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Let's Trade Options

  • #11,581
  • Dec 22, 2015 12:18am Dec 22, 2015 12:18am
Quoting The Fool
{quote} http://www.businessinsider.com/junk-...-again-2015-12 chickens coming home to roost? just take your pick among the risky overleveraged names....the melt-up mofo market is long overdue for some bloodletting.
Speaking of bloodletting, CMG appears "systemically afflicted ... ." Too bad the options blow so hard ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,582
  • Dec 22, 2015 1:16am Dec 22, 2015 1:16am
/ES pointing up early, Santa rally needs some legs....just as well I bailed on most long VXX spreads last week.....some still running into Jan expiry.....near term though I want to see a ^VIX collapse back to 15 or lower.....I am in a variety of short ^VIX trades, like Jan/Jan4 SVXY $65 and $70 calls calendars, long March $13 VIX puts, etc....need to see VIX under $15 pdq for the latter to make some money, they were a 10c debit....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,583
  • Dec 22, 2015 5:11am Dec 22, 2015 5:11am
Quoting StrayDog
Thinking of some bearish play on TSLA. Daily chart: {image} Red ma is daily 200... 4th rejection from her, from upper channell line, old SR at ~235... Thinking about selling some close call spreads, like maybe Jan 235/237.50 or something... working idea.
I've been looking at TSLA too plus all large cap stocks have the same consolidation set up that is near break out points, you can take your pick on them
  • #11,584
  • Dec 22, 2015 8:13am Dec 22, 2015 8:13am
Quoting Cecil Gee
TLT AND FXY are the two new year long term strangles I'm looking to make, just waiting for the longer term IV to come down, hoping to get in sometime next week or at one of the low volatility days next week or near the closing of year end ready for the start of the new year for some strong directional moves in those two mentioned as to me those charts indicate
so close on above pair almost got the IV needed for a long term play plus all major stocks have consolidated and there IV's are at lows making for volatile first quarter with sustained directional moves, the YEN looks the closet to be ready for the strangle on FXY maybe tomorrow, will put the trade here when I make with entry level and cost
  • #11,585
  • Edited 2:21pm Dec 22, 2015 12:36pm | Edited 2:21pm
While market is choping around... something to watch -> interview with Mark Douglas...

Inserted Video


I find his book "The Disciplined Trader" helpfull.

Addon
I found a longer version... will watch that also later.
Hope is dangerous in this game.
  • #11,586
  • Dec 22, 2015 12:44pm Dec 22, 2015 12:44pm
Quoting StrayDog
While market is choping around... something to watch -> interview with Mark Douglas...
I will watch that video if Mark sends me $500. I hope Cecil G is right about the big trends a'coming. 2015 was a flatline snooze except for the decent dip in August, which I was not positioned for in time to profit from very much. Anyway, a belated Santa Rally in effect now, if that will run into New Year's at least my short ^vix trades will make some money....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,587
  • Dec 22, 2015 12:58pm Dec 22, 2015 12:58pm
Quoting ZebraSquirl
Here's a really fundamental question that I don't know the answer to off the top of my head (since I still have never done a diagonal, let alone a double). I do know that when you leg into one side of an iron condor and then into the other, you basically only pay margin/buying power-wise for one side of the setup (the put spread "offsets" the call spread from a margin standpoint). Does the same go for a double diagonal, where you're paying a debit to set up a side?
DD's yes you only pay margin on one side, and that covers the other side too, same reason essentially as for an IC.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,588
  • Dec 22, 2015 1:18pm Dec 22, 2015 1:18pm
Quoting The Fool
{quote} I will watch that video if Mark sends me $500. I hope Cecil G is right about the big trends a'coming. 2015 was a flatline snooze except for the decent dip in August, which I was not positioned for in time to profit from very much. Anyway, a belated Santa Rally in effect now, if that will run into New Year's at least my short ^vix trades will make some money....
hey TF if you get time check out long term IV on FB, AMZN, GOOGL, TLT, FXY, TSLA, and there is more, all are near or at lows this is rare for so many to be where they are at the same time
  • #11,589
  • Dec 22, 2015 2:09pm Dec 22, 2015 2:09pm
Quoting The Fool
{quote} DD's yes you only pay margin on one side, and that covers the other side too, same reason essentially as for an IC.
Thanks much ... . Figured, but wasn't sure ... .

* * *

Culling my "herd" somewhat here: covered MXIM short strangle for 45% max; EWZ, for 40%.

Got into NKE at 1.25/contract on a Dec 31st 118/141 short strangle ... . Hopin' for an inzee outzee ... .

CNX/X covered calls working out nicely; CHK/FCX/SWN, ehhh, not so much ... . Don't like to do those very often, but figured they were cheap and worth a small shot, and couldn't see much when I put them on premium-selling wise, so figured I'd cover the gap between now and next earnings season with some of these small plays ... .

* * *

Good call on the SCTY fade, TF ... . Wrestling with a SCTY strangle here (there's a lesson there; sure, some of these less liquid instruments could be good plays, but try rolling stuff; getting a fill at the mid's a total bitch, and then all you do is regret putting the play on in the first place. If your choice is between illiquid and nothing at all, choose the nothing at all option.).
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,590
  • Dec 22, 2015 2:25pm Dec 22, 2015 2:25pm
Quoting ZebraSquirl
Good call on the SCTY fade, TF ....
short vol is tricky - the iv bleed is so heavy, you can get a pretty long move and still be where you started with the price of your otm options. A partial solution is to play long-dated, which is why I went long March VIX $13 puts, instead of something closer - fully intended to make money on those in a week or 2 with the Xmas rally and so far so good, still need to see ^vix sub 15.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,591
  • Dec 22, 2015 2:37pm Dec 22, 2015 2:37pm
Quoting The Fool
{quote} I will watch that video if Mark sends me $500. I hope Cecil G is right about the big trends a'coming. 2015 was a flatline snooze except for the decent dip in August, which I was not positioned for in time to profit from very much. Anyway, a belated Santa Rally in effect now, if that will run into New Year's at least my short ^vix trades will make some money....
That Aug/Sept stuff made my year, frankly ... . The remaining months were quite a slog for index ETF trades, punctuated by the lack of vol pop around FOMC.

I've got a total of one SPY March 18th iron condor on now, which I'm managing dynamically intratrade, moving the wings/strikes about as price slops between my uber wide short strikes to keep the setup fairly delta balanced. If 2016 gives me some vol, I'll go back to trading these fairly low key index ETF setups ... . I feel like I'm scrambling about quite a bit, doing aggressive trade management with these 45 DTE high IVR/IV plays of late, but I imagine that's just what you have to do with those to keep them delta balanced and set yourself up for successful exit ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,592
  • Dec 22, 2015 9:14pm Dec 22, 2015 9:14pm
Quoting The Fool
short vol is tricky - the iv bleed is so heavy, you can get a pretty long move and still be where you started with the price of your otm options. .....
example, for the 2-day move in UVXY - $34 to $27, a $7 move down hi to low. The Dec4 $25 puts went from $0.20 to $0.10, the Mar $25 puts went from about $6 to about $7....the long $25 Dec4 puts would've lost money even though UVXY dropped $7.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,593
  • Dec 22, 2015 10:13pm Dec 22, 2015 10:13pm
Quoting Cecil Gee
hey TF if you get time check out long term IV on FB, AMZN, GOOGL, TLT, FXY, TSLA, and there is more, all are near or at lows this is rare for so many to be where they are at the same time
aye, Cecil, very low iv rank on some names and will go lower if we keep rallying or even flatlining into year's-end. TLT shown - a possible Feb strangle, you need a move to $116 or $128 to b/e by expiry - but that is m/l the range limits for the last 1/2 year. The long options trades will work the best if you get a fast move while your options still have good time value.....but I am not sure I know what will make that happen in the coming weeks or even months? There are certainly some things brewing and I have talked about those all here but we might just as well keep on with the chop n range.....
Attached Image(s) (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,594
  • Edited 1:55am Dec 23, 2015 12:53am | Edited 1:55am
TSLA ER is Feb opex week, time spreads & flys will benefit from the rising iv into the ER and you could do well if the share price moved to your sweet spot
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,595
  • Dec 23, 2015 1:35am Dec 23, 2015 1:35am
whaddaya get when you tack a cheap long vert onto a cheap fly? A big winner. Let's call it "The Big Kahuna".....
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,596
  • Edited 3:31am Dec 23, 2015 2:16am | Edited 3:31am
it's time to start scoping out Q4 earnings trades as late Jan early Feb will start to roll those in. Looking at TWTR on 2/3/16.....need to see the Feb1 options get born...

AAPL has an interesting ER draw, Jan 25 a Monday in Jan5 week, AH - you could fish an iv rise in the prior Jan4 week.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,597
  • Edited 3:12am Dec 23, 2015 2:39am | Edited 3:12am
Quoting The Fool
whaddaya get when you tack a cheap long vert onto a cheap fly? A big winner. Let's call it "The Big Kahuna".....
long AAPL Big Kahuna, Jan calls ... I have the fly order up but with the Jan4 calls to catch the pre-ER iv ramp
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,598
  • Dec 23, 2015 3:25am Dec 23, 2015 3:25am
Big Kahuna, Big Kahuna - the way to trade a Big Kahuna into rising iv, such as one sees into the weeks before liquid stocks ER - try to catch the IVR bottom, then go ahead and buy long call and long put verts. OTM but not too far. Get em cheap cheap. Then wait. Look for the u/l to move towards one or the other. The goal is to set up the fly with the outside wing having same strike as the long leg of the vert (or close to it)....fly needs to be narrow so you can get in it cheap. If the other vert is stranded hey no prob it only was a small debit. Still playing with this idea....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,599
  • Dec 23, 2015 7:18pm Dec 23, 2015 7:18pm
Out of my NKE short strangle for 50% max ($62/contract) and OIH short strangle also ($53/contract). Good thing the NKE was an inzee outzee, since there will be a split here shortly ... .

Liking the IV expansion ideas on these earnings, TF. Just wondering if I can work both ends of the stick -- catch the expansion, catch the contraction ... . May be kinda tricky timing wise ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,600
  • Edited 2:44pm Dec 24, 2015 1:03pm | Edited 2:44pm
Quoting ZebraSquirl
Liking the IV expansion ideas on these earnings, TF. Just wondering if I can work both ends of the stick -- catch the expansion, catch the contraction ... . May be kinda tricky timing wise ... .
Yes, you can. Using weeklies. Set up trades that expire the week before or the week of to catch iv expansion and other trades with week-of or week-after expiry to catch the crush. Typically, you will be getting into the first trades a month before the ER and into the second just days before, at most. Anyway, that's the theory. Does not always work out, but what does?

Another approach is to set up double calendars or double diagonals well in advance of the ER, with the back long legs beyond the ER date, and hope you catch a directional runner right off the ER. This is not so cheap to set up, but cheaper than long strangles anyway, which you could also do.

Anyway, the fun never ends. However, I will be glad for the long weekend and being able to forget about trades for a while.

Merry Christmas, all!
"If The Fool persists in his Folly he will become wise." - William Blake
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