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Let's Trade Options

  • #10,421
  • Aug 28, 2015 12:07pm Aug 28, 2015 12:07pm
looking for a end of day sell off in the S/P so longed $196.50 put for 17c for today's expiry, risky trade.

current price 198.75

SPDR S&P 500 ETF (SPY)
-NYSEArca
198.75 0.52(0.26%) 18:07 - Nasdaq Real Time Price

SPY Aug 2015 196.500 put (SPY150828P00196500)
-OPR
0.17 0.28(62.22%) 12:48PM BST
  • #10,422
  • Aug 28, 2015 2:54pm Aug 28, 2015 2:54pm
maybe not in the cards today, CG - but index shorts will pay from here on out until the Fed pulls the trigger. Looking for rips to sell....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,423
  • Aug 28, 2015 5:58pm Aug 28, 2015 5:58pm
Quoting ZebraSquirl
178/181/210/213 SPY IC for an .89 credit and a 111/114/129/132 TLT IC for .64. I'm laddering GLD short call verts from here to December and will add a December rung at 120/123 for .25 cr. (already have Sep, Oct, and Nov, and the Sep one will probably bow out worthless or nearly so very shortly).
No fills on the two IC's; got filled on the Dec 18 GLD short call vert ... . Probs a good thing ... . My day off (Tuesday) is a better day to monkey with legging into those IC's; can doink around with market discovery ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #10,424
  • Aug 28, 2015 6:27pm Aug 28, 2015 6:27pm
Quoting The Fool
{quote} I think the channel will shift down & I am looking to get in SPY call diagonals with a safe limit out to $213 or so, which puts the expiry maxP around $210 - which I think is the top end for the rest of the year. One such trade shown below, but I'd like to see SPY come up over $200 again first...& I might get in for a nickel credit still thinking on how to DD it, where the downside Sept limit may be....? {image}
That downside limit's a bit fuzzy in the short term ... . The month's low is around the 182 (basically the April 2014 and Oct 2014 lows), but there's intermediate support, too, between here and there:

Attached Image (click to enlarge)
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Price briefly respected 204, the .50 Fib at 198-ish, but then barely paused before plunging all the way to the April/Oct 2014 lows ... . There is actually a modest amount of juice on the short put side even now -- a 178/181 Oct 16th short put vert goes for .34 (not great, I know). Were I not to have had my head up my arse, it would have made some sense to go short put vert with strikes below 182 when price was in the bottom half of the 182-213 Fib box ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #10,425
  • Aug 28, 2015 6:29pm Aug 28, 2015 6:29pm
Quoting ZebraSquirl
{quote} No fills on the two IC's; got filled on the Dec 18 GLD short call vert ... . Probs a good thing ... . My day off (Tuesday) is a better day to monkey with legging into those IC's; can doink around with market discovery ... .
Going to take a second shot on Monday at the Oct 18 178/181/210/213 SPY IC; now goes for .88 ... . If it fills, it fills ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #10,426
  • Aug 28, 2015 7:34pm Aug 28, 2015 7:34pm
Quoting ZebraSquirl
{quote} Going to take a second shot on Monday at the Oct 18 178/181/210/213 SPY IC; now goes for .88 ... . If it fills, it fills ... .
while iv is elevated, I am going to be shooting for some diagonals, can't resist the big payoff. If SPY will float up to the $203/$204 level, I will think about doing some bear call verts out into Oct, short $214 maybe. I am afraid to touch the put side short, but we'll see.....have a good weekend ZS. I wonder if/when StrayDog is coming back? He been in Greece on vacay, missed all the fireworks maybe....the Boy Wonder dropped off at a busy spot, too - hope his account's ok....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,427
  • Aug 28, 2015 7:52pm Aug 28, 2015 7:52pm
VXX 5m candles, check out the big selloff to close the day. I am looking for more of that next week and for the indices to amble up - SPY $203-4 to be touched by midweek
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,428
  • Aug 28, 2015 8:00pm Aug 28, 2015 8:00pm
riding VXX $18/$19 puts diag for next Friday expiry, need a nudge below $20 to get maxP, could net 25c, it went on for $0.00 - just comms. I will miss elevated ^VIX, but it will be back....maybe we will get a chance to reload on a hunt for the next spike...
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,429
  • Aug 28, 2015 8:29pm Aug 28, 2015 8:29pm
hard to believe VXX traded at <$17 just 7 td's ago. The Nov/Dec $16/$14 puts diag gets on for 22c credit, has a chance of $0.65+ maxP at expiry, is safe down to $15.75 or so.

Compare to short Nov $16/14 puts, gets 34c credit, is safe to $16....?

The only downside for the diag is you have to hold it to expiry to get the most out of it.
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,430
  • Aug 28, 2015 10:31pm Aug 28, 2015 10:31pm
Quoting ZebraSquirl
That downside limit's a bit fuzzy in the short term ... . The month's low is around the 182 (basically the April 2014 and Oct 2014 lows
If (when) SPY iv starts (keeps) falling, I will start looking for calendars and long put verts at the lower limits, out to year's end. I'd want to pay <20c for that Dec/Dec5 $175 puts calendar, should see it in the coming week or so.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,431
  • Aug 28, 2015 10:42pm Aug 28, 2015 10:42pm
it's a long time til the end of the year, need to be ready for anything
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,432
  • Edited Aug 29, 2015 12:04am Aug 28, 2015 11:17pm | Edited Aug 29, 2015 12:04am
been a few months since I have paid any attention to anything on tastytrade (I have been busy with dayjob work) - but I see they are still rolling out good content & now that I have finished some projects I can go back and study up. The vid below is a good one to help you understand what implied volatility is ...

https://www.tastytrade.com/tt/daily_...5?locale=en-US

the vid shows how options iv is used to estimate the expected move of the underlying. For instance, as ZS and I were puzzling over what the lower limits for SPY would be, those values are implicit in the options iv's & shown in the chains: the Dec5 (end of quarter, end of year) expected SPY value is +/- $21.32 from the close values for today - or, $178 low / $220 high......for what it's worth.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,433
  • Aug 30, 2015 12:30am Aug 30, 2015 12:30am
I have never read back through the thread - well often I will read back thru a few pages - but never read the thread from the beginning. Tried it for a while tonight, made it thru 30 pages, ugh.....I was a lot dumber 2 years ago...still a dumbass, though....hope I will have time in the coming slow season to start moving up my game.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,434
  • Aug 30, 2015 7:18am Aug 30, 2015 7:18am
I will be longing SPY puts at the open (mar)

I think this is the top of the range for now.

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  • #10,435
  • Aug 30, 2015 10:10am Aug 30, 2015 10:10am
winter's coming...

http://www.usatoday.com/story/money/...tion/71320550/
"In its August "Drilling Productivity Report," EIA forecasts that gas production will decline in all seven of the United States' major shale regions in September, the first across-the-board slump in shale gas production ever recorded by the agency.

"We're starting to see a slow-down," said Lynn Westfall, director of EIA's Office of Energy Markets and Financial Analysis, which compiles the report."
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,436
  • Aug 30, 2015 10:32am Aug 30, 2015 10:32am
I'll do it if they're giving it away
Attached Image (click to enlarge)
Click to Enlarge Name: 2015-08-30_UNG2.png Size: 65 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,437
  • Aug 30, 2015 10:41am Aug 30, 2015 10:41am
Quoting The Fool
winter's coming... http://www.usatoday.com/story/money/...tion/71320550/ "In its August "Drilling Productivity Report," EIA forecasts that gas production will decline in all seven of the United States' major shale regions in September, the first across-the-board slump in shale gas production ever recorded by the agency. "We're starting to see a slow-down," said Lynn Westfall, director of EIA's Office of Energy Markets and Financial Analysis, which compiles the report." {image}
Indeed. I am slowly starting to buy Natural gas from this week. Oil has made the first move last week, I think NGas will follow...
k
  • #10,438
  • Aug 30, 2015 7:19pm Aug 30, 2015 7:19pm
Quoting The Fool
{quote} while iv is elevated, I am going to be shooting for some diagonals, can't resist the big payoff. If SPY will float up to the $203/$204 level, I will think about doing some bear call verts out into Oct, short $214 maybe. I am afraid to touch the put side short, but we'll see.....have a good weekend ZS. I wonder if/when StrayDog is coming back? He been in Greece on vacay, missed all the fireworks maybe....the Boy Wonder dropped off at a busy spot, too - hope his account's ok....
I'm with you there on the short call side and also hesitant to the short put side (seems to be a never ending cycle of concern for the put side vs. concern for the call side). Unfortunately, it's all about patience (not my strong suit) ... .

StrayDog's either kicking himself for taking a vacation or enjoying the fact that he's flat during vacation ... .

BW may have gotten frustrated with attempting to call direction here; I'd go bonkers trying to scalp /ES in this environment ... .

I've been thinking again about UNG and have meant to research weather predictions for this winter; might give us a clue as to depth of movement: harsher predicted winter = greater upward movement ... . Last year: I don't really a cyclical bounce in 2014 until late October, after which the thing just seemed to implode after its late November high, and it's basically been sideways between 15.25 and 12.25 since the beginning of the year.

And harsh weather coupled with that EIA report indicating a shale gas production slump going forward may help ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #10,439
  • Aug 30, 2015 8:13pm Aug 30, 2015 8:13pm
Quoting The Fool
I'll do it if they're giving it away {image}
I'm liking this idea, but don't want to sit on it too long since we're near the bottom of a range that's been in place since mid-April. Prices could get more expensive for the debit spreads going forward if seasonality kicks in ... .

I looked at the NOAA 2015-16 weather outlook, which is kind of a mixed bag that all has to do with El Nino ... . http://www.cpc.ncep.noaa.gov/product...ay/fxus05.html Frankly, it wasn't very helpful, since you need to look at whether the winter will be on balance harsher than usual from a heating degree days perspective (which means greater fuel oil/nat gas consumption).

This report's pretty good, though: http://www.eia.gov/forecasts/steo/report/natgas.cfm (discusses seasonality of consumption, storage, etc.). They're showing a milder winter in terms of estimated heating degree days as compared to last winter ... . How much of a bump we'll see as compared to last winter, of course, remains to be seen.

Me personally, I'm looking at something above 15 in January, like a 15/16 vert debit spread for .18 (BE at 15.18) (frankly, that would be quite "wild" for me, with a POP% of 28% and max profit of .82).
Fireworks are fun ... as long as you don't blow your fingers off.
  • #10,440
  • Aug 30, 2015 8:25pm Aug 30, 2015 8:25pm
yeah that $20/$21 bull call vert way out in Jan is a long way out - if UNG jumped up to >$16 in Oct-Nov, you would make some money, but just a little. But, if I can get in for <$0.05, I will do a 10-lot just for a long shot. Who knows, we might see a big spike sometime in late Q4/early Q1. Godzilla El Nino means very much wetter weather for California, and wetter than normal in the east - not necessarily colder, but you have the potential for some monster snow storms, and those make the news and penetrate the mass market mind....
"If The Fool persists in his Folly he will become wise." - William Blake
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