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Let's Trade Options

  • #9,761
  • Edited 1:42am Aug 2, 2015 1:24am | Edited 1:42am
THERE'S almost zero volume in the ISE fx options - the PHLX fx options are somewhat better, but still quite thin.....maybe usable though
"If The Fool persists in his Folly he will become wise." - William Blake
  • #9,762
  • Edited 2:52am Aug 2, 2015 2:41am | Edited 2:52am
http://fxtrade.oanda.com/analysis/currency-correlation

Oanda keeps a current fx pairs correlation map - I would do a visual check on the charts anyway - since we can't trade the same pair simultaneously long/short in the US, it may be possible to long/short well-correlated pairs to the same effect - this is my answer to the fx options diagonal death slide, as noted above - I will show an example when I put a trade on.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #9,763
  • Aug 2, 2015 5:20am Aug 2, 2015 5:20am
Quoting The Fool
Monthly SPY - six years a slave to the punchbowl - check the volume, though, blood more popular than punch. I wonder what the wonks will say about this spell 30 years from now...? {image}
I was watching the NYSE Composite on Friday to see how it behaved at the 200dma. Was anybody else watching?

Check it out below: it failed at the 200dma - poked its head above, closed below.
Just for kicks, below it is the Dow (which I don't usually pay much attention to) as well; I noticed on Thu last week that like the NYSE Composite it, too, was trading just underneath its 200dma. Guess what: same failure at the 200dma.

Now I'm not saying stocks can't and won't go up from here, because the road to trading hell is paved with a trillion "clever" observations that turn out to have been red herrings, but it's interesting enough to me to warrant keeping an eye on. It's good also because if we get a good and successful push back above those 200dma's we have something to work with - for me the bias switches to longs until the 200dma is lost again.
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I have no clue what I'm talking about.
  • #9,764
  • Aug 2, 2015 5:23am Aug 2, 2015 5:23am
Quoting Cecil Gee
{quote} waiting on Euro, FXE to do a 8 month strangle that should be enough time to take it out of ranges that's been laid down over the last couple of months, FXY the YEN will be the next big move, don't ask me direction cus I don't know or bothered, tha is the beauty of trading options
Sounds like a good idea.
I have no clue what I'm talking about.
  • #9,765
  • Aug 2, 2015 5:32am Aug 2, 2015 5:32am
Quoting StrayDog
Some thoughts... (and lamentation) After some scalping success this week, few days good, I managed to screw that all... probably finishing week with a weekly loss. Good Monday, started good on Tuesday, got greedy and wiped all. I had 3 days banking plan in my pocket, and wiped all. When you have bank your daily plan, maybe the best trade is not to trade more. Lost on Wednesday, cover that on Thursday, so 2 days for nothing. Today I lost on DAX.. made a following mistake -> got into the trade, didn't like it after a while, closed on b/e. Later I...
Hard lines. I had a tough week too, up and down, up and down, not sure if I made money or not this week because by the end of the week I can usually not be sure of what I had at the start. I think I might have lost money but any and every week that I don't blow up I consider a win :0)
This is a very tough game for those that are trying to make serious money, there's no doubt about that. If one has the psychological fortitude or inclination to only wager small amounts, and by extension to try to make only small amounts, it's probably borderline enjoyable, but if you want to make serious money you need to wager serious money and then when you get hurt it hurts, really bad.
It's not for nothing that conventional wisdom says trading success is at least 60% psychology, and only around 10% trading "system".
I have no clue what I'm talking about.
  • #9,766
  • Aug 2, 2015 5:39am Aug 2, 2015 5:39am
Quoting Buber
Hi StrayDog, thanks for the advise. Of course I wouldn't want to stay there. The only question remains is how to close all the positions yet retaining their real value as much as possible. Whenever I want to close a position the dealer magnifies the spreads to as much as 20-37 pips on options that should normally have about 6-7 pips spread (as is the case with Saxo Bank). The total nominal quantity of my positions is 12,000,000 so that each pip they enlarge costs 1,200$. If I close all my positions on their 20+ pips spread I'd lose about 16,000-18,000$...
Can you not hedge your exposure on those options with either spot forex, or futures, or futures options?
E.g. synthetically you can make a long put from a short underlying plus long call - http://www.theoptionsguide.com/synthetic-long-put.aspx
You can do similar other synthetics. So a last resort would be holding your current options trades to expiry and hedging them elsewhere. Not ideal because it ties up capital for the duration of your options trades but perhaps it's a possibility.
You could or should also threaten to report them to the relevant authority by the sounds of things. If yo were led to believe that the spread was X pips and then took the trade on and then when you want to close the trade they say it's X*5 that seems to me to be, well, not the kind of thing a financial regulation authority would be particularly impressed by. Your broker would have to supply a reason why the spread has ballooned.
I have no clue what I'm talking about.
  • #9,767
  • Aug 2, 2015 5:55am Aug 2, 2015 5:55am
Quoting The Fool
{quote} so this is the next step for me. You can say all you want about non-directional options trading, but you can not escape the fact that the u/l moves, and your trades are a slave to the u/l movement. Even worse, your trades are a slave to time. By hedging time-dependent options trades with non- time-dependent futures or spot trades, you can try to eliminate the harsh time effects that options trades can suffer.
If I have learnt one thing over the last few years about option trading, it is that - in my experience at least - you simply have to focus your time and analysis on the underlying and use that as the basis for your trade.
I have seen the tastytrade videos where the geezer (forget his name) says "heh heh you can't possibly know where it's going so why bother, that's why we do non-directional trades and we make millions heh heh it's easy heh heh look at all those fools trying to predict the market heh heh" and when I saw that video I had this "eureka" moment - "that's where I've been going wrong!!!" etc.

But it turned out to be for me a load of bollocks and cost me a lot of money.
I have no clue what I'm talking about.
  • #9,768
  • Aug 2, 2015 12:23pm Aug 2, 2015 12:23pm
Quoting The Fool
red August, baby, a big beater NFP gets the bulls heading for the exits....250k+ will do it, I expect something 50k over the forecast or better....
my bias for the coming week and August.....need to try to not let it run away with me
"If The Fool persists in his Folly he will become wise." - William Blake
  • #9,769
  • Aug 2, 2015 1:30pm Aug 2, 2015 1:30pm
Quoting The Fool
{quote} hang on, maybe Aug w/slide back to knock on the lower band - if we get below SPY $205 I might try to IC but more likely would just bail for decent % profit.
My tendency is to just leave incomplete IC's alone ... . By the time the price moves sufficiently to decently leg in to the unfilled side, I'm usually out of the half IC in profit ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #9,770
  • Aug 2, 2015 1:36pm Aug 2, 2015 1:36pm
Quoting The Fool
Long vol out to Dec catches both the Sept and the Dec FOMC. UVXY spiked to $45-$50 and stayed > a week during the Greek endmess. A rate hike or fear thereof would do all that and more? Problem with UVXY is filling anywhere near the mid, but you can just keep trying Dec verticals and see what will fill. If anybody knows the trick to filling these down low near the mid please share. {image} {image}
When I have a day off (usually Tuesdays), and want to get a UVXY trade filled, I can literally do "market discovery" for hours chasing price slightly below mid. Despite having a lower volume, I generally get quicker fills of SVXY shorts at mid ... . Don't know why that would be so ... . Maybe it was just a fluke with the last couple shorts I set up.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #9,771
  • Aug 2, 2015 1:45pm Aug 2, 2015 1:45pm
huge space between mid and market on UVXY usually - but I have filled just a nickel off the mid sometimes
"If The Fool persists in his Folly he will become wise." - William Blake
  • #9,772
  • Aug 2, 2015 2:15pm Aug 2, 2015 2:15pm
Quoting Boy Wonder
{quote} If I have learnt one thing over the last few years about option trading, it is that - in my experience at least - you simply have to focus your time and analysis on the underlying and use that as the basis for your trade. I have seen the tastytrade videos where the geezer (forget his name) says "heh heh you can't possibly know where it's going so why bother, that's why we do non-directional trades and we make millions heh heh it's easy heh heh look at all those fools trying to predict the market heh heh" and when I saw that video I had this...
Tom likes to berate Tony about "not showing charts" (i.e., "I don't want directional bias to influence my setup, which is based on the sheer probability of being ITM at expiry."). That being said, he does plenty of directional trades that are based on U/L's reaching historical highs/lows -- trades he's put on in SLV or RIG are examples of directional trades that require him to look at a chart. So, I'd take Tom's "don't show me the chart" BS with a grain of salt ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #9,773
  • Aug 2, 2015 2:46pm Aug 2, 2015 2:46pm
Liking all the FXE/EURUSD ideas, TF ... .

I'm probably going to go with a long-term calendar set-up that I can wrap my brain around easily ... . The simplest way I can digest taking a position in an underlying lying under an underlying (in this case, spot EUR/USD), along with a corresponding instrument, like FXE, is like a covered call/put ... . Beyond that, it kind of makes my brain hurt ... . You'd think all the clever folks at TOS would have a setup for such a trading strategy that combines the trading of options in a proxy with the actual instrument or product the proxy represents .... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #9,774
  • Aug 2, 2015 3:06pm Aug 2, 2015 3:06pm
Quoting Boy Wonder
{quote} I was watching the NYSE Composite on Friday to see how it behaved at the 200dma. Was anybody else watching? Check it out below: it failed at the 200dma - poked its head above, closed below. Just for kicks, below it is the Dow (which I don't usually pay much attention to) as well; I noticed on Thu last week that like the NYSE Composite it, too, was trading just underneath its 200dma. Guess what: same failure at the 200dma. Now I'm not saying stocks can't and won't go up from here, because the road to trading hell is paved with a trillion...
I still think that SPY, for example, is still holding to the 100 point or so range it's been in since mid-March ... . There's a lot of short-term bullish/bearish crap that's happened between then and now, and it seems to me that the indices have been flopping back and forth across short-, medium-, and long-term MA's for weeks, so I've kind of given up at looking at those for clues as to direction between, for example, now and 45 DTE ... . It otherwise drives me bonkers ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #9,775
  • Aug 3, 2015 12:16am Aug 3, 2015 12:16am
/ES off modestly in mid-session Asian trading (-1.75 to 2096.50); /EQ off 8.25; /ZN off a smidgeon ... . Asian markets hit by poor China data ... .

The Greek stock market is set to reopen tomorrow, which may ripple through the markets. http://www.theguardian.com/world/201...market-reopens

Hoping for a dip in the indices and a rip in UVXY (please and thank you).
Fireworks are fun ... as long as you don't blow your fingers off.
  • #9,776
  • Aug 3, 2015 12:35am Aug 3, 2015 12:35am
Not sure about the $350 figure, but I think gold lower, too ... . http://money.cnn.com/2015/07/30/inve...350/index.html

The reason is far simpler than that stated in the article: dollar strength ... .

XAUUSD: Short-term resistance at 1145, support at 1045:

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That being said, I'm hedged via short put verts and short call verts, varying expirations, in GLD, where resistance is currently at about the 110 strike/support at the 102.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #9,777
  • Aug 3, 2015 1:03am Aug 3, 2015 1:03am
Quoting ZebraSquirl
The Greek stock market is set to reopen tomorrow, which may ripple through the markets.
ASE too small to rock the world if it tanks, but I have been waiting for it to come back - been watching GREK and NBG - if they dive it could be an opening for longs
"If The Fool persists in his Folly he will become wise." - William Blake
  • #9,778
  • Aug 3, 2015 1:05am Aug 3, 2015 1:05am
Unlike GLD, I could consider going naked backwardated short puts with SLV with the expectation of assignment at desirable prices ... .

The problem is that a 1 SD short put (12.5 strike/Sep expiry) will only get you a .11 cr and the back month setups (Oct and Nov) get you a similar, paltry sum, so you'd have to go big to make it worthwhile and risk assignment of a large number of shares of potential crap ... . The alternative is to just buy 100 shares of the underlying and then sell short calls against to reduce cost basis ... . The call side is even thinner than the put side ... . Tom did this exact set-up in a TastyTrade segment; bought 100 shares of SLV and then laddered short calls against ... . Doubt if that set-up is working out for him given what you can get out of the short call side ... .

USO might be a better candidate for backwardated short puts ... . Little more meat on the bone ... . Although that, too, could very well go further in the crapper by some measure on the back of dollar strength.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #9,779
  • Aug 3, 2015 1:11am Aug 3, 2015 1:11am
Quoting The Fool
{quote} ASE too small to rock the world if it tanks, but I have been waiting for it to come back - been watching GREK and NBG - if they dive it could be an opening for longs
I'm thinking cheap debit/lottery trade setups for both of those ... . Will just have to see what happens at the open ... .

Fillage may be problematic ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #9,780
  • Aug 3, 2015 2:47am Aug 3, 2015 2:47am
Quoting ZebraSquirl
Liking all the FXE/EURUSD ideas, TF ...
Nothing conclusive. Only thing I'd save for a trial out of all that above would be using a spot fx directional trade to hedge against the "death slide" risk of a FXE (or /6e) diagonal....or calendar....for those opps when direction is obvious but pinpointing a target not so easy...
"If The Fool persists in his Folly he will become wise." - William Blake
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