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Let's Trade Options

  • #11,681
  • Edited 1:23pm Jan 4, 2016 10:51am | Edited 1:23pm
Quoting The Fool
{quote} fast profits is the best profits. ..
Absolutely... sometimes is good to have a GTC close set up... in fact most of times.
Today it would be better to manualy close NOW for $2.50 (because it is bouncing from support), but I am satisfied. I didn't expect such a sell-of today, I was thinking of a red day today, but less than a percent down... (addon - expectation from Dec 31, BEFORE the Chinese plunged...)
Hope is dangerous in this game.
  • #11,682
  • Jan 4, 2016 1:56pm Jan 4, 2016 1:56pm
Please, sir, can I have some more? Yes, I need another day like today, say ^VIX > 24.0, and I will be able to get out of Jan VIX and UVXY bflys with 2x-3x net gains. So hard to get even 2 bear days in a row....maybe things are changing?........ fingers crossed for Tuesday.

Naturally, I already think of fading the VIX spike, but unfortunately I have not figured out how to do that efficiently with options......
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,683
  • Jan 4, 2016 2:44pm Jan 4, 2016 2:44pm
Quoting The Fool
Please, sir, can I have some more? Yes, I need another day like today, say ^VIX > 24.0, and I will be able to get out of Jan VIX and UVXY bflys with 2x-3x net gains. So hard to get even 2 bear days in a row....maybe things are changing?........ fingers crossed for Tuesday. Naturally, I already think of fading the VIX spike, but unfortunately I have not figured out how to do that efficiently with options......
I monitor a few butterflies, but I don't have any on UVXY... I will stick to simple vertical spreads for a bit longer, and combinations with them ( for catching a vol spike I showed a few weeks ago, call spreads financed by selling put spreads and similar)

As for VIX and generally fading vol, I used to do that with selling call spreads on VXX, since it has the best options of them all, easy to fill the order.

But for longer term holding, buying XIV or SVXY shares on big VIX spikes is OK also.
Hope is dangerous in this game.
  • #11,684
  • Jan 4, 2016 6:04pm Jan 4, 2016 6:04pm
Quoting The Fool
{quote} Hey, welcome, gmann....yes I use ToS and would recommend it to anyone who is trading options. Those spreads you indicate are in profit? Good luck with them.
Slightly in profit. Need short puts to decay more and should get into more profit.
  • #11,685
  • Jan 4, 2016 6:18pm Jan 4, 2016 6:18pm
Quoting thegmann
Slightly in profit. Need short puts to decay more and should get into more profit.
yeah I am on the other side of you there, I actually think equities and oil will rally into the end of Q1. I don't have much bullish positioning done yet, though - would love to see this sell off continue for the week and beyond. I am going to lose a little money on Jan VIX & UVXY call spreads if it does not.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,686
  • Jan 4, 2016 7:30pm Jan 4, 2016 7:30pm
Sheee yaht ... . What a way to begin the year ... . All's I could do was watch from time to time on the iPhone ... . Covered some SPY short call spread action on this down move and rolled my poor man's covered call IWM short call down to 111 for a 1.41 credit.

May be able to get out of my Jan 15 96/99 GLD short put vertical for near max profit if gold prices hover around this area for a few days (which is all I need).
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,687
  • Jan 4, 2016 7:36pm Jan 4, 2016 7:36pm
Quoting ZebraSquirl
Next Week's Earnings Plays: MON: Announces on 1/6 (Wednesday) before market open WBA: Announces on 1/7 (Thursday) before market open BBBY: Announces on 1/7 (Thursday) after market close MON -- .97 credit for a 93/104 Jan 15th short strangle. WBA -- 1.05 credit for a 78.5/91.5, Jan 15th short strangle. BBBY -- .73 credit for the 44.5/52 Jan 15 short strangle. I'll naturally check these on Monday or Tuesday. The IVR's, IV's, and mid prices are suspect in the off hours ... .
MON and BBBY not looking so hot from a volatility perspective ... . WBA may be my only earnings play this week, which suits me just fine ... .

* * *

I finally covered my ULTA setup today; here's the history: the original setup was a 145/185 short strangle that I received a 1.58 credit for; on Dec 7th, I covered the short put side of the setup for a .10 debit and bought a little protection on the call side (a 195 long call for a .30 debit), after which I rolled out the 185/195 short call spread to the Jan 15th expiration for a .93 credit, matching it up with a Jan 15th 160/170 short put spread for a .83 credit. I eventually rolled up the short put side a bit to a 165/175 short put spread (same expiry) for an additional .40 credit. So, I received 1.58+.93+.83+40 = 3.74 in credits. I covered today for a 2.95 debit, which when added to the other debits (.10 + .30) = 3.35. So I made 3.74-3.35=.39 or $39/contract. Not great, but better than managing a loser for eons ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,688
  • Jan 4, 2016 7:39pm Jan 4, 2016 7:39pm
Quoting thegmann
{quote} Slightly in profit. Need short puts to decay more and should get into more profit.
Welcome. Welcome. Welcome. Nice to have another body in the room ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,689
  • Jan 4, 2016 8:28pm Jan 4, 2016 8:28pm
Quoting ZebraSquirl
{quote} Welcome. Welcome. Welcome. Nice to have another body in the room ... .
Thanks. Hoping for more of a sell off tomorrow. Looking to get long some call spreads in apple, if anything is going to go up this year I think it'll be that. Also may gamble a bit on chipotle we're pretty much at 2013 prices the stock has sold off close to 50% from all time highs. I'm overall bearish on the market but need to get some more long Deltas going.
  • #11,690
  • Jan 4, 2016 9:08pm Jan 4, 2016 9:08pm
AAPL earnings is 1/26....I am in the call side of this Jan5/Feb1 double calendar....maybe get in the puts maybe not
Attached Image (click to enlarge)
Click to Enlarge Name: 2016-01-04_1905aapl.png Size: 82 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,691
  • Jan 5, 2016 1:44am Jan 5, 2016 1:44am
Quoting StrayDog
As for VIX and generally fading vol, I used to do that with selling call spreads on VXX, since it has the best options of them all, easy to fill the order. But for longer term holding, buying XIV or SVXY shares on big VIX spikes is OK also.
VIX put verts, if you have the margin
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,692
  • Jan 5, 2016 2:10am Jan 5, 2016 2:10am
Quoting The Fool
So hard to get even 2 bear days in a row..........
to btfd or not to btfd, that is the question.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,693
  • Jan 5, 2016 9:15am Jan 5, 2016 9:15am
Quoting The Fool
{quote} to btfd or not to btfd, that is the question.
I went long the 105/110 feb16 call spread in AAPL and short the 31/30 put spread in BBY. Still watching CMG may look to put on bull call spread there as well around 450 or wait see if we can get 425 in few weeks before throw one on. Got some long Deltas going though now we'll see what happens. Still holding onto my bear put spreads in DIA and SPY.
  • #11,694
  • Jan 5, 2016 1:00pm Jan 5, 2016 1:00pm
Quoting thegmann
... Still watching CMG may look to put on bull call spread there as well around 450 or wait see if we can get 425 in few weeks before throw one on....
It should bounce, maybe like this:

CMG Weekly chart
Attached Image (click to enlarge)
Click to Enlarge Name: CMG-W.PNG Size: 103 KB
Hope is dangerous in this game.
  • #11,695
  • Jan 5, 2016 2:20pm Jan 5, 2016 2:20pm
What I have learned doing long vol trades the last couple months: if you get some juice and your trade gets in some good profit, take it, even if you are way early. It's just like pulling chicken teeth to get any kind of persistent vol and elevation in the ^VIX, and this is true even if the indices are trending down. Only exception would be some kind of protracted, exogenous event that brings real panic into the markets.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,696
  • Jan 5, 2016 2:22pm Jan 5, 2016 2:22pm
Quoting thegmann
Still watching CMG may look to put on bull call spread there ....
good luck, not my meat, options too thin and spreads suck.....that might be one to set up a synthetic long stock trade on, though - get in and catch a $100+ spike like you know it can do at earnings......only problem might be if you can not get out if it goes against you....too scary.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,697
  • Jan 5, 2016 3:53pm Jan 5, 2016 3:53pm
Quoting thegmann
{quote} I went long the 105/110 feb16 call spread in AAPL and short the 31/30 put spread in BBY. Still watching CMG may look to put on bull call spread there as well around 450 or wait see if we can get 425 in few weeks before throw one on. Got some long Deltas going though now we'll see what happens. Still holding onto my bear put spreads in DIA and SPY.
I agree with TF on this one. I've tried to play CMG repeatedly and every which way from Sunday (short strangle, iron condor, yada yada). The problem: the liquidity in the options sucks. Naturally, you can get into those fairly easily if you are willing to get a fill at something far less than the mid price. However, when you want to roll the thing or exit at a particular price, it becomes a headache and more than you bargained for. All of a sudden, you're regretting having entered the trade in the first place ... . Even some of the Dough "two star" liquidity underlyings blow; CMG's got a "one star" liquidity rating ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,698
  • Jan 5, 2016 4:10pm Jan 5, 2016 4:10pm
Tuesday's my "housecleaning" day. Covered some junk (GPRO short strangle) and rolled some ill-advised crap out for credit (RRC, FIT, QUNR short strangles), improving strikes where I could ... .

Flopped on a "poor man's covered put" to match my IWM poor man's covered call, so now it's an Aug 19th 97 short call/Feb 19th 111 short call/Feb 19th 110 short put/Aug 19th 138 long put poor man's covered call/put setup (what the hell, just call it a "double mullet"). But I'm treating the poor man's covered call separately from the covered put for trade management purposes ... .

The notion is to treat the long options like stock and work the short options as you would in a covered call/put situation, reducing your cost basis in the setup by rolling your short options either within the same expiry for a credit or out for a credit ... . Bail on the entire setup when you're in profit by at least 50% of the credit received or when the long-dated options get too close in time ... . Hoping for a low key alternative to index ETF iron condors without all the vol skew ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,699
  • Jan 5, 2016 4:18pm Jan 5, 2016 4:18pm
Currently suffering from TMSO ("Too Much Shit On") syndrome ... .

But there's always room for a "wafer thin mint":

Inserted Video


P Covered Call
Buy 100 shares at 11.63
Sell 1 Feb 19th 12 short call
Entire Package: 10.42 debit
Max Profit: $158 (if called away at 12; 15.2% ROC)
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,700
  • Jan 5, 2016 4:24pm Jan 5, 2016 4:24pm
Passed on a MON earnings play; volatility just wasn't there ... . In fact, it ebbed over the trading day ... .

This leaves BBBY and WBA this week. I'll pass on BBBY; it's got the vol, but not the juice (I need at least a 1.00 credit to bother; it looks like .55 for the standard short strangle).

WBA's offering .83 for the Jan 15th 74.5/87, which doesn't get me terribly excited ... .
Fireworks are fun ... as long as you don't blow your fingers off.
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