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Let's Trade Options

  • #9,521
  • Jul 23, 2015 8:51pm Jul 23, 2015 8:51pm
Quoting The Fool
I don't usually look that far out, but I like the Sep SPY bear call spread idea
I'm kind of running for a little bit with the Market Measures 45 DTE recommendation ... . They seem to be big on that. It gives a lot of time for the trade to work out, but it also gives a lot of time for shit to hit the fan ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #9,522
  • Jul 23, 2015 9:06pm Jul 23, 2015 9:06pm
Quoting ZebraSquirl
{quote} I'm kind of running for a little bit with the Market Measures 45 DTE recommendation ... . They seem to be big on that. It gives a lot of time for the trade to work out, but it also gives a lot of time for shit to hit the fan ... .
less is more
"If The Fool persists in his Folly he will become wise." - William Blake
  • #9,523
  • Jul 23, 2015 9:07pm Jul 23, 2015 9:07pm
Quoting ZebraSquirl
{quote} I'm kind of running for a little bit with the Market Measures 45 DTE recommendation ... . They seem to be big on that. It gives a lot of time for the trade to work out, but it also gives a lot of time for shit to hit the fan ... .
The other thing about 45 DTE -- at least for me -- is that I experience less anxiety about a side of an IC being breached especially when I've got 30 days or more to go for the thing to resolve itself. The important thing for me is to keep these mechanical index trades kinda of queued up from here to 45 days out if I can. Naturally, that isn't always possible ... . IVR pisses away and a week or two may go by when the vol just isn't there to necessarily make a smart premium selling trade, although these short-term highs are awfully tempting to just dive into (which I have; screw volatility). QQQ says "short me" all over the place, although I'm probably going to wait for NY reaction to AMZN before wading in there ... . QQQ still seems to have a slight boner on over GOOG; who knows what the BTFD'ers will do in NY with AMZN ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #9,524
  • Jul 23, 2015 9:08pm Jul 23, 2015 9:08pm
Quoting The Fool
{quote} less is more
So, you're kind of a 25 DTE kinda guy?
Fireworks are fun ... as long as you don't blow your fingers off.
  • #9,525
  • Jul 23, 2015 9:09pm Jul 23, 2015 9:09pm
Quoting ZebraSquirl
{quote} So, you're kind of a 25 DTE kinda guy?
... for like verts/iron condors? Calendars kind of a different animal ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #9,526
  • Jul 23, 2015 9:16pm Jul 23, 2015 9:16pm
Quoting ZebraSquirl
So, you're kind of a 25 DTE kinda guy?
I don't like to have to wait to get paid, so I will be looking at whatever might have a chance of working, & the faster the better. If we're talking short spreads, you can find decent premium r:r out at 30 dte or so....if you're lucky enough to be trading in a high IVR spell, even shorter dte's will work
"If The Fool persists in his Folly he will become wise." - William Blake
  • #9,527
  • Jul 23, 2015 9:16pm Jul 23, 2015 9:16pm
The bleeding doesn't stop in XAUUSD ... . It's now broken 1080 ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #9,528
  • Jul 23, 2015 9:19pm Jul 23, 2015 9:19pm
Quoting ZebraSquirl
{quote} ... for like verts/iron condors? Calendars kind of a different animal ... .
calendars are tricky. If your time spread is wide, you can get decent profit in short time if the u/l moves to your calendar target strike....but you pay for wide time spreads. If you like to gamble on cheap calendars you're prolly talking about 1-week time spreads and you are really looking to hold til near expiry
"If The Fool persists in his Folly he will become wise." - William Blake
  • #9,529
  • Jul 23, 2015 9:21pm Jul 23, 2015 9:21pm
Quoting The Fool
{quote} I don't like to have to wait to get paid, so I will be looking at whatever might have a chance of working, & the faster the better. If we're talking short spreads, you can find decent premium r:r out at 30 dte or so....if you're lucky enough to be trading in a high IVR spell, even shorter dte's will work
I need to work on evaluating the difference between expiries as far as profit is concerned ... . If it's only a few pennies in credit between one expiry and the other, might as well go shorter ... . In addition to patience, I need to work on my laziness in setting these up ... . A lot of the time it's just a matter of, well, I've got an hour here or there to look at set-ups and to make a decision, so, let's slap something on .... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #9,530
  • Jul 23, 2015 9:27pm Jul 23, 2015 9:27pm
Quoting ZebraSquirl
The bleeding doesn't stop in XAUUSD ... . It's now broken 1080 ... .
yeah, at this point I am waiting to trade a bounce long off $1k....I missed all of the gold dump but I rarely trade it anyway...

I was totally wrong about long bonds - the yield curve has been flattening - short durations sold & long bought - my TBT put calendars all looking like lost causes, but they were cheap, so small losses, anyway I have til Aug....my premise was that the Fed would show some hawk next week and scare down the long bonds, but maybe not....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #9,531
  • Jul 23, 2015 9:27pm Jul 23, 2015 9:27pm
Quoting The Fool
{quote} calendars are tricky. If your time spread is wide, you can get decent profit in short time if the u/l moves to your calendar target strike....but you pay for wide time spreads. If you like to gamble on cheap calendars you're prolly talking about 1-week time spreads and you are really looking to hold til near expiry
I guess that's why I probably haven't messed with them that much yet ... . Most of the time I'm in somewhat of a crunch to look at setups and the verts are the easiest to look at and evaluate in short order, especially where the indices are concerned, where I have a good feel for the tops/ranges and what they've been doing ... .

Calendars would require the type of thinking skills that are in short supply with me after a day at work ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #9,532
  • Jul 23, 2015 9:28pm Jul 23, 2015 9:28pm
Quoting ZebraSquirl
In addition to patience, I need to work on my laziness in setting these up ... . A lot of the time it's just a matter of, well, I've got an hour here or there to look at set-ups and to make a decision, so, let's slap something on .... .
getting your nuts shot off will cure you of haphazard entries...believe me I know (squeak!)
"If The Fool persists in his Folly he will become wise." - William Blake
  • #9,533
  • Jul 23, 2015 9:36pm Jul 23, 2015 9:36pm
Quoting The Fool
{quote} yeah, at this point I am waiting to trade a bounce long off $1k....I missed all of the gold dump but I rarely trade it anyway... I was totally wrong about long bonds - the yield curve has been flattening - short durations sold & long bought - my TBT put calendars all looking like lost causes, but they were cheap, so small losses, anyway I have til Aug....my premise was that the Fed would show some hawk next week and scare down the long bonds, but maybe not....
My assumption on TLT was also lower, but knowing how these things go, I put on an IC when vol was high, expecting the inevitable contraction. We got the contraction, but we also got the movement, higher of all things ... . Not sure what info treasuries are digesting; must be on a different page than I am ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #9,534
  • Jul 24, 2015 1:01am Jul 24, 2015 1:01am
Quoting The Fool
yeah, at this point I am waiting to trade a bounce long off $1k........
$1000 gold would be about $96 GLD, a 1c diagonal to bank on the bounce off $1k....if $1k holds a 20-lot risks $60 to make maxP $750+
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #9,535
  • Jul 24, 2015 9:50am Jul 24, 2015 9:50am
Quoting The Fool
$1000 gold would be about $96 GLD, a 1c diagonal to bank on the bounce off $1k....if $1k holds a 20-lot risks $60 to make maxP $750+
did the GLD puts diagonal above, but Aug $97/96 for $0.00 debit
"If The Fool persists in his Folly he will become wise." - William Blake
  • #9,536
  • Jul 24, 2015 10:54am Jul 24, 2015 10:54am
Quoting ZebraSquirl
I know you may have commented about this in the past, but I can't find the darn post ... . How's the liquidity with the /ES futures options? Good as or better than SPY? Do you prefer the /ES futures options over SPY options? I know you mentioned something about the commission structure being a little more favorable ... . A 10.00 credit ... . Me wanteee ... .
Hi ZS.
Yes I did comment before, but I will do it again .
/ES futures options -> there are good liquidity on monthly strikes. SPY options are more liquid and they have 1c bid ask spread, while /ES futures options trades for 0.05 price increments. For example -> prices like 7.55 then 7.60, 7.65 and so on. Multiplier with all futures options are the same like on u/l future contracts, so for /ES multiplier is 50, and for /CL is 1000 and so on. So, 0.05 price increment means a 2.5 bucks increments. A $10.00 credit means $500 credit. Also, there are high volume on weekly options, like todays expiry for example. Filling order at midpoint is not an issue during RTH, usually very fast. Out of RTH just takes some time.

I trade with IB, and comms are 2.82 bucks per one /ES futures spread. So, for $500 credit, I would have to get into at least 5 SPY spreads, and pay about 12.50-13.00 bucks of comms for that. Also, the above Sep 2150/2180 spread that I sold, I did that 6 hours before market opened. Their working hours is the same as u/l future, and that can be important also.

About DTE -> the same 2150/2180 Aug spread was about $5.00 CR, so half the credit of the Sep expiry. More time means fat credit. More time can be good or bad, depends of situation. This time I choose this, instead of tt recommended 45 DTE, because it is easier to get a fill on monthly expiry, especially out of the RTH. There is a good book, our swiss friend @njr mentioned it months ago... about selling futures options, and those guys usually sell them with 60-90 DTE. You can find really juicy far OTM options on futures, much more juice than on equities. I traded only /ES and /CL futures options so far. Had some nice winners and some stupid b/e trades which should be winners.

As TF mentioned before, it is very important for us to get into the cycle of selling something, so that at least on every monthly expiry we have something. Spreads, ICs, naked options, whatever. Not so doable on equities with this permanent low VIX environment, so that is also one of the reasons to try futures options.
Hope is dangerous in this game.
  • #9,537
  • Jul 24, 2015 11:30am Jul 24, 2015 11:30am
Quoting StrayDog
{quote} Hi ZS. Yes I did comment before, but I will do it again .
good points, SD, thanks. Being able to trade /ES and other futures/futures options in extended hours is a big deal. /ES and /CL very good, also check out /ZB. Yep, I have fallen out of my cycle of getting trades on/off regularly. Trading that way is a problem for me when I have heavy work schedule. Trading for me is actually not near the top of the list of important things I have to do. This is obvious sometimes when I don't have time to stay in sync with intraday & near-term market moves, so of course those are times when I am better off not trading - like now.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #9,538
  • Jul 24, 2015 1:29pm Jul 24, 2015 1:29pm
Quoting Cecil Gee
{quote} that is the very reason I'm going much further out in time, may wait another 8 weeks or closer to the next earnings to trade it, also looking to trade Biogen (BIIB) for Fridays earnings, stock closed at 391$ yesterday will look at single day option prices for a surprised move
BIOGEN dropped almost $90 today, details of my trade below, I actually bought at $1.60 and closed at $40 minus the other strangle leg for the call side

BIIB Jul 2015 350.000 put (BIIB150724P00350000)
-OPR
40.00 f 38.62(2798.55%) 19:05

Prev Close:1.38
Open:25.00
Bid:36.20
Ask:39.20
Strike:350.00
Expire Date:24-Jul-15
Day's Range:24.61 - 41.95
Contract Range:N/A - N/A
Volume:538
Open Interest:780
  • #9,539
  • Jul 24, 2015 1:31pm Jul 24, 2015 1:31pm
Quoting Cecil Gee
, I actually bought at $1.60 and closed at $40 minus
"If The Fool persists in his Folly he will become wise." - William Blake
  • #9,540
  • Jul 24, 2015 1:37pm Jul 24, 2015 1:37pm
well I hope somebody was scalping /ES short today. I didn't see this sharp selloff coming this week & thought they would try to push for new index highs before next week's FOMC - but that was last week - so yeah, I'm about a week out of sync. But that's OK, the funhouse will still be here when I get back on track.
"If The Fool persists in his Folly he will become wise." - William Blake
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