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Let's Trade Options

  • #10,721
  • Sep 20, 2015 11:22am Sep 20, 2015 11:22am
Quoting The Fool
sold out of all Oct VXX call flys, all $21/25/29 in for about 12c out for $0.90....trying to learn to take a healthy profit when I can & not wait around for the perfect finish on time spreads, end up with less....
That was a kick-ass trade TF. A x7 trade is nothing to sneeze at.

IMO, there is very low probability to make a max profit out of a butterfly anyway. You have to be either a fortune teller or extremely lucky.
Hope is dangerous in this game.
  • #10,722
  • Sep 20, 2015 11:24am Sep 20, 2015 11:24am
Quoting ZebraSquirl
... No way we're seeing anything near parity in the next couple of months ...
Hi ZS.
I agree with that, since shorting the fiber becomes very crowded trade... Rate increase is prolonged AGAIN... and after all - isn't it already calculated in the price...
Hope is dangerous in this game.
  • #10,723
  • Sep 20, 2015 3:50pm Sep 20, 2015 3:50pm
Quoting StrayDog
That was a kick-ass trade TF. A x7 trade is nothing to sneeze at. IMO, there is very low probability to make a max profit out of a butterfly anyway. You have to be either a fortune teller or extremely lucky.
Thanks, mate. The time spreads are dicey, it's true. Like almost everything else, you make money on the good entry. The trick with calendars and flys is to get in cheap and catch rising iv, time that for a known event. ER's come to mind, but even bigger events, like FOMC, big elections, etc, can be good. I set that VXX fly above thinking FOMC would spike the VIX and I would catch a VIX fall-back to my sweet spot sometime in mid-Oct. I should have played one for the opposite outcome, for a FOMC whiff and a VIX drop maybe the week after the FOMC.

I keep trying to set up these bi-directional trades and they often make money. (The no-direction, dead-in-the-water outcome is the mofo to watch out for.) Still have the taste of shit in my mouth on the SPY combo I had set up for Sept expiry. No movement off the FOMC. SPY finished right at the dead low spot for the trade's PL. Even so, I only lost about $100 on the trade. Had such high hopes..... boo hoo .....fml, etc..., .....Oh well, life goes on, another opp just right around the bend......
"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,724
  • Sep 20, 2015 4:17pm Sep 20, 2015 4:17pm
Quoting The Fool
The trick with calendars and flys is to get in cheap and catch rising iv, time that for a known event. ER's come to mind, ......
looking out to AAPL ER a day or so before Oct expiry ... the $1 strike spreads are in the Oct4 chains....30+ cents maybe too much to pay
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,725
  • Sep 20, 2015 4:24pm Sep 20, 2015 4:24pm
Quoting The Fool
....30+ cents maybe too much to pay
which is why at look at the cheap diagonals. The downside is you tie up margin and open up risk on the far end. But for call diagonals running into ER's, you can get u/l share price going up AND iv going up too -
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,726
  • Sep 20, 2015 4:29pm Sep 20, 2015 4:29pm
Quoting StrayDog
{quote} Hi ZS. I agree with that, since shorting the fiber becomes very crowded trade... Rate increase is prolonged AGAIN... and after all - isn't it already calculated in the price...
I dunno ... . The Eurozone is seeing some spotty improvement of its own since Draghi started doin' his own little QE dance. It could be that parity is no longer in the cards because of this, but as long as FXE stays below 112, I'm good to go ... . What happens from there is for the spot forex traders to worry about (poor little fellas). It's just had a nasty little habit of poking its head above that 112 level now and again ... . If I do add short call verts for some reason (like my buying power's got nothing better to do, or we get another one of those short expressions of strength), I'll steer a little wider of that 112-114 zone ... . Janet may have bought me a little extra time to milk some more beans out of it ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #10,727
  • Sep 20, 2015 4:35pm Sep 20, 2015 4:35pm
not sure what AAPL gonna do? Crystal ball cloudy? Double up on the diagonal. You can ride the other side "fee" from the margin allocated already. Who knows, maybe it will move in the week before the ER and you can close one side for decent profit...if you let the short strikes expire, you are left with a (kind of) wide strangle....
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,728
  • Sep 20, 2015 4:40pm Sep 20, 2015 4:40pm
Quoting The Fool
not sure what AAPL gonna do? Crystal ball cloudy? Double up on the diagonal. You can ride the other side "fee" from the margin allocated already. Who knows, maybe it will move in the week before the ER and you can close one side for decent profit... {image}
I feel guilty doing it (shows I lack balls in directional assumption), but I almost always go for the margin free oppositional side ... . With IC's and short strangles, it's 100% guaranteed that at least one side will expire worthless; why not hedge against the possibility that the other side will blow up in your face?
Fireworks are fun ... as long as you don't blow your fingers off.
  • #10,729
  • Sep 20, 2015 4:42pm Sep 20, 2015 4:42pm
Quoting The Fool
if you let the short strikes expire, you are left with a (kind of) wide strangle....
actually, better to set these up so that you are left with the strangle expiring in ER week - but AAPL was not a great example because it has $5 strike spreads in the Oct chain....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,730
  • Sep 20, 2015 4:44pm Sep 20, 2015 4:44pm
I tell you one trade that's goin' nowhere, my UNG Jan 12/13 debit spread ... . Plenty of time to work out, but if I would have been more patient, I would have put that on here, when price is closer to its 52-week lows ... . If price breaks 12, I may consider adding an 11/12 ... . The damn things been gyrating around between here and 13 ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #10,731
  • Sep 20, 2015 4:47pm Sep 20, 2015 4:47pm
Quoting ZebraSquirl
I tell you one trade that's goin' nowhere, my UNG Jan 12/13 debit spread ....
only chance for a natgas spike is a freakin polar vortex snow hurricane that freezes the eastern US for a good month....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,732
  • Sep 20, 2015 4:48pm Sep 20, 2015 4:48pm
Quoting The Fool
{quote} actually, better to set these up so that you are left with the strangle expiring in ER week - but AAPL was not a great example because it has $5 strike spreads in the Oct chain....
Never understood those $5 strike spreads and the timing of when they go to $1 wide ... . Some of those $5 wides straddle the 1 SD, where you think buying/selling interest might be ... . How close does the expected move have to get to the 1 SD to go to $1 wide strikes? (Rhetorical question).
Fireworks are fun ... as long as you don't blow your fingers off.
  • #10,733
  • Sep 20, 2015 4:50pm Sep 20, 2015 4:50pm
OK, I am looking for ER plays, but most everything is still at a pretty high IVR because of the heavy VIX movement we have had over the last several weeks......looking for names w/ ER's in the Oct-Oct5 window, please let me know your good candidates
"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,734
  • Sep 20, 2015 4:51pm Sep 20, 2015 4:51pm
Quoting ZebraSquirl
{quote} Never understood those $5 strike spreads and the timing of when they go to $1 wide ... . Some of those $5 wides straddle the 1 SD, where you think buying/selling interest might be ... . How close does the expected move have to get to the 1 SD to go to $1 wide strikes? (Rhetorical question).
$5 strikes on something trades as much as AAPL is a joke. And why have $1's on the weeklies but only $5's on the monthly?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,735
  • Sep 20, 2015 4:54pm Sep 20, 2015 4:54pm
Quoting The Fool
OK, I am looking for ER plays, but most everything is still at a pretty high IVR because of the heavy VIX movement we have had over the last several weeks......looking for names w/ ER's in the Oct-Oct5 window, please let me know your good candidates
trying FB, IVR around 35

........IVR still too high, need to look for IVR down around 20 then look at Oct4/Oct5 double diagonals, don't want to pay more than 20c a side
"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,736
  • Sep 20, 2015 4:58pm Sep 20, 2015 4:58pm
Quoting The Fool
{quote} only chance for a natgas spike is a freakin polar vortex snow hurricane that freezes the eastern US for a good month....
I looked at NOAA's long-term Dec/Jan forecast ... . It doesn't tell me much as far as natural gas demand is concerned, but they're saying warmer than normal in the top tier of states/about normal in the middle/below normal in the lower tier ... . That could also do the trick. The top 5 consumer states of nat gas are TX, CA, LA, NY, FL, but TX and CA are kinda NSS (no shit, Sherlock) for most consumption ... . Surprised about LA and FL, though ... .

This article's quite good: http://www.eia.gov/todayinenergy/detail.cfm?id=22892 The peak will be in Jan, but how big a peak ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #10,737
  • Sep 20, 2015 5:03pm Sep 20, 2015 5:03pm
Quoting ZebraSquirl
Surprised about LA and FL, though ... .
not much oil heating in the south....I still think a big storm will do it....Gzilla el ninyo not expected to bring deep freeze but it could spawn a lot of big storms
"If The Fool persists in his Folly he will become wise." - William Blake
  • #10,738
  • Sep 20, 2015 5:04pm Sep 20, 2015 5:04pm
Quoting The Fool
OK, I am looking for ER plays, but most everything is still at a pretty high IVR because of the heavy VIX movement we have had over the last several weeks......looking for names w/ ER's in the Oct-Oct5 window, please let me know your good candidates
There's only one below IVR 10; a few below IVR 35:

UAL: 32 days from earnings, IVR 9; GILD: 37 days, IVR 28; BA, 32 days, IVR 27; DIS, 46 days, IVR 33 ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #10,739
  • Sep 20, 2015 5:17pm Sep 20, 2015 5:17pm
Quoting ZebraSquirl
{quote} There's only one below IVR 10; a few below IVR 35: UAL: 32 days from earnings, IVR 9; GILD: 37 days, IVR 28; BA, 32 days, IVR 27; DIS, 46 days, IVR 33 ... .
Got me looking at earnings plays ... . BBRY popped on the radar for next week. Why is that company still around? It's an AOL-era equity ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #10,740
  • Sep 20, 2015 7:22pm Sep 20, 2015 7:22pm
Quoting ZebraSquirl
{quote} Got me looking at earnings plays ... . BBRY popped on the radar for next week. Why is that company still around? It's an AOL-era equity ... .
lol I hear people joke about it - "can you get on your blackberry and see where the Eddie Money show is this weekend?" ....or something like that...
"If The Fool persists in his Folly he will become wise." - William Blake
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