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Let's Trade Options

  • #11,041
  • Oct 23, 2015 11:57am Oct 23, 2015 11:57am
Quoting The Fool
... As far as max loss goes, below the strikes, you just lose your initial debit, but beyond the strikes, you can see the loss is a non-linear function, but the max loss is the difference between the strikes + comms - or for the 20-lot shown, around $1,000 ----- BUT, you would have to see SPY move way out past $218 to start getting close to the maxL. These are tricky to trade and it's important to put the short strike well beyond where you think the u/l may move to by expiry, as the losses are steep past there. Also, you have to hold these...
Yeah man, I totally forgot about that -> because I switched to credit spreads only, and after all that is what IB shows also, that max loss is 54 bucks, so 50 for the spread and 4 for the debit... (of course another 3 bucks or so for comms). Thanks.
Hope is dangerous in this game.
  • #11,042
  • Edited 3:32pm Oct 23, 2015 1:52pm | Edited 3:32pm
I have more bullish SPY diagonals - 2 blocks of $208/$209 calls, one @ O5/N1 and the other @ N1/N2, letting them ride and if we get a bit of a pull back next week will have to take them off with profit. If SPY keeps running north of $208, will have to give back some nice October gains.....the Lord giveth & the Lord taketh away....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,043
  • Oct 23, 2015 6:02pm Oct 23, 2015 6:02pm
Quoting The Fool
if we get SPY running up to $210, I will start looking out to Dec and selling $2-3 verts beyond $215, will use some of that credit to fund put spreads for potential Dec FOMC jitter fallbacks to $200 & below...
that's the 4-8 week horizon trade, imho, look for more/more sell the (Dec FOMC) rumor backslide in the US indices. Take advantage of tanking iv to get into some wide (4-weeks) otm (like SPY $195 and below) and cheap (cheaper the better) put time spreads...don't forget choice indi names, they could be in store for some big spills.....

Have a good weekend, ya'll.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,044
  • Oct 23, 2015 6:09pm Oct 23, 2015 6:09pm
Quoting The Fool
{quote} from VXX O/O4 $20/19p diag rolled the O-$20p down to O4-$18.5p for a net debit of 22c overall, now VXX running under $18.50 and I may make out a double. looking to close for 50c+ on a nice green day tomorrow
out for 35c, a net out of ~15c. woohoo....vix futures with Dec FOMC in view may keep VXX/UVXY from tanking down all the way to summer lows. Long vix trades to catch Dec/Jan volatility should be considered.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,045
  • Edited Oct 24, 2015 12:42pm Oct 23, 2015 6:27pm | Edited Oct 24, 2015 12:42pm
Mike has lots of good videos for the beginning options trader

https://www.tastytrade.com/tt/shows/...e=en-US&page=3
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,046
  • Oct 23, 2015 8:44pm Oct 23, 2015 8:44pm
tricky, tricky...AAPL has popped up near $120 O5 short strike, ER 10/27, and I am underwater. I must get out b4 the ER, hoping for a buck or 2 pullback Monday & I will not lose much on the calls, or make something...will let the puts run and get lucky & catch a dump for a nice payout on the puts......down to the wire drama is often the nature of the beast with diagonals
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,047
  • Oct 24, 2015 10:08pm Oct 24, 2015 10:08pm
I tell ya', this premium selling business is all flurry of activity, followed by long droughts where you wait for the probabilities to work on what you have on and the little bit of house cleaning on what isn't working out. I can see why premium sellers fill in the gaps with something else, like futures/scalping.

I may dabble a bit with scalping /ES, but only have one day off to have eyes on the screen, which may not be all that productive (we'll see). I've been pouring through /ES scalping videos on the web, most of which are total crap or want you to take one of the seminars or buy some unnecessary software that probably will not give you that advertised "edge." I like simple price action, which doesn't require complicated software or rocket science systems ... . Just gotta get my chops back from when I scalped forex ... . Now that Katie is trading some futures, I could probably do with watching those while I wait for some kind of volatility to return.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,048
  • Edited 6:17pm Oct 25, 2015 1:04am | Edited 6:17pm
Quoting ZebraSquirl
I can see why premium sellers fill in the gaps with something else, like futures/scalping.
well, one does not have to always trade. The TT motto, "trade small, trade often" is not "wrong" - not really gonna be my creed, though. I always come back to the fishing metaphor. Nothing wrong with going out every day & catching a few, maybe many small fish. But, every time you go out, you put yourself and your boat & crew at risk: is it really worth that mortal risk to chase after some thin schools of sardines? Hell no, better to wait until the best runs of big fish are there, then you go fishing....etc, etc....so, in trading, keep your powder dry and learn to anticipate the best trades. I would say 1/2 the trades I do are trades I probably should not have taken. I am getting better, though, in the patience department....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,049
  • Oct 25, 2015 1:43am Oct 25, 2015 1:43am
so what are the best trades on the horizon?
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,050
  • Oct 25, 2015 6:05pm Oct 25, 2015 6:05pm
AAPL caught a 10% run-up in the weeks before the last ER, too
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,051
  • Oct 25, 2015 6:16pm Oct 25, 2015 6:16pm
if AAPL will pull back a buck or 2 on Mon-Tues, I can close the diag calls for b/e or small gain/loss - the short call is too close for comfort to let run thru the ER. Let the puts run and hope for a dump.....
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,052
  • Oct 25, 2015 10:46pm Oct 25, 2015 10:46pm
Quoting The Fool
{quote} well, one does not have to always trade. The TT motto, "trade small, trade often" is not "wrong" - not really gonna be my creed, though. I always come back to the fishing metaphor. Nothing wrong with going out every day & catching a few, maybe many small fish. But, every time you go out, you put yourself and your boat & crew at risk: is it really worth that mortal risk to chase after some thin schools of sardines? Hell no, better to wait until the best runs of big fish are there, then you go fishing....etc, etc....so, in trading, keep your...
I'm good at patience in short spurts, after which I become impatient with that ... . I just gotta learn that there's absolutely nothing wrong with hand sitting. If you're trading just to put on a trade, then you probably shouldn't be trading right then ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,053
  • Oct 25, 2015 10:48pm Oct 25, 2015 10:48pm
Quoting The Fool
so what are the best trades on the horizon? {image}
I may be wrong, but FOMC week = more vol pissing out of the market, at least in the days immediately before ... . Thereafter seems to be a mixed bag ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,054
  • Oct 26, 2015 10:02am Oct 26, 2015 10:02am
Hi TF and ZS.

Looking at indices, I can see that RUT is seriously lagging... NQ 100 and NQ Composite are clear leaders, than SPX, than DJIA. Just look at the daily charts of all of the above. Then I watched weekly Shadow Trader video, and author is also wondering "could there be a catch up trade"... Since /NQ is like 2% from its ATH, SPX less than 3%... So, if you made it up here, what is stoping them to retest ATHs? And RUT will probably folow. That could be played with selling put spreads on IWM, for example. I would probably use Dec expiry, and 110/113 strikes. A clear break above $116.20 will confirm the up move on IWM, IMHO.
Hope is dangerous in this game.
  • #11,055
  • Oct 26, 2015 10:10am Oct 26, 2015 10:10am
yup, I've been suggesting we will see new ath's in the indices in November....we'll see. Looking at natgas futures making a new low today - $2.12.....UNG down @ $10.02, may break below $10....don't know if I care to throw change at natgas anymore....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,056
  • Oct 26, 2015 10:12am Oct 26, 2015 10:12am
Quoting The Fool
if AAPL will pull back a buck or 2 on Mon-Tues, I can close the diag calls for b/e or small gain/loss - the short call is too close for comfort to let run thru the ER. Let the puts run and hope for a dump.....
getting what I need w/ AAPL DD......will let it ride until tomorrow.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,057
  • Oct 26, 2015 10:30am Oct 26, 2015 10:30am
flirting with a good finish on SPY $208/209 O5/N1 calls diag......sweet spot is about $207.50.....maxP at expiry maybe 50c, 5c debit got me in...I have set a 30c gtc, don't want to hold it thru the FOMC if I can get out with decent profit....
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,058
  • Oct 26, 2015 10:33am Oct 26, 2015 10:33am
Quoting ZebraSquirl
... I may dabble a bit with scalping /ES, but only have one day off to have eyes on the screen, which may not be all that productive (we'll see). I've been pouring through /ES scalping videos on the web, most of which are total crap or want you to take one of the seminars or buy some unnecessary software that probably will not give you that advertised "edge." I like simple price action, which doesn't require complicated software or rocket science systems ...
Hi ZS.
For scalping you need screen time... This is what I do - try to find as many as possible support and resistance levels, and usable trend lines, starting from daily timeframe and down to the 15m chart. Sometimes I just cast my bait to some significant level (in close vicinity of it), put a limit order and some modest take profit. The absolute best thig is when an order like that fills and banks while you sleep. Obviously that is pretty rare, 99.5% of the time you must watch the mofo like an eagle. Price tends to test some levels multiple times, and you must have discipline to react automatically. It is very important that you already have levels and lines on your chart, so you can react... wait, wait... and strike. Especially if the trade is a counter trend trade... lines and fibs is pretty much all you need. I use MACD and RSI also, but primarily to find divergences.

Example - This is German DAX from now
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Pink level 10,844 is from daily chart... was some low from June and some resistance even before that... Some large fibs like from ATH to Aug lows are there also and so on... And price WAS testing that 2 times on Friday, and 2 times TODAY. That was a good place for a counter trend trade, short there, since DAX made over 650 points straight up in just 2 days... but wait for the level. Or, just put a limit order there.

That was just an example of usage of daily levels on smaller time frames. Obviously that trade is gone (took something there, smaller than I should ). Now I will see some fib retracement of the up move, or maybe take a long trade... but probably nothing.
Hope is dangerous in this game.
  • #11,059
  • Oct 26, 2015 11:54am Oct 26, 2015 11:54am
Quoting The Fool
... I did a 10-lot $215/$215.5 as above for 4c today - I like these $0.50 spread diagonals - you can put on a good number & not tie up so much margin, and if you get on the death slide, it's a little easier slope to deal with.
I entered the exact same trade today, so I will keep you company with it .
Hope is dangerous in this game.
  • #11,060
  • Oct 26, 2015 12:09pm Oct 26, 2015 12:09pm
Quoting StrayDog
I entered the exact same trade today, so I will keep you company with it .
Welcome aboard, mate. If we get that bull run to the summer highs in Nov we may make out ok. Wildcards coming up are a hawkish Fed this week, new threats of a US govt shutdown, etc...if we are on the wrong side of the market we might look to enter a corresponding put-side spread to ride the margin in the calls......or, just let the calls run and take the small loss
"If The Fool persists in his Folly he will become wise." - William Blake
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