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Let's Trade Options

  • #13,101
  • May 26, 2016 4:30pm May 26, 2016 4:30pm
Quoting The Fool
{quote}..it's been a shit sandwich with all the ^vix derived options....a crowded trade with many traders pushing their luck on very plausible prospects for a June swoon (guilty).....then the Fedheads start singing hawk songs in the last week or so and the markets suck it up and ride the oil rally to a bull breakout? Well, it ain't over til the fat lady sings, June is still looming. All of the dynamite booby traps are still there, waiting......if we get a ^vix pop back towards 20, anytime between now and Jul opex, I am going to score the best set...
No doubt ... .

Here's an indication of how big that sandwich is (these are a couple short legs of my VXX poor man's covered calls): rolled June 17th 18 VXX short call to July 8th 15.5 for a $68/contract credit. The 18 was at the 75% prob OTM strike for that expiry when I rolled it; it burned up more than 65% of its value on this escalator ride down. The 15.5 is the 75%'er for the July 8th. Also rolled the June 22nd 18 (same story) to the July 15th 16 for a $56/contract credit. When I set these up with Sept as the back month, I figured that was "plenty of time." I've got 2, maybe 3 rolls tops here before then, so it's not looking all that "plenty" now ... .

Nevertheless, beaucoup shit can happen in the next 3 1/2 months ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #13,102
  • May 26, 2016 4:32pm May 26, 2016 4:32pm
Bought to cover GDX June 24th 20/26.5 short strangle for a $56/contract debit. Bailed at 42% max profit ... . Figured I'd simplify what I have to think about running through Memorial Day weekend ... .

Down to 21 setups ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #13,103
  • May 26, 2016 4:36pm May 26, 2016 4:36pm
The very definition of "treading water":

Attached Image
Fireworks are fun ... as long as you don't blow your fingers off.
  • #13,104
  • May 26, 2016 5:10pm May 26, 2016 5:10pm
Quoting ZebraSquirl
I figured that was "plenty of time." I've got 2, maybe 3 rolls tops here before then, so it's not looking all that "plenty" now ... . Nevertheless, beaucoup shit can happen in the next 3 1/2 months ... .
that was plenty time, but everything runs outta time, sooner or later, and I have a knack for picking spots right up against the wire. In the case of UVXY, I am resigned at this point to seeing a 1:5 R/S when it crashes below $10, and all my fat options will be pared down before I have a chance to get anything back on them.....sad....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,105
  • May 26, 2016 5:20pm May 26, 2016 5:20pm
Quoting The Fool
/cl about to take out $50, I am still holding USO $12 and $14 Jul long calls, leftovers from burned calendars....RIG I have Sept $14 & $15 calls.....PBR $7 and $8 calls for July.....PBR really got dumped over the last couple weeks, has been sliding even with the oil rally...
Rather than take some off my USO long position at $12, I decided to play it with options instead. Bought a Jul-15 $11.50 Put in case of any nastiness after next week's OPEC meeting, and reduced its price a little by selling a Jul-15 $14 Call. I regretted the short call after I'd gone to bed though, and may buy it back tonight. I only got about 8c for it ($8 per contract), which is crazy! If oil continues to go up then I'd rather lose the $8 and gain full on the ETF instead.

Also bought another VXX calendar spread at $19 strike. All these are small positions for training purposes and it wouldn't really matter if I lost the full debit on each one. Yet if VXX takes off after the short legs have expired, the profits would be nice if not substantial

Still reading and learning a lot about various option strategies. I'll increase my size as I gain confidence. Meanwhile, my main trading continues on the Nikkei and FX futures.
You reap what you sow.
  • #13,106
  • May 26, 2016 6:32pm May 26, 2016 6:32pm
Quoting NorthTrader
{quote} Rather than take some off my USO long position at $12, I decided to play it with options instead. Bought a Jul-15 $11.50 Put in case of any nastiness after next week's OPEC meeting, and reduced its price a little by selling a Jul-15 $14 Call. I regretted the short call after I'd gone to bed though,
USO sucks. I made money on wide (time) calendars and some of the Jul $12 calls I left on in hopes oil rally continues and I can sell another call @ $12 to make another calendar or even @ $13. But USO sucks.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,107
  • May 26, 2016 8:47pm May 26, 2016 8:47pm
Quoting The Fool
USO sucks
Agreed. I don't normally trade oil but couldn't stop myself when prices became so low. I thought, what the hell, a small position as a long term investment... why not? But they keep sending me all this crap paperwork for some reason (first time it's happened with an ETF), and it should be higher than $12 by now based on where it was last time CL was $50. So I'll be walking away when I've finally closed this trade.
You reap what you sow.
  • #13,108
  • May 26, 2016 8:54pm May 26, 2016 8:54pm
Quoting The Fool
{quote}USO sucks. I made money on wide (time) calendars and some of the Jul $12 calls I left on in hopes oil rally continues and I can sell another call @ $12 to make another calendar or even @ $13. But USO sucks.
Yeah, USO really does suck. Could not find any good oil ETF's that actually would work well with rally
  • #13,109
  • May 26, 2016 8:56pm May 26, 2016 8:56pm
Quoting NorthTrader
{quote} Agreed. I don't normally trade oil but couldn't stop myself when prices became so low. I thought, what the hell, a small position as a long term investment... why not? But they keep sending me all this crap paperwork for some reason (first time it's happened with an ETF), and it should be higher than $12 by now based on where it was last time CL was $50. So I'll be walking away when I've finally closed this trade.
Do you live in Japan?
  • #13,110
  • May 26, 2016 8:58pm May 26, 2016 8:58pm
Have any of you guys ever managed to trade a conversion or a reversal? On paper this looks like free money, but like any arbitrage trade I guess they are rarely available to the retail trader.
You reap what you sow.
  • #13,111
  • May 26, 2016 9:00pm May 26, 2016 9:00pm
Quoting stylinex
{quote} Do you live in Japan?
Yes. I'm British but have been here about 14 years. Do you live in Hong Kong? I stopped over there in January... great city!
You reap what you sow.
  • #13,112
  • May 26, 2016 9:02pm May 26, 2016 9:02pm
you are better off finding an individual name (with liquid options) that is well correlated with oil price....I have not found the perfect vehicle yet....if you want to trade oil, /CL is where it's at, I just cant trade futures options in the IRA accounts.

Nevertheless, I have made money trading USO in this long rally....but that is after losing money on oil trades in the year before....oh well.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,113
  • May 26, 2016 9:03pm May 26, 2016 9:03pm
Quoting NorthTrader
Have any of you guys ever managed to trade a conversion or a reversal? On paper this looks like free money, but like any arbitrage trade I guess they are rarely available to the retail trader.
can you amplify? not sure what you are referring to....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,114
  • May 26, 2016 9:05pm May 26, 2016 9:05pm
not looking too good for UVXY....

http://www.wikinvest.com/stock/Virtu...ants_Preferred
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,115
  • May 26, 2016 9:07pm May 26, 2016 9:07pm
Quoting NorthTrader
Have any of you guys ever managed to trade a conversion or a reversal? On paper this looks like free money, but like any arbitrage trade I guess they are rarely available to the retail trader.
aha, I was wondering how come your English is so good....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,116
  • May 26, 2016 9:10pm May 26, 2016 9:10pm
Quoting The Fool
not looking too good for UVXY.... http://www.wikinvest.com/stock/Virtu...ants_Preferred
I can't recall going thru this: so, if I have 10 UVXY calls at $20 and UVXY hits $10 and they do a 1:5 reverse split, UVXY share price will bump to $50.....and does that mean I will have what....2x $100 calls...?!?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,117
  • May 26, 2016 9:15pm May 26, 2016 9:15pm
Quoting NorthTrader
{quote} Rather than take some off my USO long position at $12, I decided to play it with options instead. Bought a Jul-15 $11.50 Put in case of any nastiness after next week's OPEC meeting, and reduced its price a little by selling a Jul-15 $14 Call. I regretted the short call after I'd gone to bed though, and may buy it back tonight. I only got about 8c for it ($8 per contract), which is crazy! If oil continues to go up then I'd rather lose the $8 and gain full on the ETF instead. Also bought another VXX calendar spread at $19 strike. All these...
That would kind of be a legit setup -- a short strangled covered call, but normally you'd have the short put below your cost basis in the stock (to protect the downside) at something like the 75-85% probability OTM strike, then your shares of stock and then 2 short calls above your shares' cost basis at the 75-85% OTM short call strike. The single short put and one short call are the short strangle; the other short call to cover the shares ... . Ordinarily, you want to get something "decent" for those shorties, though -- a tough thing to do in a low priced underlying ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #13,118
  • May 26, 2016 9:17pm May 26, 2016 9:17pm
Quoting stylinex
{quote} Yeah, USO really does suck. Could not find any good oil ETF's that actually would work well with rally
The alternatives are XOP and OIH (both ETF's); they don't precisely mimic /CL, but those are in the instruments in which I do the vast number of my "petro" trades ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #13,119
  • May 26, 2016 9:18pm May 26, 2016 9:18pm
Quoting NorthTrader
Have any of you guys ever managed to trade a conversion or a reversal? On paper this looks like free money, but like any arbitrage trade I guess they are rarely available to the retail trader.
HFT's have all but killed arbitrage ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #13,120
  • May 26, 2016 9:23pm May 26, 2016 9:23pm
Quoting ZebraSquirl
{quote} HFT's have all but killed arbitrage ... .
de bastards...and the CB's killed volatility....
"If The Fool persists in his Folly he will become wise." - William Blake
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