217, $216/218 and $217/219. Need to keep hoovering up that short spread trade income and rolling on back into more of the same. I am trying to work out a regular MO to follow for selling credit spreads on SPY...
That is the way to do this, looking to do the same. One instrument is enough to do majority of trades on it. Good job TF.
Hope is dangerous in this game.
  • #8,886
  • Jun 1, 2015 9:51am Jun 1, 2015 9:51am
Quoting StrayDog
{quote} That is the way to do this, looking to do the same. One instrument is enough to do majority of trades on it. Good job TF.
A dip below SPY $210 will close me out of many long call spreads, 2-3-4 weeks early, always nice to get on the right side of the market.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #8,887
  • Jun 1, 2015 11:33am Jun 1, 2015 11:33am
Quoting The Fool
{quote} A dip below SPY $210 will close me out of many long call spreads, 2-3-4 weeks early, always nice to get on the right side of the market.
The problem with this market is that it doesn't have a side... so this tactics of selling every mofo rip with OTM call spreads should be fine.
It looks like bulls are reinforcing support on /ES in 2100/2105 area.

njr, where are you? Gone, just when I started to trade futures options?
Hope you are doing fine.
Hope is dangerous in this game.
  • #8,888
  • Jun 1, 2015 1:01pm Jun 1, 2015 1:01pm
Quoting StrayDog
{quote} The problem with this market is that it doesn't have a side... so this tactics of selling every mofo rip with OTM call spreads should be fine. It looks like bulls are reinforcing support on /ES in 2100/2105 area. njr, where are you? Gone, just when I started to trade futures options? Hope you are doing fine.
sure, sell da rips, don't blink, though. I had finger on trigger this morning to sell some <20 delta put spreads to match the call spreads, they were paying about $0.25 for a $2 Jun spread.....idk, prolly shoulda. Anyway, if we can start seeing more red candle action at least there will be a little more premium, even if its still sideways pa m/l.

yep, njr is a good un, I hope he has moved on up to that high mountain top. I miss pipple, too, he was a true pro. And Wulfgar, damn he just dropped off the map? I hope he is doing well, wherever he may be.

The thing about trading, it's boring. And the better a trader you are, the more boring it is. If I get into a routine of just selling SPY credit spreads or IC's, well how much is there to say about that? ..."sold the 22 delta $225/$227 calls for $0.42, Jul call spreads coming off full credit on expiry, just under the wire, blah blah blah, the Fed will never raise rates, the ECB will never let Greece default, nothing ever changes, oh well...."
"If The Fool persists in his Folly he will become wise." - William Blake
  • #8,889
  • Jun 1, 2015 2:26pm Jun 1, 2015 2:26pm
was looking at selling SPY call spreads out to Jul, 46 dte, but I am sitting on hands now, will like to see what happens with the Greek drama this week. I have to expect the ezone heads will cave and give Greece another fix - the old can kick, which will be oh yes quite bullish, but....maybe they will surprise us? Maybe it will keep dragging out...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #8,890
  • Jun 1, 2015 10:32pm Jun 1, 2015 10:32pm
Quoting The Fool
VXX 1dte strangle, is it too much to ask to get a $1 VXX move on month-end GDP day?
will look at this again, come Thursday, for a possible NFP pop or drop....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #8,891
  • Jun 1, 2015 10:51pm Jun 1, 2015 10:51pm
Quoting The Fool
I am trying to work out a regular MO to follow for selling credit spreads on SPY where I have a rationalized approach that produces weekly revenue under hard rules for risk and margin management. I have been doing this for several months now. SPY credit spread trades are like 3/4 of my books. I will continue to look at other names and opportunities for good returns on other defined-risk trade types, but I don't really care if I do none of those.
m/l what I have been doing is looking at SPY (sometimes IWM, too) out anywhere from 21 to 42 dte (3-6 weeks) and selling credit spreads @ 20 perhaps max 25 deltas on the short leg, trying to get a minimum of 20% the width of the strikes (that's $0.40 on a $2 spread) but usually doing a little better than that, sometimes a little less. Premium is very thin, iv < 10% on these SPY options, it's pitiful.

Looking to have options expiring every week, week-in week-out, but not stressing if I miss a week or have multiple spreads in the same week. Looking to put on 20% of margin on each spread, running 3-4 spreads at any given time, with always at least 20% in reserve. So, in a $10k account, that's $2k margin hit for a 10-lot $2 spread that might bring in $0.25-$0.35 net, every week - so, if I never lose that would be 10%-14% return on equity per month. Best case. The preceding for a one-sided market with no to low vol, I will have to re-assess if/when that ever changes. The preceding not allowing for any IC's, I am working into that.

Managing winners at no less than 50% of full profit but often waiting a bit for 70% and no shame in taking 100% if it works out that way. Managing losers? Yes, now, this part needs some work....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #8,892
  • Jun 1, 2015 10:58pm Jun 1, 2015 10:58pm
Quoting The Fool
The preceding not allowing for any IC's, I am working into that.....
SDog is right, the sideways market is begging for IC's. When you start forgetting about IC's, though, and just sell into strength either side (with care, don't get caught in any big moves!) - then you are trading KtheST style, albeit with spreads, since you, and by you I mean me, are too poor to sell naked....so, you might end up with IC's, but it's an evolving scenario where you are trying to balance call side and put side margin costs.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #8,893
  • Jun 2, 2015 2:59am Jun 2, 2015 2:59am
I am so happy when I get free money, grats to the Greeks....(too soon? I'm just getting warmed up....)

Quoting The Fool
sitting on hands now, will like to see what happens with the Greek drama this week. I have to expect the ezone heads will cave and give Greece another fix - the old can kick, which will be oh yes quite bullish, but.......
Inserted Video
"If The Fool persists in his Folly he will become wise." - William Blake
  • #8,894
  • Jun 2, 2015 3:17am Jun 2, 2015 3:17am
all we need is euros,...sweet euros
Inserted Video
"If The Fool persists in his Folly he will become wise." - William Blake
  • #8,895
  • Jun 2, 2015 3:25am Jun 2, 2015 3:25am
you know what?...money won't make you happy.
Inserted Video
"If The Fool persists in his Folly he will become wise." - William Blake
  • #8,896
  • Jun 2, 2015 3:39am Jun 2, 2015 3:39am
loop it til the next tranche comes through
Inserted Video
"If The Fool persists in his Folly he will become wise." - William Blake
  • #8,897
  • Jun 2, 2015 8:26am Jun 2, 2015 8:26am
Quoting The Fool
all we need is euros,...sweet euros
fiber up 200 pips on wispy news
"If The Fool persists in his Folly he will become wise." - William Blake
  • #8,898
  • Jun 2, 2015 8:42am Jun 2, 2015 8:42am
a break of SPY $210 today breaks me out of lots of the higher spreads, $217's all hit manageable profit - and I go into much cash....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #8,899
  • Jun 2, 2015 9:38am Jun 2, 2015 9:38am
Entered another bear call spread on mighty SnP....

/ES July 2155/2165 for $2.75 credit... entered with ES @ 2107
Hope is dangerous in this game.
  • #8,900
  • Jun 2, 2015 9:51am Jun 2, 2015 9:51am
Hi Guys,

Anyone familiar with Brian Johnson's books? I've just read "Option Strategy Risk / Return Ratios" with the concepts of Delta/theta riskratio and Vega/theta risk ratio. The book offers some nice reflections on the greeks & risks in option income strategies. However, I'm no option-wizard so I'm curious what you guys think of Johnson's approach.

http://www.amazon.com/Option-Strateg...ptions+trading

http://www.amazon.com/Exploiting-Ear...sap_bc?ie=UTF8

Oh, currently a small SPY-position in my portfolio: one spread for Jun05/12 and one income for Jun19. Lately, I didn't do much in options but in the coming weeks I'm looking for more marketneutral spreads in SPY.
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