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Let's Trade Options

  • #13,281
  • Jun 7, 2016 11:20pm Jun 7, 2016 11:20pm
Quoting NorthTrader
Very nice idea, Fool How much lower can it go? This is so cheap for such a long time period so I might just get me some of those. Thanks!
to tell you the truth, NT, I would not put much more at risk on UVXY with it so close to reverse split danger zone (I guess that would be sub-$9...?)....we can look for similar trades in VXX, I suppose.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,282
  • Jun 7, 2016 11:56pm Jun 7, 2016 11:56pm
Quoting The Fool
I am prolly too far removed from trading cash to give a good answer, but I would maybe suggest this: ...
Thanks, that's a nice idea. But it'd probably end in tears for me personally so I might just wait until the dust settles and grab a few from the long-term trend. Hopefully.
Quoting The Fool
{quote}to tell you the truth, NT, I would not put much more at risk on UVXY with it so close to reverse split danger zone (I guess that would be sub-$9...?)....we can look for similar trades in VXX, I suppose.
Ah yes, I now remember you talking about those splits recently (memory like a sieve!). Good job you mentioned it though. You're right, probably better to pass on those and focus on VXX instead. Thanks
You reap what you sow.
  • #13,283
  • Jun 8, 2016 12:54am Jun 8, 2016 12:54am
Quoting The Fool
..we can look for similar trades in VXX, I suppose.
Jan $19/20 VXX calls is 13c....$14/$15 is 25c....I'm a dreamer and I usually go no higher than 20c on a $1 spread, practically that will put you in 3-bag territory. Usually I am much cheaper and looking for 12c or less, to net out 6x....VXX likes to go >$25 on big moves, but there's no guarantees....if it keeps sliding it could get a R/S, too....that's what these things are made to do....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,284
  • Jun 8, 2016 1:37am Jun 8, 2016 1:37am
Is it true?

"Beginning in mid-June, companies will stop buying back their stock prior to issuing earnings reports, sapping liquidity from the market, Kostin said. Those discretionary purchases won't pick back up until August, he added."

https://www.yahoo.com/finance/news/s...153521438.html
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,285
  • Edited 7:35am Jun 8, 2016 7:05am | Edited 7:35am
Quoting The Fool
{quote}to tell you the truth, NT, I would not put much more at risk on UVXY with it so close to reverse split danger zone (I guess that would be sub-$9...?)....we can look for similar trades in VXX, I suppose.

Nothing happens to the value of the options you hold in a reverse split. All that happens is the new options issued after that day are 5x the size. The new options are issued separately and traded separately. You will see they have a completely separate option chain
If you wish to trade your options after a split or a reverse split they still trade as they normally would. There is no change in the value of the options you hold.

If this wasn't the case people wouldn't trade options if there was a risk their options becoming worthless because of a split.
  • #13,286
  • Jun 8, 2016 9:22am Jun 8, 2016 9:22am
OK, thanks, Sherpa. I understand what happens in the r/s now. You can see the result of the last split in the UVXY chains (the 20/100 Jan '17)....I have just heard that trading these reduced options can be hard to do, given their relative illiquidity....and I am referring specifically to UVXY. Anyway, I will cross that bridge if & when.

Are you an options trader?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,287
  • Jun 8, 2016 9:55am Jun 8, 2016 9:55am
Quoting The Fool
I will cross that bridge if & when.
Not like this....
Inserted Video
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,288
  • Edited 11:47am Jun 8, 2016 10:15am | Edited 11:47am
as of yesterday I had rolled all Jun 17 UVXY long calls to $17, and with a very small uptick in iv now I am breaking even on those....is it possible that the spoos could post one decent red candle in an infinite series? If that day be today or tomorrow, I will be able to sell some Jun 10 $18 calls and lock in some profits for the Jun 17 set, of which there are good numbers
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,289
  • Jun 8, 2016 2:26pm Jun 8, 2016 2:26pm
Quoting The Fool
OK, thanks, Sherpa. I understand what happens in the r/s now. You can see the result of the last split in the UVXY chains (the 20/100 Jan '17)....I have just heard that trading these reduced options can be hard to do, given their relative illiquidity....and I am referring specifically to UVXY. Anyway, I will cross that bridge if & when. Are you an options trader?
Yes. I'm an option trader and trade the family of VIX related productIt does look a bit confusing but you will have to believe me there is no difference. If there is a reverse 5:1 split then the new option chains are now 5x the size. So if the 13 put is trading for $1.00 the new option chain becomes 13 strike at $5.00They have to maintain the 5:1 ratio in price otherwise they will be crushed by someone doing arbitrage. The old chains phase out as they expire. If you are worried about it you can see all this in the ToS backtester as well as bid ask spreads and open intrest
  • #13,290
  • Jun 8, 2016 3:13pm Jun 8, 2016 3:13pm
yes, I get it Sherps, thanks. Do you think UVXY will r/s soon? lol...by all means feel free to share your trading ideas here. I am getting to where the vix product options is mostly what I want to trade anymore....

I tried to fill VXX $13.50 long calls for Friday, for 7c, didn't chase...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,291
  • Jun 8, 2016 6:17pm Jun 8, 2016 6:17pm
this guy's articles on vix-related trading have been instructive

https://sixfigureinvesting.com/2015/...g-vix-futures/
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,292
  • Jun 8, 2016 6:43pm Jun 8, 2016 6:43pm
Quoting The Fool
I tried to fill VXX $13.50 long calls for Friday, for 7c, didn't chase...
Someday, maybe in my remaining days or years, the market will sell off....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,293
  • Jun 8, 2016 6:48pm Jun 8, 2016 6:48pm
Quoting The Fool
Is it true? "Beginning in mid-June, companies will stop buying back their stock prior to issuing earnings reports, sapping liquidity from the market, Kostin said. Those discretionary purchases won't pick back up until August, he added." https://www.yahoo.com/finance/news/s...153521438.html
I guess he's assuming that the market will give a crap ... . "Sapping liquidity" ... . Lol.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #13,294
  • Jun 8, 2016 6:59pm Jun 8, 2016 6:59pm
Quoting Sherpa
{quote} Yes. I'm an option trader and trade the family of VIX related productIt does look a bit confusing but you will have to believe me there is no difference. If there is a reverse 5:1 split then the new option chains are now 5x the size. So if the 13 put is trading for $1.00 the new option chain becomes 13 strike at $5.00They have to maintain the 5:1 ratio in price otherwise they will be crushed by someone doing arbitrage. The old chains phase out as they expire. If you are worried about it you can see all this in the ToS backtester as well...
I'm not so much concerned about undergoing a R/S in itself, but rather the possible liquidity issues with the oddball, non-standard contracts that result ... . As time goes on and there are fewer and fewer "players" in those non-standard's, you may have difficulty finding buyers/sellers for the turd pile you're trying to exit gracefully ... . I guess I'd rather just not deal with the headache, minor or otherwise ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #13,295
  • Jun 8, 2016 7:36pm Jun 8, 2016 7:36pm
Quoting The Fool
this guy's articles on vix-related trading have been instructive https://sixfigureinvesting.com/2015/...g-vix-futures/

He has some good info on his site about how the reverse split works
  • #13,296
  • Jun 8, 2016 9:02pm Jun 8, 2016 9:02pm
82 lot Jun 17 long calls, avg strike about $17.25, avg cost basis, a cat hair under 10c. I need UVXY $11 by Friday just to break even. The b/e runs hard out towards $16+ in early next week. Realistically, about the best can be hoped for by Jun 17 would be UVXY $14-$15 in a market sell-off, vol rush. So I need vol to come on Thurs so I can either sell out or sell some June 10 calls. Perpetual sideways/upgrind market is getting old.
Attached Image (click to enlarge)
Click to Enlarge Name: 2016-06-08_1850UVXY.png Size: 65 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,297
  • Edited 11:14am Jun 9, 2016 9:45am | Edited 11:14am
Quoting The Fool
So I need vol to come on Thurs so I can either sell out or sell some June 10 calls. Perpetual sideways/upgrind market is getting old.
TEPID spoos move down straining at -0.5%, no faith in bears near-term so I am selling Jun 17 UVXY calls to make 50c verts, getting barely what I need to break even
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,298
  • Jun 9, 2016 1:01pm Jun 9, 2016 1:01pm
Quoting ZebraSquirl
{quote} I'm not so much concerned about undergoing a R/S in itself, but rather the possible liquidity issues with the oddball, non-standard contracts that result ... . As time goes on and there are fewer and fewer "players" in those non-standard's, you may have difficulty finding buyers/sellers for the turd pile you're trying to exit gracefully ... . I guess I'd rather just not deal with the headache, minor or otherwise ... .
ezzackly.....you're gonna be "made whole" with some bullshit that only the other victims of being "made whole" need or want to trade with you. Nobody other then them uns even looks in those screwball chains.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,299
  • Jun 9, 2016 4:26pm Jun 9, 2016 4:26pm
Quoting The Fool
I need UVXY $11 by Friday just to break even. The b/e runs hard out towards $16+ in early next week. Realistically, about the best can be hoped for by Jun 17 would be UVXY $14-$15 in a market sell-off, vol rush. So I need vol to come on Thurs so I can either sell out or sell some June 10 calls. Perpetual sideways/upgrind market is getting old.
Jun 10 was never gonna be worth a dam, I did fix about 1/2 of Jun 17 long calls, made 50c verts out of em m/l to break even....taking a chance on some real selling coming on to close the week, hey miracles do happen....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,300
  • Edited 8:51am Jun 10, 2016 8:41am | Edited 8:51am
Quoting The Fool
Jun 10 was never gonna be worth a dam, I did fix about 1/2 of Jun 17 long calls, made 50c verts out of em m/l to break even....taking a chance on some real selling coming on to close the week, hey miracles do happen....
shoulda waited, closed all remaining long VXX and UVXY Jun 17 calls for about net 2x...a little better than that on VXX. Was sweating those as clock was ticking and looked like market would never break down. Thanks, Soros.
"If The Fool persists in his Folly he will become wise." - William Blake
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