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Let's Trade Options

  • #12,401
  • Mar 18, 2016 2:47pm Mar 18, 2016 2:47pm
Quoting Cecil Gee
{quote} UVXY will be the instrument i will look to trade once i decide to go long on it, its a year maker
expecting it go deeper as its taken out a double bottom
  • #12,402
  • Mar 18, 2016 4:31pm Mar 18, 2016 4:31pm
Quoting Cecil Gee
{quote} expecting it go deeper as its taken out a double bottom
just so long as they don't R/S it - which they could do, 4:1 or 5:1 if it gets down to $15

also, new SEC regs may be coming that will affect leveraged etf's....

https://www.federalregister.gov/arti...ment-companies

comment period ends in 10 days, who knows where this is going?,.... but it could potentially wipe out the 2x and 3x geared etf's
"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,403
  • Mar 18, 2016 5:43pm Mar 18, 2016 5:43pm
Rolled up the short put wing of my TSLA IC from the April 22nd 170/175 to 187.5/192.5 for a .27 ($27) credit to delta balance.

Damn thing's a freakin' juggernaut ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #12,404
  • Mar 18, 2016 6:05pm Mar 18, 2016 6:05pm
good things happening in most of my books, ZS, except for that one errant Mar SPY $198/201 calls - took the max loss on that this week, somewhere around $2.25 - even in that account though I am making money, thanks mostly to offsetting short vol trades....I am out of all IC action, may not look for more until the coming bull run gets older....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,405
  • Mar 18, 2016 6:08pm Mar 18, 2016 6:08pm
Oil off 2.4%, but S&P up 6.2 points, so it didn't follow ... . Don't know if part of that is the fact that it's opex and there may have been some short covering or what ... . I assume the market will tell us something next week.

VIX finished the day at 14.13, down 2.15%, and it's showing very little signs of life. Thursday it actually broke 14 and this is actually the first green candle in about a week (if you can call today's candle a candle). I'm kind of cautious in my enthusiasm for long volatility products. From late Feb of last year until the end of August, we had an extended bout of VIX sub-13 dips, and it ranged for an awfully long time between 12 and 17 for six months, so it can pay if you're patient, and maybe get a sub-13 or sub-12 price.

I can see putting on some bull call spreads financed by short put spreads if I get the right VIX number ... .

With VXX, the chart is f'd up due to contango/backwardation/splitting, so the bottom is not necessarily as "firm." The 2015 low is around 15.5, so how long you wait is a bit "fuzzier." I'd probably use the VIX number as the guide and then hit VXX with something since it's not as clean ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #12,406
  • Mar 18, 2016 6:17pm Mar 18, 2016 6:17pm
Quoting The Fool
good things happening in most of my books, ZS, except for that one errant Mar SPY $198/201 calls - took the max loss on that this week, somewhere around $2.25 - even in that account though I am making money, thanks mostly to offsetting short vol trades....I am out of all IC action, may not look for more until the coming bull run gets older....
It's been a pretty bueno March for me, too. But there is little premium selling to be had, so I may have to hand sit for a bit or turn my attention to (ugh) earnings. Last time I checked, there was only one underlying in the Dough "TastyTrade" grid with an IVR of 70 or greater, and that was EWZ (no surprise).

SPY IC's, at least "locally" (45 DTE and less) aren't going to be productive here, and you'd have to go all the way out to the July expiry to see anything approaching a 20% IVR (July's actually only 18.8%, compared to April's 14.3). The July expiry's nearly 120 days out, and I'm simply not waiting that long for my candy ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #12,407
  • Mar 18, 2016 6:22pm Mar 18, 2016 6:22pm
I may consider a double diagonal/calendar in AAPL here ... .

Earnings is 38 days out and IVR's below 9 ... .

Edit: You've done those earnings related IV expansion plays before, TF, so any setup ideas would be helpful. (Why reinvent the wheel?)
Fireworks are fun ... as long as you don't blow your fingers off.
  • #12,408
  • Edited 9:42pm Mar 18, 2016 7:05pm | Edited 9:42pm
Quoting ZebraSquirl
I may consider a double diagonal/calendar in AAPL here ... . Earnings is 38 days out and IVR's below 9 ... . Edit: You've done those earnings related IV expansion plays before, TF, so any setup ideas would be helpful. (Why reinvent the wheel?)
Maybe I will look for some - the bestest time to look is in the weeks following the last ER and vol crash. I did a few Apr/May diagonals and calendars to catch the next ER's - one I am watching with wishful eyes is AAPL Apr/May $120 calls calendar - I got in that for 30c and it is worth 45c now, need to hold into Apr opex and catch a run above $115.....
Attached Image (click to enlarge)
Click to Enlarge Name: 2016-03-18_1941AAPL.png Size: 86 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,409
  • Mar 18, 2016 9:57pm Mar 18, 2016 9:57pm
Quoting ZebraSquirl
I may consider a double diagonal/calendar in AAPL here ... . Earnings is 38 days out and IVR's below 9 ... . Edit: You've done those earnings related IV expansion plays before, TF, so any setup ideas would be helpful. (Why reinvent the wheel?)
EATS lotsa margin but could return well if AAPL trends up and iv trends up too.....AAPL ER's in the Apr5 week
Attached Image (click to enlarge)
Click to Enlarge Name: 2016-03-18_1954APLDIAG.png Size: 82 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,410
  • Mar 18, 2016 11:04pm Mar 18, 2016 11:04pm
Quoting The Fool
AAPL ER's in the Apr5 week
AAPL IVR is quite low and I bet that be true of many good names - now is a good time to shop calendars and diagonals for the names with late April ER's
"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,411
  • Mar 18, 2016 11:45pm Mar 18, 2016 11:45pm
NFLX ER is 4/18 - the Monday after Apr opex....the Apr/Apr4 $115 calendar is a >$2.00 debit...the Apr4/Apr5 same is 30c....hmmmm
Attached Image (click to enlarge)
Click to Enlarge Name: 2016-03-18_2140nflx.png Size: 79 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,412
  • Mar 19, 2016 5:56pm Mar 19, 2016 5:56pm
Good ideas on both NFLX and AAPL. Will look at prices of setups on Monday or Tuesday (options pricing is always goofy after hours) ... .

There may be a couple next week worth selling premium on: NKE and GME.

Right now the April 1st NKE 58.5/67.5 short strangle will get you a .79 credit; a GME April 1st 27.5/34.5, .70. To me, that isn't really good enough (I generally look for 1.00 credit for a 70% probability of profit setup in these; not worth the headache otherwise, particularly if you want to go defined risk (which means you'll get less than those figures)), so I'll need to see some kind of vol pop in these in order to play. NKE was a much better play before they split, unfortunately ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #12,413
  • Mar 19, 2016 7:26pm Mar 19, 2016 7:26pm
HOW LONG DO I HAVE TO LIVE TO SEE /ES break out of the pattern it has been in for the last 500 years? ....big 1-2 week drop followed by 5-7 week steady rally back....forever and forever and forever.....so fucking boring...
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,414
  • Mar 19, 2016 8:20pm Mar 19, 2016 8:20pm
Assuming this is a 50k bull call spread (May 20th VXX 24/25 call spread):

Attached Image


Dough prices this spread right now at $15 bucks a pop, soooo 50,000 x $15 = $750,000 ... . If that's "cheap insurance," I don't know what expensive insurance is ... . Lol. (Although they may be hedging a ginormous position ... ).
Fireworks are fun ... as long as you don't blow your fingers off.
  • #12,415
  • Mar 19, 2016 8:27pm Mar 19, 2016 8:27pm
Quoting ZebraSquirl
Assuming this is a 50k bull call spread (May 20th VXX 24/25 call spread): {image} Dough prices this spread right now at $15 bucks a pop, soooo 50,000 x $15 = $750,000 ... . If that's "cheap insurance," I don't know what expensive insurance is ... . Lol. (Although they may be hedging a ginormous position ... ).
Similar action in May 18th VIX options with Friday volume highest in 28/30 call strikes (65k plus). A similar price ($15-$16/contract).
Fireworks are fun ... as long as you don't blow your fingers off.
  • #12,416
  • Mar 19, 2016 9:05pm Mar 19, 2016 9:05pm
Quoting ZebraSquirl
Assuming this is a 50k bull call spread
PRETTY common to see big long vix trades now....always good r:r IF you get in cheap - 10c-15c for a $1 spreads is about as good as it gets for something with that much time
"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,417
  • Mar 19, 2016 9:09pm Mar 19, 2016 9:09pm
The problem with going either VIX or VXX bull call financed by short put verts is that the OI in puts below current price is almost nonexistent, so I'm pondering this setup (I have a similar one on in VXX), a synthetic covered call:

Attached Image (click to enlarge)
Click to Enlarge Name: VIX SYNTH COVERED CALL.jpg Size: 108 KB


Pros: (1) Plenty of time to work out; (2) collect credit if price goes up, down, or sideways; (3) highly likely that price breaks 14.5 at some point during the life of the setup. Cons: (1) Pricey to put on; (2) Unknown profit potential; and (3) Short call will be a drag on profit in the event of a pop.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #12,418
  • Mar 19, 2016 9:17pm Mar 19, 2016 9:17pm
Quoting The Fool
HOW LONG DO I HAVE TO LIVE TO SEE /ES break out of the pattern it has been in for the last 500 years? ....big 1-2 week drop followed by 5-7 week steady rally back....forever and forever and forever.....so fucking boring... {image}
Index ETF premium selling trades are beginning to wear thin with me, at least the IC's and spreads. For the price of SPY ($200), I should be getting something significant, I figure ... . We had a couple times this year where a 3-wide brought in a 1.00 credit, but it doesn't occur frequently enough to dick with. Turning my focus to sector ETF's (SPDR's) that have higher vol, although you'll still encounter the same vol skew BS you do with SPY, IWM, DIA, and QQQ, and they're invariably priced "for the common man" (i.e., below $50/share), which makes them insufficiently "juicy" to bother with most of the time.

The alternative is to "bring out the big guns" and work SPX, NDX, and RUT, but if the vol is not there in SPY, QQQ, and IWM, it won't be in those either, even though there's more juice in the options because you're playing with a larger caliber weapon ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #12,419
  • Mar 19, 2016 9:23pm Mar 19, 2016 9:23pm
I'll whine about index ETF's for a bit, and then earnings for a bit ... . It's my general "cycle of hate" ... . Lol. Figure it's about time to throw VIX products into the cycle ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #12,420
  • Mar 20, 2016 2:04am Mar 20, 2016 2:04am
Quoting ZebraSquirl
The problem with going either VIX or VXX bull call financed by short put verts is that the OI in puts below current price is almost nonexistent....
I don't often go super bull on the vix product options, but I keep an eye on the UVXY puts. as there are sometimes some extreme pricing disparities in there. Occasionally you can get your long leg ask @ <10c with a pretty fat short leg bid $2-$4 away .... you can see in the Jun puts chain how shitty the spreads are. This is a recipe for pain if you want or need to buy out of the spread b4 expiration. I see $14/$10 as a possibility maybe you can get 80c for it, and that sucks. If there is a vol spike and you want to buy out, the future spreads may be so bad that the best you could ever do, regardless of how high UVXY goes, is 20-30c debit out. You might as well sell SPY or IWM calls (or something closely neg correlated with ^VIX) - you'd probably do better after all is said/done, get easier/cheaper fills out, etc....
Attached Image (click to enlarge)
Click to Enlarge Name: 2016-03-19_2347UVXY.png Size: 86 KB
"If The Fool persists in his Folly he will become wise." - William Blake
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