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Let's Trade Options

  • #13,781
  • Jun 28, 2016 1:26pm Jun 28, 2016 1:26pm
if you wait till after the vol spike, getting into any kind of position in the vix derivatives can be hard to do cheaply, since iv has come up so much....sometimes you can fill flys for a good price while the options are high....I have been trying to play the anticipated vol spikes with both call and put spreads in VXX and UVXY. This has worked out fine when the u/l price has landed near the spread midpoint....my idea has been to adjust the put spreads during the vol spike, after the puts have gone otm - to make a put bull vert that would pay very well on the reversion...however, not been able to test this idea, as vol spikes so hard to come by, and in the case of the last (Brexit) one, just not much of a spike, after all
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,782
  • Jun 28, 2016 2:05pm Jun 28, 2016 2:05pm
Quoting StrayDog
.... (Last week I bought some UVXY July 1st 14/14.50 call spreads for $0.11, just in case of Brexit Small number but I will take the money.) For this week, I have sold /ES Aug 2050/2080 call spread for $14.00 CR....
That UVXY call spreads was $0.27 (at midpoint, so maybe $0.25 in real life) yesterday, but I didn't do shit about that, so now the chance is they are going to expire worthless.
When I saw /ES over 2000, 7 hours before the open, I closed that /ES call spread for $12.75 to take at least something out of it. That is one of the advantages of futures options, you can do a trade in premarket.

So, what now... futures breached the level that I find important... imo, if the move to the downside will continue, this rally has to stop right now, maybe some doji tomorrow or something like that, otherwise if they continue to go up, shorting that could be very dangerous. This today is classic short covering rally, I am glad that I didn't get burned today with that... and hard to buy also, since 1/2 of the move was overnight. Well... made some beer money today, at least I didn't lose shit.
Hope is dangerous in this game.
  • #13,783
  • Jun 28, 2016 2:34pm Jun 28, 2016 2:34pm
Quoting StrayDog
{quote} That UVXY call spreads was $0.27 (at midpoint, so maybe $0.25 in real life) yesterday, but I didn't do shit about that, so now the chance is they are going to expire worthless.
Snooze/looze on the vol peak plays, expecially with relentless UVXY, always looking for $0.00 and a r/s rebirth.

I got out of much of UVXY spreads, but still have some @ Jul 01 - sad to see them bleeding out - the best was $13.50/$16.00 calls......boohoo, maybe still a chance there, perhaps we finally see some "sell in May go away" here at the end of June....?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,784
  • Jun 28, 2016 3:53pm Jun 28, 2016 3:53pm
Quoting StrayDog
{quote} That UVXY call spreads was $0.27 (at midpoint, so maybe $0.25 in real life) yesterday, but I didn't do shit about that, so now the chance is they are going to expire worthless. When I saw /ES over 2000, 7 hours before the open, I closed that /ES call spread for $12.75 to take at least something out of it. That is one of the advantages of futures options, you can do a trade in premarket. So, what now... futures breached the level that I find important... imo, if the move to the downside will continue, this rally has to stop right now, maybe...
Always a crap shoot ... . Broke that 203 level. If you drill down to the 30 min. chart, you'll see two post-Brexit attempts at recovery failures: one at 2052 (SPX500), the second at 2073. The retrace from 2052 was to 2030; the one from 2073 was all the way through 2030 (which it then tested from below), falling further all the way to 1989 (if you're looking at /ES prices, subtract about 7 handles from these figures; FXCM tacks on about a $7 markup to /ES pricing). So this shit could be short-lived ... . But the market has an awfully short memory in this 24-hour a day news cycle; already the rotation is back to the general election ... . Brexit will quickly become a "distant overseas problem" ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #13,785
  • Jun 28, 2016 3:59pm Jun 28, 2016 3:59pm
Quoting ZebraSquirl
{quote} Always a crap shoot ... . Broke that 203 level. If you drill down to the 30 min. chart, you'll see two post-Brexit attempts at recovery failures: one at 2052 (SPX500), the second at 2073. The retrace from 2052 was to 2030; the one from 2073 was all the way through 2030 (which it then tested from below), falling further all the way to 1989 (if you're looking at /ES prices, subtract about 7 handles from these figures; FXCM tacks on about a $7 markup to /ES pricing). So this shit could be short-lived ... . But the market has an awfully short...
... and because it's a crap shoot, continuing to play this jazz nondirectionally with iron condors, although that NDX IC went almost immediately underwater with this upmove ... . Not to worry; plenty of time to work out, and it's only skewed 3.5 delta short (so far ... ). Ugh.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #13,786
  • Jun 28, 2016 4:08pm Jun 28, 2016 4:08pm
Quoting ZebraSquirl
... and because it's a crap shoot, continuing to play this jazz nondirectionally with iron condors,
PROLLY not a bad plan. The ^VIX is a Fart and all the little derivative toys that play on it, VXX and lead balloon UVXY, etc, are turds and should be shut down by the SEC. It seems pretty clear that, after what happened to the ^VIX last August, it has been "fixed" so that it will work better for the market makers, that's all that matters in this game anyway....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,787
  • Jun 28, 2016 5:05pm Jun 28, 2016 5:05pm
Quoting The Fool
{quote}PROLLY not a bad plan. The ^VIX is a Fart and all the little derivative toys that play on it, VXX and lead balloon UVXY, etc, are turds and should be shut down by the SEC. It seems pretty clear that, after what happened to the ^VIX last August, it has been "fixed" so that it will work better for the market makers, that's all that matters in this game anyway....
The "system" is rife with "exploitable" setups ... . Used to be just spoofing; after which they graduated to outright collusion to fix prices (Libor scandal; tsk tsk, that's really "old school"). Now, with HFT's and algorithms, given certain market conditions ([insert name of instrument here] in thin volume), you can use comparatively minimal capital to "burn through rungs on the ladder," causing a small cascade in a desired direction, which all the lemmings follow over the cliff ... .

It's not beyond contemplation that some players got together and said, "Hey, we were toasted big time in June on all that call side insurance we bought. Let's pin price here a bit so that we don't get burned again ... ." Course, given the volume involved, this would either have to be a shit ton of players or a small number of players with a shit ton of contracts ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #13,788
  • Jun 28, 2016 5:37pm Jun 28, 2016 5:37pm
Putting this bitch on because (a) it was on my post-Brexit play list; (b) it's cheap (the other ones were TBT long, TLT short, EWU long, EFA long, EWG long); and (c) I seem to have a shit ton of cash on the sidelines at the moment ... .

BCS covered call
100 Shares @ 7.34
August 19th 8 short call
Whole Paqueta: $686 ($6.86 will be my cost basis in this puppy)
Max Profit: $114 (if called away at $8)
Fireworks are fun ... as long as you don't blow your fingers off.
  • #13,789
  • Jun 28, 2016 5:45pm Jun 28, 2016 5:45pm
Interesting take ... per usual. Nutshell: VIX hedge unwind "mistaken" for bullish signal: http://www.zerohedge.com/news/2016-0...ad-cat-brounce
Fireworks are fun ... as long as you don't blow your fingers off.
  • #13,790
  • Jun 28, 2016 6:04pm Jun 28, 2016 6:04pm
Quoting ZebraSquirl
VIX hedge unwind "mistaken" for bullish signal:
The ^VIX is a Fart and the CBOE needs to be turned into a crater. The ^VIX stands still while all the world is buying the hedge products and then moves down when they are sold off? The ^VIX will soon need to be periodically "reset" like the thieving ProShares junk...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,791
  • Jun 28, 2016 8:55pm Jun 28, 2016 8:55pm
Makes perfect sense....if you're the crook running the shit
Attached Image (click to enlarge)
Click to Enlarge Name: 2016-06-28_1853VIX.png Size: 47 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,792
  • Jun 28, 2016 9:05pm Jun 28, 2016 9:05pm
Quoting The Fool
Makes perfect sense....if you're the crook running the shit {image}
That's not a pretty graph to look at. Hurts my eyes. I'm still taking this in from Monday.
  • #13,793
  • Jun 28, 2016 9:10pm Jun 28, 2016 9:10pm
there's no escape from the sideways market
Attached Image (click to enlarge)
Click to Enlarge Name: 2016-06-28_1902_es.png Size: 77 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,794
  • Jun 28, 2016 9:37pm Jun 28, 2016 9:37pm
Brexit vote a bfd, right? ...so when the vote came in a surprise result (sure), "the market" sells off 5 whole percent....because, uh...Brexit bad....then, oh yeah, "the market" immediately erases that loss.....because, ....Brexit over....sure.......there is no "market", there is just a collection of algorithms, bots trading against each other in microsecond trades.....market moves don't "mean" anything.... I am beginning to doubt that there is any actual, real-world, macroeconomic event that would compel the "market" to do anything that makes any sense.....the bots are just oblivious to anything but the last series of meaningless moves....
Attached Image (click to enlarge)
Click to Enlarge Name: 2016-06-28_1927es2.png Size: 56 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,795
  • Jun 28, 2016 10:11pm Jun 28, 2016 10:11pm
Quoting The Fool
Brexit vote a bfd, right? ...so when the vote came in a surprise result (sure), "the market" sells off 5 whole percent....because, uh...Brexit bad....then, oh yeah, "the market" immediately erases that loss.....because, ....Brexit over....sure.......there is no "market", there is just a collection of algorithms, bots trading against each other in microsecond trades.....market moves don't "mean" anything.... I am beginning to doubt that there is any actual, real-world, macroeconomic event that would compel the "market" to do anything that makes any...

The 5% drop was approx $3 Trillion dollar loss to the value in the markets so, yes it was a bfd

Also as I mentioned in my other post, it was just a referendum. They have 2+ years to leave and that clock won't start till they invoke article 50 which is in Oct so really it will take 3 years and the effect will be a recession for UK but it will take a few years to play out
  • #13,796
  • Jun 28, 2016 10:15pm Jun 28, 2016 10:15pm
Quoting The Fool
{quote}PROLLY not a bad plan. The ^VIX is a Fart and all the little derivative toys that play on it, VXX and lead balloon UVXY, etc, are turds and should be shut down by the SEC. It seems pretty clear that, after what happened to the ^VIX last August, it has been "fixed" so that it will work better for the market makers, that's all that matters in this game anyway....

You need to research more on how the VIX is calculated. It is an index not a stock that can be manipulated. The option market is trillions of dollars in value, the VIX is only a reflection of what people are buying/selling options on the S&P.

If you already know the VIX is bound by a low of 10 and a max of 50 (yes it can go higher but can't sustain very long above 50) why not build strategies around that?
  • #13,797
  • Jun 28, 2016 10:18pm Jun 28, 2016 10:18pm
Quoting The Fool
{quote}Snooze/looze on the vol peak plays, expecially with relentless UVXY, always looking for $0.00 and a r/s rebirth.

You do realize that UVXY and VXX can actually never go to a value $0.00.
They can actually reverse split forever. They were designed that way from the start
  • #13,798
  • Jun 28, 2016 10:48pm Jun 28, 2016 10:48pm
Quoting The Fool
there's no escape from the sideways market
run it up, we can't have a down market on Murica's birthday....

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"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,799
  • Jun 29, 2016 2:06am Jun 29, 2016 2:06am
Quoting The Fool
Brexit vote a bfd, right? ...so when the vote came in a surprise result (sure), "the market" sells off 5 whole percent....because, uh...Brexit bad....then, oh yeah,
the Brexit was a terrible, terrible thing, we were all so afraid it would happen, terrified, and then it happened, but ya know, it weren't that bad, so we just bought everything....hooray for Brexit! What? There was another ISIS mass murder? Hooray, hooray! Buy more Stocks! Buy Commodities! Buy Everything!
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #13,800
  • Jun 29, 2016 2:25am Jun 29, 2016 2:25am
Quoting StrayDog
So, what now... futures breached the level that I find important... imo, if the move to the downside will continue, this rally has to stop right now, maybe some doji tomorrow or something like that, otherwise if they continue to go up, shorting that could be very dangerous. This today is classic short covering rally, I am glad that I didn't get burned today with that... and hard to buy also, since 1/2 of the move was overnight. Well... made some beer money today, at least I didn't lose shit.
sideways is the new down, also maybe the new up, there is no stopping perpetual sideways market run by CB's. If things get really bad, though, I could see them breaking it out to a series of new ath's....
"If The Fool persists in his Folly he will become wise." - William Blake
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