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Let's Trade Options

  • #11,461
  • Dec 11, 2015 6:16pm Dec 11, 2015 6:16pm
Quoting merquise
{quote} Heh, there are tons of links to read as well as books, so Tasty will have to wait in line For futures I've demo traded them on Ninja platform, I like it. They are the same as forex, the only difference being ticks instead of pips.. Technical analysis works the same. What I like about them is commodities. I loved trading oil, gold, corn, wheat, soy, nat. gas. But let me try to say what I wanted to accomplish with options if it is possible. Using the yesterday example of EUR USD. Had I opened short position on forex or futures @ 1.1 and...
To me, there's quite a bit of a difference between trading futures versus futures options. There are various aspects to futures options (time decay, IV, etc.) that just aren't present in straight futures just as there are with equities options versus straight equities buying and selling. Because of these aspects of options (which require greater time frames to unfold), "daytrading" options simply doesn't make sense in the vast majority of instruments. For that reason, I will daytrade a future (such as /ES), but will never daytrade a futures option since the benefits of time decay don't accrue on such short time frames ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,462
  • Dec 11, 2015 6:32pm Dec 11, 2015 6:32pm
Quoting The Fool
{quote} just mho - I would move up Tastytrade to the front of the line. There's a bewildering number of vids in there but the content is better than most options books. Re: books, there are many that are just elementary & a few stand out, like "Volatility Trading" by Sinclair, "Trading Options Greeks" by Passarelli, etc....you can get all you need from online resources though, no need to spend money on books you will read once or twice and then put on a shelf... ...re: TT - I don't really agree with how some (most?) people there trade, but I still...
I would agree ... . There's nothing like having them go through a live trade and walking through the logic of why they are doing things that particular way.

I would also agree that most of the Traders on the "Follow" page aren't worth replicating, frankly, with the exception of one or two. For instance, I have learned a great deal from Robyn's trades, just because she takes the time to explain what she's doing, why she did it, and the fact that she is extremely patient and mechanical with her setups. I do look at the other traders' stuff for ideas, but 99% of the time I don't agree with what they're doing ... .

That being said, I notice that Katie is doing a ton of futures trades, so that is a resource I would look into, as well ... . That is a fairly new segment on TastyTrade, and I haven't been able to pour through it all myself ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,463
  • Dec 11, 2015 6:48pm Dec 11, 2015 6:48pm
Quoting The Fool
Dec2/Dec VXX calendars @ $26, $27, & $28 - all tapped for $0.20 - $0.40 net. Nice fat payday. If ^VIX continues to blow up next week, I have many Dec/Jan VXX and UVXY calls calendars, some Jan VIX calls bflys also - that will make me richer. Those 1-month calendars have huge like 20 bagger MaxP's on expiry day but I am looking at probably getting out on FOMC day.


I've got my eyeballs peeled for a VIX product short play post-FOMC; I'll just have to watch price action post-FOMC to try and catch the top of any spike (good luck with that) or set up a GTC order for a cheap put debit spread where the break even is sub-15 (for example, in VIX) ... . I'll play with setups Sunday/early next week ... .

In the mean time, one man's junk is another man's treasure:

Attached Image (click to enlarge)
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Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,464
  • Dec 11, 2015 6:49pm Dec 11, 2015 6:49pm
Looking forward to next week ZSquirl.....I am thinking this week we saw some "sell the rumor" and that after next week we could be back to "buy the fact" with another BTFD moment.....but this time could be different. The next 2-4 weeks could make my year if we get a persistent stretch of elevated ^VIX.

Have a good weekend.......
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,465
  • Dec 11, 2015 6:52pm Dec 11, 2015 6:52pm
Ain't squat on next week's earnings calendar (which is probably a good thing so close to FOMC).

Only FDX and ORCL stick out. I ran setups on ORCL; not enough juice.

FDX, on the other hand, could be worthwhile:

Attached Image (click to enlarge)
Click to Enlarge Name: FDX Short Strangle.jpg Size: 138 KB


Will just have to see as we get right on top of the thing ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,466
  • Dec 11, 2015 6:55pm Dec 11, 2015 6:55pm
Quoting ZebraSquirl
{quote} I've got my eyeballs peeled for a VIX product short play post-FOMC; I'll just have to watch price action post-FOMC to try and catch the top of any spike (good luck with that) or set up a GTC order for a cheap put debit spread where the break even is sub-15 (for example, in VIX) ... . I'll play with setups Sunday/early next week ...
good idea and good luck - I am thinking the same and have already started trying to fill VXX and UVXY put spreads for the inevitable reversion. If UVXY (and VIX) will spike high enough I will look at the BWBflys, too.

Options trading and volatility, mmmmmm good....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,467
  • Dec 11, 2015 6:55pm Dec 11, 2015 6:55pm
Quoting The Fool
Looking forward to next week ZSquirl.....I am thinking this week we saw some "sell the rumor" and that after next week we could be back to "buy the fact" with another BTFD moment.....but this time could be different. The next 2-4 weeks could make my year if we get a persistent stretch of elevated ^VIX. Have a good weekend.......
If you would've quit bogarting those binoculars back in mid-Nov, maybe I could have seen this event a little better and planned ahead ... . (Oh, wait, you did post quite a few setups I could've jumped on ... . Lol.) Have a good weekend, too. Rock that VIX!
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,468
  • Dec 11, 2015 8:24pm Dec 11, 2015 8:24pm
Quoting The Fool
USO strangler's Dec2 $12/$14.5 for 18c - the $12 puts have gone to $0.82....net 64c or $64 x 85,000 is a $5MM payday, if they hung in.....
classic event-driven bi-directional trade, risked 1.5 to net 6.5
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,469
  • Dec 11, 2015 9:00pm Dec 11, 2015 9:00pm
Quoting ZebraSquirl
Rock that VIX!
a lot can happen in a few days....8/19 to 8/24 4-day move saw VIX $14.84 to $53.29................whether you get in low or catch the high, the speculator's job is to know when/where to look, how to move, and to be ready with as much dry powder as he can afford to lose.
Attached Image (click to enlarge)
Click to Enlarge Name: 2015-12-11_1849vix.png Size: 93 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,470
  • Dec 11, 2015 9:44pm Dec 11, 2015 9:44pm
VXX Dec/Jan $33 calls calendar has a shot at glory......in for 20c could get out for >$3.00....but it won't be easy to ride that pig.....will be in the mountains all next week, isp access spotty....might be a blessing in disguise.
Attached Image (click to enlarge)
Click to Enlarge Name: 2015-12-11_1939vxx.png Size: 85 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,471
  • Dec 12, 2015 12:09am Dec 12, 2015 12:09am
I have only recently started trading VIX options. Right I mean options on the CBOE VIX futures. The first thing I noted: the product has different margin requirements than equity options. There are margin requirements on spreads that would have none if it were a normal equity options product. For instance, there are quite high margin requirements for calendars and even for long vertical spreads. How screwy is that? otoh, I have been putting on VIX bflys as if they were any other options fly....

I will be boning up on this topic this weekend.....

http://www.optionpundit.net/how-to-c...n-requirement/
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,472
  • Dec 12, 2015 3:52pm Dec 12, 2015 3:52pm
http://cfe.cboe.com/education/TradingVolatility.pdf
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,473
  • Dec 12, 2015 6:06pm Dec 12, 2015 6:06pm
Quoting The Fool
I have only recently started trading VIX options. Right I mean options on the CBOE VIX futures. The first thing I noted: the product has different margin requirements than equity options. There are margin requirements on spreads that would have none if it were a normal equity options product. For instance, there are quite high margin requirements for calendars and even for long vertical spreads. How screwy is that? otoh, I have been putting on VIX bflys as if they were any other options fly.... I will be boning up on this topic this weekend........
Gah. I haven't really given it a thought, either. Course, I've had a notion of an ideal VIX long play, but I've yet to get filled on that since I slapped GTC orders on for that setup, so I haven't seen the VIX options in action; the margin requirements appear to shift underfoot as you scoot around an extremely slippery floor ... . Most of the time I stick around 50% in cash, so I'm not sure it's a huge concern, but if you're one to play it extremely tight with available cash/buying power, it could quickly become a problem maybe ... .

Anyhoo ... . On the put side, I'm looking at long put verticals in VXX with a breakeven for the setup below 20. Naturally, I don't want to pay current prices, but want to take advantage of any spike to get into something cheap on that end of things and by "cheap," I mean something in the vicinity of .07-.12 for something like a 19/21 spread (19-1 max profit) or 20/21 spread (9-1 max profit). I think that's it's reasonable to assume that at some point post-FOMC, we'll see a meltup or other BTFD such that VXX dips below 20 again, so I plan on setting up several long put vert GTC orders at varying expiries that shoot for that magical .10 fill ... . If they fill, they fill, if they don't, oh well ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,474
  • Dec 12, 2015 6:31pm Dec 12, 2015 6:31pm
Quoting The Fool
VXX Dec/Jan $33 calls calendar has a shot at glory......in for 20c could get out for >$3.00....but it won't be easy to ride that pig.....will be in the mountains all next week, isp access spotty....might be a blessing in disguise. {image}
I'm not liking the low end break even of the calendars I looked at ... . It may be that the ideal time to put those on has passed with this upmove, so I may just have to be satisfied with the long put vert setups and just leave it at that ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,475
  • Dec 12, 2015 6:39pm Dec 12, 2015 6:39pm
Quoting ZebraSquirl
{quote} I'm not liking the low end break even of the calendars I looked at ... . It may be that the ideal time to put those on has passed with this upmove, so I may just have to be satisfied with the long put vert setups and just leave it at that ... .
Then again, I may just be too picky ... . These spikes have a tendency to not fade immediately; there is some volatility afterglow and aftershocks after one of these events, so it's going to probably stay above 20 for quite some time ... . I dunno, 2-4 weeks at least, I would think ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,476
  • Dec 12, 2015 8:10pm Dec 12, 2015 8:10pm
http://money.cnn.com/2015/12/11/inve...n=money_latest

well, if we start seeing more stories like the above, we could be in for a spell of risk-off.....and if oil keeps falling the fear in the junk market will intensify and ripple out to equities as a whole...throw in some over-reaction to the Fed, low liquidity around the holiday weeks....we could see vol spikes and elevated ranges....if we start to see weak hand frackers going under, defaulting on their debts, then the whole thing could stink up the place for months.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,477
  • Edited Dec 13, 2015 1:56am Dec 12, 2015 8:18pm | Edited Dec 13, 2015 1:56am
Quoting ZebraSquirl
Gah. I haven't really given it a thought, either.
well, the main message is: if you want to trade VIX options, check into the margin requirements before you dedicate real money - it's a differently-striped cat.....the bflys, however, seem to trade the same as any equity option bfly.......so that might be my go-to play for VIX. I have the one below.....
......another thing or 2 - the VIX options expire on Wednesdays, which is to say Tuesday is your last day to tweak them.....and, the weeklies are still thin, so look in the monthlies for good volume....in the Jan chains, Jan4 is the monthly and Jan is a weekly.....confused?
Attached Image (click to enlarge)
Click to Enlarge Name: 2015-12-12_1814vix1.png Size: 77 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,478
  • Dec 12, 2015 8:23pm Dec 12, 2015 8:23pm
Quoting The Fool
http://money.cnn.com/2015/12/11/inve...n=money_latest well, if we start seeing more stories like the above, we could be in for a spell of risk-off.....and if oil keeps falling the fear in the junk market will intensify and ripple out to equities as a whole...throw in some over-reaction to the Fed, low liquidity around the holiday weeks....we could see vol spikes and elevated ranges....if we start to see weak hand frackers going under, defaulting on their debts, then the whole thing...
I'm kind of looking at this whole thing as a once in a lifetime thing ... . When are we going to see another post-QE, TARP, ZIRP first-time rate hike? Hopefully never, but it might be kinda "special" ... . Not that I'm going to go crazy here with short VIX product positions, but it could put a nice bow around the end of the year ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,479
  • Dec 12, 2015 8:29pm Dec 12, 2015 8:29pm
Quoting The Fool
{quote} well, the main message is: if you want to trade VIX options, check into the margin requirements before you dedicate real money - it's a differently-striped cat.....the bflys, however, seem to trade the same as any equity option bfly.......so that might be my go-to play for VIX. I have the one below..... ......another thing or 2 - the VIX options expire on Wednesdays, which is to sat Tuesday is your last day to tweak them.....and, the weeklies are still thin, so look in the monthlies for good volume....in the Jan chains, Jan4 is the monthly...
The expiries can throw you for a bit of a loop ... . Last time I had a some kind of long VIX option spread on, I really hadn't done my homework and the expiry crept up on me in the dead of night ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,480
  • Dec 12, 2015 8:35pm Dec 12, 2015 8:35pm
Here's the long put vert setups, all GTC until like Dec 22 ... . Some of them, obvious long shots to get filled for a dime in the absence of some massive spike:

Attached Image (click to enlarge)
Click to Enlarge Name: VXX Long Put Verts.jpg Size: 54 KB


Naturally, I'll tweak if we get something near a dime ... . Otherwise, no massive spikee, no fillee ... .
Fireworks are fun ... as long as you don't blow your fingers off.
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