Let's Trade Options

....never more dangerous words uttered by a Trader....but I'm right there with you, buddy....

Putzed with /ES a bit last week, shorting from the top of this downward sloping channel (snagged 15 or so handles for a short from 2080-ish, but got stopped out after moving my SL, so I didn't catch all the down move). Looking to lather, rinse, repeat with something a little less buying power intensive here ... .



Given the fact that /ES, SPY, and SPX500 continue to conform to the downward sloping yellow channel, I'm looking to continue to short on meaningful retraces of price, ideally to the upper bound of the yellow channel, since I think this offers the best risk-reward here. I can naturally do this one of several ways, for example, by entering a GTC order to short /ES, SPY, or SPX500 if price strikes that upper bound (currently around 2075). An alternative way to short via options is using a debit spread set up broken across that upper bound -- a SPY 207/210 or SPX 2070/2100 long put vertical.

Currently, the SPY spread is priced at a 1.73 ($173) debit (June 24th expiry), but I don't want to pay that. As price moves toward the spread, it's price will decline. Given the fact it's a three-wide, I want to ideally only spend something like 1.00 ($100) on that spread, so I'll set up a GTC order for a 1.00 fill for this coming week and go from there.

I'm glad you mentioned these, North....I am looking at these again....if you can get in these when the iv is really low (i.e., when the options are cheap), you can do a $1 spread for credit - the scenario that comes to mind is to enter these in the iv crush right after earnings on the good names.....the drawback is they're gonna tie up some margin

Lol. True ... . I shouldn't get cocky here ... . Let's just say that I think it'll produce "some" volatility ... .

tricky times in Trade land, the CB's are falling over each other in their heavyhanded moves in the markets...I'm not taking anything for granted. I have been showing big long vol trades here but I have been putting those on very cheap, and trying to squeeze the risk out of them when I can, also hedging with bullish SPY trades, also put on cheap cheap....I hope any of the lurkers who may look in here will just. be. careful.....

...not that I think anybody actually is payin any attention, tho....

wide, long-dated flys my friend for long-vol trade initiation ---- the wider, the better the r:r, and the better your options for adjusting if that's what you need to do.....as shown risk 65c to make $9.00+......they only go out to $36 for the Dec UVXY calls, hmmmm.....

Wow, a lot more good info here since this morning. Thanks TF and ZS. Sunday DIY eh... don't you just hate it?

That calendar spread looks brilliant to me! Kind of perplexed why you wouldn't take it. But don't tell me... I want to figure it out for myself. I'm guessing it's because there are better options (ha ha), like the fly you just posted.

Backspreads, yes, I've only read good things about these. Also tried a few back in the day. I didn't make any money on them but didn't lose much either. That wasn't acceptable to me back then, with my get-rich-quick-from-trading ambitions, but now that I'm a bit wiser I can see the point of backspreads a lot more clearly. The point is that if you always have one on, and you manage to keep your equity together in the process, then you will make a fortune when the shit hits the fan. These black swan events and crashes only happen a few times in your life, but when they do you're going to get paid

I also like the idea of getting paid even when you're completely wrong about direction, if you're able to put them on for a credit.

Might it be suitable for the end-of-June events? Could well be. The pound, S&P, whatever, are likely to move big in one direction or another. You'll only lose if they don't move much, or move too quick to get out before returning to the starting price. The problem now is managing to put it on at a credit when IV is so high. But it's possible.

Right, time to digest everything that's been written so far. Thanks again.

HAIR of the dog, fight fire with fire, hedge UVXY calls long vol juggernaut with UVXY put flys.....as shown the $2 broke wing gets 66c credit.......if it fills......if we see a big vol poppy you can hold it for the inevitable reversion, or you can roll up the cheap long puts .... it is possible you could retain some of the credit and end up with a bull put vert risk-free.....good to know (from modeling) that a vol pop in June/July would push the P/L max well above the 66c initial credit, but no not nearly as high as the expiry maxP....or, in other words - the hedge trade makes profit at the same time the hedged trades do....(gotta love volatility)......worst case is we never see any volatility in June/Jul, in which case you may consider shorter term bull put verts.........another option is looking for any opp to protect the tail risk of the Sept brk-wing fly shown and then let it run ....if it goes on for 66c credit use some of that to buy calls or call spreads on the far otm end to make it as risk-free as possible

look at Jun24/Jul1 VXX bull puts, <15c @ $16 maybe $17 maybe $15, too....debit will elevate with volatility so may be wise to bite the bullet on these now

Hey, North....if you want to find a trove of options trading educational materials, all free and on-line, check out tastytrade.com and dough.com:

https://www.tastytrade.com/tt/
https://www.dough.com/

Thanks for the links, Fool. You gave them to me about a year back actually, but I'm embarrased to say I never got round to looking at them
This time I will.

You're welcome. You need a way to model options trades, especially spreads. I use Think or Swim, but I don't think that is available to you outside the US. You might check this one out.....

http://www.optionsplay.com/

Thanks, that link looks interesting. I had a play around with my broker's platform before (Interactive Broker's TWS). There are loads of tools on there to analyse options. Bit of a learning curve though. I might have to watch a webinar or two on it before proceeding!

Also, I need to subscribe to the realtime data for the volatility ETFs you mentioned (don't get it by default). It doesn't cost much but I'll play around with the free delayed data until I'm ready to trade.

Better get on with it all... Cheers

FILLING these around 13c....also filled the Dec UVXY put fly shown above

interminable sideways market....

UVXY dipped just below $13 today and I am in a hole that I can't get out of unless the bears stage a dramatic comeback, with some big red dailies strung together.....I will make money with any kind of decent ^vix pop, but I had me heart set on making a fortune.......

A touch of premium selling farther out in time than I usually like to go, but VIX is sub-15 ...

IWM July 15th 101/104/117/120 iron condor
Proabability of Profit: 57%
P50: 71% (Probability of Reaching 50% of Max Profit Before Expiry)
Max Profit: $93/contract
Max Loss/Buying Power Effect: $207/contract
Theta: 1.07/contract
Delta: -3.56

I looked at all of the index ETF's -- SPY, QQQ, DIA, and IWM. IWM's IV approaches 20% nearer in time than the others. I was nearly able to squeeze one-third the width of the wings out of the thing, but didn't want to go any tighter with the setup ... .

Short calls of VXX diagonals working out great ... . Long calls of VXX diagonals, ehhh, not so much .... .

The Jun4/Jul1 $15/$20 DC gets on for <25c .... sets you up perchance to catch a nice move either way in the aftermath of the Brexit vote

....not touching UVXY anymore unless the ^vix starts to turn, UVXY looks like a R/S risk, could be heading well sub $10 if the market rallies with oil to the end of May....I continue to look to roll down UVXY calls, rolling into the $20's now, rolling down the short legs if there's any value in them....kind of flogging a dead mule, though....

Hi mate,

Actually I have been following this thread for quite some time. Can I know how is your performance so far? Roughly how large you are trading in your account now? Interested to manage larger fund if I am able to help you? But I need some figures before we can proceed further.