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Let's Trade Options

  • #12,841
  • May 6, 2016 10:36pm May 6, 2016 10:36pm
what I really want on long vol spreads is about a potential 8:1 or better net out. With volatility looking like it will bottom again, I put on wide call spreads with the short leg on a 00 or 05 - those strikes are where the best liquidity will be, so your bid values will come up, making the spread debit less. UVXY is a wild mofo and you never know what might fill. I have filled $1 spreads for as low as 3c.....
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,842
  • May 6, 2016 10:42pm May 6, 2016 10:42pm
Quoting The Fool
{quote}I will just wait for the inevitable top of range move again, somewhere 2,100 way, then shoot at June or later SPY $213 short.......yawn....
Yep. Market starting to tick me off ... just a little bit. Flurry of mid-Dec, mid-Jan, mid-Feb vol pops only to be sailing through a lengthy doldrum here ... . A little bit more mentally prepared for that this year than last, though. Have sucked it up a couple of times at VIX <15 and sold premium farther out in time while waiting for a vol rise to put stuff on nearer in time, so have a couple of setups out in July decaying away. Glad I snuck in those IWM, SPY setups early today before VIX dropped ... . In the grand scheme of things, keeping things queued up is the important part. Can't decay theta if you don't have any theta on ... .

But can't believe I may have to start looking at August index ETF setups some time next week if VIX doesn't break 15 and if I can't find anything else to play. Theta pile starting to thin out here ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #12,843
  • May 6, 2016 10:45pm May 6, 2016 10:45pm
Quoting The Fool
what I really want on long vol spreads is about a potential 8:1 or better net out. With volatility looking like it will bottom again, I put on wide call spreads with the short leg on a 00 or 05 - those strikes are where the best liquidity will be, so your bid values will come up, making the spread debit less. UVXY is a wild mofo and you never know what might fill. I have filled $1 spreads for as low as 3c..... {image}
Wow, that's kind of a wild thing to know ... . I'm so f'in lazy with getting fills ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #12,844
  • May 6, 2016 11:02pm May 6, 2016 11:02pm
Quoting ZebraSquirl
Wow, that's kind of a wild thing to know ... . I'm so f'in lazy with getting fills ... .
I just put those lotto tix on constantly and they almost never fill....but sometimes they do. And, a little more often, some spread I am trying to fill for 6c on the $1 I will bump to 8c and bam! Maybe that shit went to nothing but hey it was only 8c.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,845
  • Edited 11:47pm May 6, 2016 11:14pm | Edited 11:47pm
Quoting The Fool
what I really want on long vol spreads is about a potential 8:1 or better net out. With volatility looking like it will bottom again, I put on wide call spreads with the short leg on a 00 or 05 - those strikes are where the best liquidity will be, so your bid values will come up, making the spread debit less.
example: UVXY Sep $17/20 bull calls, P/L shown on Bastille Day. Any pop >$30 in late June or thereafter will get me to at least 0.5(maxP)...........I want this spread for 30c - 10c on the dollar....it trades for around 58c at Friday close, we will see....
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,846
  • May 7, 2016 7:23pm May 7, 2016 7:23pm
SPOOS set to rally in the coming week? What is the better trade: SPY long May2 $210 calls or SPY May2 $208/$208.50 bull vert calls? Both will be about 12c debit +/-. if SPY gaps up a bit pre-market Monday?....
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,847
  • May 7, 2016 10:09pm May 7, 2016 10:09pm
HERE'S ANOTHER Fool options trade. Is it as crazy as it looks? Dec SPY $209/$210/211 fly ---- for 2c, sure if you can fill it. A 50-lot would cost me $260 @ 2c. Thinking Santa rally....thinking if we get a SPY Summer dip to $180 or lower, I could buy Dec calls somewhere around $205 ---- sell the $211 calls, buy $206 calls, keep the $209 calls, for instance....and I will have converted the cheap fly into a $206+209/$210 vert.......if I could do that for less than 50c, it would be a deal.....for this fly to make anything as-is you would have to ride it into Dec and get a finish within a couple bucks of the short strike....
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,848
  • May 7, 2016 10:36pm May 7, 2016 10:36pm
resulting $206+209/$210 vert would have a chance of making >9 bag....but, of course, this adjustment needs a deep dip in SPY and would end up losing money if SPY does not rally into year-end....also I am guessing about the debit, but that is my limit anyway....if we never got a dip for SPY, I would look for other ways to adjust the narrow wing fly.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,849
  • May 7, 2016 11:11pm May 7, 2016 11:11pm
Quoting The Fool
HERE'S ANOTHER Fool options trade. Is it as crazy as it looks? Dec SPY $209/$210/211 fly ---- for 2c, sure if you can fill it. A 50-lot would cost me $260 @ 2c. Thinking Santa rally....thinking if we get a SPY Summer dip to $180 or lower, I could buy Dec calls somewhere around $205 ---- sell the $211 calls, buy $206 calls, keep the $209 calls, for instance....and I will have converted the cheap fly into a $206+209/$210 vert.......if I could do that for less than 50c, it would be a deal.....for this fly to make anything as-is you would have to ride...
Very creative. I like those setups that you can do something with even when they don't work out as originally setup -- rolling debit spreads to convert them to credit spreads, stripping off wings of flies, leaving you with either just the credit spread or the debit spread, and things of that nature ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #12,850
  • May 7, 2016 11:11pm May 7, 2016 11:11pm
Quoting The Fool
SPOOS set to rally in the coming week?
weekend China data good....I'd bet oil's gonna rally....we could be in store for a big green weekly candle.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,851
  • Edited 11:27pm May 7, 2016 11:15pm | Edited 11:27pm
Quoting ZebraSquirl
Very creative. I like those setups that you can do something with even when they don't work out as originally setup - ... .
yup....if you are working with enough time you will have a better range of choices for adjustments.....all trading really boils down to: "buy low, sell high".....the point of the narrow Dec SPY fly shown above is to get into 25 $209 long calls at a very low debit....the narrow fly is sacrificial from the get-go....if I wanted to buy Dec $209 calls outright now, they're $7.76........so I could buy 3 for $260...???....with the fly shown I can buy many more, maybe not at 3c or whatever but definitely much cheaper........
"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,852
  • May 7, 2016 11:25pm May 7, 2016 11:25pm
Ugh. Premium selling here a true drag. Gandering at earnings as a last resort:

LC: 5/9 (Monday) after market close. Due to the price of the underlying, will short straddle it, if anything.
VRX: 5/11 (Wednesday). I don't show it as before or after market right now. I've been in and out of that turdpile a couple of times this year ... .
M: 5/11 (Wednesday) before market open.
JWN: 5/12 (Thursday) after market close.
NVDA: 5/12 (Thursday) after market close.

VIX: My VXX plays are a "spaghetti works," so I'm probably not going to put on more there. I don't want to make a mistake by rolling one of these diagonal's short calls into a butterfly strike or something similarly doofy (inadvertently closing a leg out), so I'm looking at seeing what I can do with VIX, depending on what happens with it next week. Another touch of 13 would be swell, just for a day or two ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #12,853
  • May 7, 2016 11:32pm May 7, 2016 11:32pm
Quoting ZebraSquirl
Ugh.
I never traded any of those names. re: ^vix, I still think we could see good vol in June, but the NFP really made things harder for the bears last week. We need Dudley and the other geeks to bring back the fear by talking up the 2 more hikes bs......need some good data points, and especially, need the markets to start buzzing with the Brexit risk meme....I am way overextended on long vol trades and I need to try to make some money with some new ideas in the near term, ergo the bullish SPY ideas above.....I was just about to look at short term long SVXY trades.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,854
  • May 8, 2016 7:52pm May 8, 2016 7:52pm
Quoting The Fool
the point of the narrow Dec SPY fly shown above is to get into 25 $209 long calls at a very low debit....the narrow fly is sacrificial from the get-go....if I wanted to buy Dec $209 calls outright now, they're $7.76........so I could buy 3 for $260...???....with the fly shown I can buy many more, maybe not at 3c or whatever but definitely much cheaper........
LOL, weekend, math skills.....Dec $209 calls are $7.76 so I can buy one for $776. Anyway, I have a couple of the 50/100/50 flys loaded for $0.02...$265 for each, the gameplan as suggested above: roll down the $211 calls as low as I can if that opportunity arises on a deep SPY dip (with reservations).....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,855
  • Edited 10:23pm May 8, 2016 9:04pm | Edited 10:23pm
if you can really fill them at <5c, you could stack them on the x0's and x5's, do the same thing with puts......Dec a long way out, who knows, maybe the endless flatline market will come to an end and one of these converted flys will be in a position to pay off....if not, it's defined risk, the only pain will be the sticker shock at the outset...
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,856
  • May 8, 2016 11:57pm May 8, 2016 11:57pm
Quoting The Fool
{quote}I never traded any of those names. re: ^vix, I still think we could see good vol in June, but the NFP really made things harder for the bears last week. We need Dudley and the other geeks to bring back the fear by talking up the 2 more hikes bs......need some good data points, and especially, need the markets to start buzzing with the Brexit risk meme....I am way overextended on long vol trades and I need to try to make some money with some new ideas in the near term, ergo the bullish SPY ideas above.....I was just about to look at short...
I've only ever played M. We're nearing the end of the season, so it might be best not to play any of these last few. Didn't play most of the season due to the godawful low volatility, which infected everything around it ... . That's fine -- fewer headaches as a result.

Adding a little more theta to the pile far out in time:

SPY Aug 19th 188/191/217/220 Iron Condor

Probability of Profit: 51%
P50: 68%
Max Profit: $109/contract
Max Loss/Buying Power Effect: $191/contract
Theta: .64/contract
Delta: -3.32/contract

I don't like going this far out on a regular basis, but I'm going small, so it's not like I'm piling into 100 DTE setups left and right. I've also got setups getting within a couple of weeks of expiry that I'm going to be peeling off here fairly soon, so I'm trying to be proactive and keep things cookin'. June's IV is 16.4, July's, 17.6; and August's, 18.7, which is why I'm doing August here until the closer in time expiries pop up to >20 ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #12,857
  • May 9, 2016 12:12am May 9, 2016 12:12am
Quoting The Fool
{quote}I never traded any of those names. re: ^vix, I still think we could see good vol in June, but the NFP really made things harder for the bears last week. We need Dudley and the other geeks to bring back the fear by talking up the 2 more hikes bs......need some good data points, and especially, need the markets to start buzzing with the Brexit risk meme....I am way overextended on long vol trades and I need to try to make some money with some new ideas in the near term, ergo the bullish SPY ideas above.....I was just about to look at short...
I think we had a fairly good data point over the weekend here with positive Chinese trade balance data, which caused /ES to gap up a couple of handles on the open and oil to pop slightly. When all is said and done with that data come Monday open, it may be a "good news" is "bad news" for the market, since the Fed has been barking up the global market weakness/fragility tree off and on as an excuse not to tweak the rates another whopping 25 bps, which is really just a drop of piss in the Mississippi ... . Who knows ... .

* * *

The Brexit vote's coming up fairly fast. I followed the Scot indie vote on BBC, and it's probably the place to go to see how the polling's going and all the blow-by-blow stuff on election night. http://www.bbc.com/news/uk-politics-32810887 With 45 days to go, it's evenly split for stay or go, but with 16% undecided. http://www.economist.com/blogs/graph...-eu-referendum If things stay this way (evenly split) right up to the vote, it'll add to the uncertainty, which'll add to the volatility, which'll add to the profitability of my long vol plays .... . Fingers crossed for virgin tight polling up to the very last minute ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #12,858
  • May 9, 2016 12:28am May 9, 2016 12:28am
yep I've got a lot riding on a June swoon and that Brexit/June FOMC combo is basically what I staked it on. Meanwhile, if we get a rally into May opex I won't be surprised. The sooner the better & I will look to sell June SPY call spreads if SPY will squirt past $210 again. Good Luck, ZS - it's gonna be interesting.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,859
  • May 9, 2016 12:37am May 9, 2016 12:37am
Quoting The Fool
yep I've got a lot riding on a June swoon and that Brexit/June FOMC combo is basically what I staked it on.
as I believes I has mentioned b4, the opportunity awaiting immediately on the backside of the Brexit vote is a potential rally for equities (and volatility crash) if the Brexit vote fails.....I will be setting up for this when I figure out how the fk to do that....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #12,860
  • May 9, 2016 2:50am May 9, 2016 2:50am
fire in Canada oil sands country could mean a daily 1MM bbl cut in global oil supply, so they say on Bloomberg
"If The Fool persists in his Folly he will become wise." - William Blake
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