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  • #11,741
  • Jan 8, 2016 7:14pm Jan 8, 2016 7:14pm
Quoting ZebraSquirl
Not sure when this down turn will peter out, but I'm looking to buy the dip with short put verts once this downturn seems to be starting to peter out (thought it would today with those bomber NFP numbers).
I have to think we will see rally action after the Jan FOMC, or thereabouts. But there are some crazy mofos out there saying we will retrace the entire bull market that was laid up on the various QE's - so back to 666? Doubtful, China will prolly settle down, oil will rally as demand starts to pick up in late Q1, and the SnP will put on some big bull ballz moves back towards 2150+ in Q2. I am fantasizing about bullish oil trades (see above) but I will take what I can get.

I got out of long vix spreads too early this week.....I babysat those smbtches for weeks just to get out for net 30-50 cents? ------ some of them might go to $2.50+ next week......... Well that's what happens when things come down to the wire....even though I know they are designed to go down to the wire....some are easier to manage in the end than others. I still have one UVXY fly that could be glorious....

Have a good weekend, ZS, CG, et al....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,742
  • Jan 8, 2016 7:17pm Jan 8, 2016 7:17pm
Quoting ZebraSquirl
Dipped my dick in that honeypot... .
man I got a good feeling about that booger for 2016, just gotta cross fingers and get in near that bottom - selling puts is the way to go in there while the iv in the puts is thru the roof. I am seriously considering selling a kidney so I can get in that with monstrous size......more later.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,743
  • Jan 8, 2016 7:23pm Jan 8, 2016 7:23pm
Quoting thegmann
{quote} I'm looking to get short either tlt and sell some puts against it or long tbt and short some calls depedning on how things open. If we can get any sort of rally towards 2000 on the SP or 106/107 on the QQQ's i'll be looking to hop back in short as I closed out my bear vertical puts on DIA and SPY earlier this week and would like to reload some shorts and get some negative delta going. Would absolutely love to get short the Nasdaq on a good bounce. If we can get another sharp downmove on oil may look to short some puts or put on a possible...
You might want to take some care with TLT in particular right now. Its volatility rank is near 0; if it pops (it will at some point) your options will become richer, so it's a crappy premium selling play right now; use either a debit spread, a calendar, or a diagonal (the low IV play options).

Me personally, I'm using a long-dated 100 DTE iron condor with TLT -- an April 15th 108/111/136/139. You won't get shit for the thing up front credit-wise, but the notion is to manage the put/call wings dynamically, rolling them intratrade toward price as is profitable for the duration of the setup. (The idea is the volatility in further dated months is a bit more "regularized" than in nearer terms months, which is why I went with that option).

I used to play TBT on occasion, but it's less liquid than TLT. Unfortunately, it's volatility is nearly as rock bottom as TLT's right now ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,744
  • Jan 8, 2016 7:38pm Jan 8, 2016 7:38pm
Quoting The Fool
{quote} man I got a good feeling about that booger for 2016, just gotta cross fingers and get in near that bottom - selling puts is the way to go in there while the iv in the puts is thru the roof. I am seriously considering selling a kidney so I can get in that with monstrous size......more later.
You're absolutely right about that ... . Still watching it like a hawk ... . WTI bounced off that 2009 low, settled back into it by day's end ... . IVR's still at 77, but that could evaporate quickly if an upmove gets any legs under it. Having watched WTI for virtually eons, it's not beyond the imagination that it'll piddle around in a consolidative fashion like it did in September for weeks, after which it briefly bounced and then totally caved, breaking $38 after the last OPEC hootenanny ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,745
  • Jan 8, 2016 7:59pm Jan 8, 2016 7:59pm
Quoting The Fool
{quote} man I got a good feeling about that booger for 2016, just gotta cross fingers and get in near that bottom - selling puts is the way to go in there while the iv in the puts is thru the roof. I am seriously considering selling a kidney so I can get in that with monstrous size......more later.
Same.

Have been at it all night. Thinking of liquidating my forex. Selling unneeded vehicles. Tax return....

Would love to liquidate my silver, but thats still a heavy buy.

So many good investment opportunities...
  • #11,746
  • Jan 8, 2016 8:13pm Jan 8, 2016 8:13pm
Quoting The Fool
{quote}But there are some crazy mofos out there saying we will retrace the entire bull market that was laid up on the various QE's - so back to 666? Doubtful, China will prolly settle down, oil will rally as demand starts to pick up in late Q1, and the SnP will put on some big bull ballz moves back towards 2150+ in Q2.
I love those articles ... . They set these nobbers up for a "told ya so" if it comes to pass, but they hardly every do ... . This ain't 2008, and cheap money still abounds, if not here in the U.S. then in Draghiville, where they're just starting to open up the cheap money floodgates (so behind the curve, the ECB).
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,747
  • Jan 8, 2016 8:19pm Jan 8, 2016 8:19pm
Looking to fade this vol pop with something:

VXX Feb 19th 16/17 long put debit spread ... . Currently goes for .07 at the mid. Risk .07 to make .92 ... . Will those cheapies be there at Monday open? Probs not ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,748
  • Jan 8, 2016 9:47pm Jan 8, 2016 9:47pm
here's the AAPL kitty modeled with a 10% iv increase ..... it's all about the iv on these but obviously I need AAPL to get back above $100 --- the other quirk is that the front month iv's will jump more (much more?) than the back ---- how the latter pans out is really what determines the profitability of the trade.....
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,749
  • Jan 8, 2016 9:58pm Jan 8, 2016 9:58pm
big wide NFLX kitty same as AAPL just much wider, will do great if iv behaves, should be phun.....
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,750
  • Jan 8, 2016 11:00pm Jan 8, 2016 11:00pm
to catch a trending move, run a wide USO calls calendar out into long calls....the trick is to set the front short calls out beyond the u/l move up to that expiry date - as shown below you can use the calendar as a way to reduce the cost of buying those long dated calls...

with puts iv running over 50% in USO, you can sell a put spread to fund the above trade.....for instance, the March short $9.5/8.5 puts gets a $0.36 credit & m/l covers the wide calendar debit.....
Attached Image(s) (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,751
  • Jan 8, 2016 11:32pm Jan 8, 2016 11:32pm
Quoting The Fool
I have to think we will see rally action after the Jan FOMC, or thereabouts.....
SPY Big Kahuna to catch the SnP rallying into the end of Q1....maybe not gonna happen, maybe jitters around the March FOMC, where we will prolly see another 25 bps ffr hike....but hey it's an 8c risk to catch about $1.10 maxP....
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,752
  • Jan 9, 2016 8:33am Jan 9, 2016 8:33am
everybody trying to catch a whiff of that commodity bottom.......

http://www.forbes.com/sites/bryanric...rtner=yahootix
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,753
  • Edited 9:08am Jan 9, 2016 8:57am | Edited 9:08am
Quoting ZebraSquirl
Looking to fade this vol pop with something: VXX Feb 19th 16/17 long put debit spread ... . Currently goes for .07 at the mid. Risk .07 to make .92 ...... .
trying to fade vol is a tough thing to do with options - because you are chasing after collapsing vol with options that will be losing value as their iv's crash with the collapsing vol.....verticals are ok, but if you buy those near the money when the iv's are high, you have to pay a lot....and buying verts near the money is a key to success with those.

I'm looking at SVXY, which should claw back to >$50 from the dip below $40.....long shares & forget about freakin iv....I prolly only do 100 shares but that bounce could happen pretty fast....

....also XIV, which is dipping <$20 and could quickly make back $5 and prolly $10 within a few months
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,754
  • Jan 9, 2016 9:17am Jan 9, 2016 9:17am
Quoting The Fool
everybody trying to catch a whiff of that commodity bottom.......
you can spend days slogging through all the possibilities.....I have more dry powder now than I have had for many years, but I wish it were much a much more.....

the little triangles are the front month iv's, avg of atm puts/calls.....so, for FCX, 102.14% is the avg of the iv's for the Jan $5.5 put and call....if you are doing long-dated spreads you need to be able to project the changes in iv for your options, as that will have dramatic effects on the P/L of the spread over time.....
Attached Image (click to enlarge)
Click to Enlarge Name: 2016-01-09_0716fcx.png Size: 131 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,755
  • Jan 9, 2016 9:24am Jan 9, 2016 9:24am
sell the house
  • #11,756
  • Jan 9, 2016 9:44am Jan 9, 2016 9:44am
Quoting The Fool
so, for FCX, 102.14% is the avg of the iv's for the Jan $5.5 put and call....if you are doing long-dated spreads you need to be able to project the changes in iv for your options, as that will have dramatic effects on the P/L of the spread over time.....
for instance, the year-wide $20 calls calendar is a bet that FCX will claw back some of its losses over the next 1-2 years. The P/L shown uses the current iv of the options involved - looks great, shows a huge profit range with a lower b/e of $7 on the expiry date. That's wrong though - you have to project the iv drop. Looking at the chart I see that iv's were down at 40% low when FCX was last trading at $20 - so I need to lower the expiry iv's down from ~80% to about 45%. When I do that, the expiry P/L changes a lot, as shown. Who know's where iv will be? It will certainly be lower, though, so you have to account for that when you plan your trade.

Put spread trades, conversely, may benefit over time from rising iv....
Attached Image(s) (click to enlarge)
Click to Enlarge Name: 2016-01-09_0739fcx1.png Size: 76 KB
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,757
  • Edited 4:28pm Jan 10, 2016 4:12pm | Edited 4:28pm
From what I can see....

The technical reasons to bounce to 50.14 have already been met

$25.34 crude is a target which should translate to roughly $7.67 USO, not sure what that translates into options

$31.54 crude is 1/2 target which should translate to roughly $9.55 USO, again not sure what that will translate to in options

Either of those numbers are numbers I look for to get a bounce off of, if the bounce is there (or very close) then the chance of a bounce to $50 before lower is very likely

$50 oil translates roughly to $15-$16 USO

The fall from $50 to where we are right now has been 3 months, it's reasonable to assume that the climb will take longer....especially if we haven't found the bottom yet. All things equal (of which of course they arent), we should hit 25.34 in Feb of this year. If we bounce $31.54 first- we'll need to assess, as time maybe up......50 is already calling

If all goes to plan, and we get the indicated bounce, with the indicated $50 norm, then it should be sold for $12.93
Attached Image (click to enlarge)
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  • #11,758
  • Jan 10, 2016 7:51pm Jan 10, 2016 7:51pm
Quoting The Fool
{quote} trying to fade vol is a tough thing to do with options - because you are chasing after collapsing vol with options that will be losing value as their iv's crash with the collapsing vol.....verticals are ok, but if you buy those near the money when the iv's are high, you have to pay a lot....and buying verts near the money is a key to success with those. I'm looking at SVXY, which should claw back to >$50 from the dip below $40.....long shares & forget about freakin iv....I prolly only do 100 shares but that bounce could happen pretty fast.......
I'm liking SVXY longs better. Will have to look at setups ASAP. This volatility could and is likely to be fleeting ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #11,759
  • Jan 10, 2016 10:59pm Jan 10, 2016 10:59pm
Quoting ZebraSquirl
I'm liking SVXY longs better. Will have to look at setups ASAP. This volatility could and is likely to be fleeting ....
while the iv is jacked up you can get in UVXY put bflys at a decent debit and they are not hurt too bad by the iv crush - in fact, per the ToS vol adjuster model, bfly maxP goes up with falling iv (but the b/e's come in a bit.....) - as iv falls you can buy cheap put verts to protect the downside of the bw fly shown below, although the low range b/e is set down at the prior UVXY low
Attached Image (click to enlarge)
Click to Enlarge Name: 2016-01-10_2054uvxy.png Size: 72 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #11,760
  • Jan 10, 2016 11:33pm Jan 10, 2016 11:33pm
Quoting Pharm0r
From what I can see....
/CL last had a day around $49.50-$51 on 10/9, when USO ranged right around $16, so you're right about that. I am looking for another leg down for wti, a break of $30, which would drop USO down to $8.50 or so. I am gonna try to wait on that, & I think it will be good to catch that kind of low because I don't think we will have a huge v-bottom, just a bounce to wti $55 or so in Q2......oil is a real tough call and I am not putting all my huevos in that basket....I already lost money (not much) on long oil exactly a year ago....
"If The Fool persists in his Folly he will become wise." - William Blake
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