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Let's Trade Options

  • #14,161
  • Oct 4, 2016 10:33pm Oct 4, 2016 10:33pm
Quoting peterdrill
Hey Fool. How goes it on your end? I'm still seeking the bear. Out of any VIX's and won't jump until free-fall is in.
hey pete, I am pitching pennies lately but it seems October vol could come on with good force. I like the VIX call flys because they can give you good r:r across a wide range
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,162
  • Oct 4, 2016 10:37pm Oct 4, 2016 10:37pm
trade shown above set for Nov 2 to perhaps catch pre-election jitters, but it would pay in any decent vol pop, as shown here @ P/L 2 weeks earlier (10/22)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,163
  • Oct 4, 2016 10:53pm Oct 4, 2016 10:53pm
Quoting The Fool
{quote}hey pete, I am pitching pennies lately but it seems October vol could come on with good force. I like the VIX call flys because they can give you good r:r across a wide range {image}
I have always liked the VIX plays and did very well with them up until the Monday after the Brexit. Call flys look to be the best play now. But this election has become somewhat unpredictable lately and less jittery than supposed. Should be gearing up before elections. But this year, nothing has been following the tracks of history. I'm on light mode until I see some brighter bulbs shinning.
  • #14,164
  • Oct 5, 2016 1:13am Oct 5, 2016 1:13am
http://realmoney.thestreet.com/artic...HOO&yptr=yahoo

I agree: I think ^VIX will ride up into the Nov 8 US elections and could really spike if DJT is elected; Dec FOMC risk could be a repeat of 2015, a brief rally followed by a sell-off in US equities. I'm focused on the next month only, though.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,165
  • Oct 5, 2016 1:17am Oct 5, 2016 1:17am
Quoting The Fool
http://realmoney.thestreet.com/artic...HOO&yptr=yahoo I agree: I think ^VIX will ride up into the Nov 8 US elections and could really spike if DJT is elected; Dec FOMC risk could be a repeat of 2015, a brief rally followed by a sell-off in US equities. I'm focused on the next month only, though.
That's correct. It's time to trade only on earnings players like AAPL GOOG AMZN NFLX SBUX and so on.
  • #14,166
  • Oct 5, 2016 1:26am Oct 5, 2016 1:26am
Quoting hammadshahir
That's correct. It's time to trade only on earnings players like AAPL GOOG AMZN NFLX SBUX and so on.
Hey bro. I usually only trade a few names at earnings season, and I like to trade calendars which benefit from the iv rise into the ER date, and cash out of those before the actual release. I am too late to get in those now, for the most part, and so I prolly won't trade any ER setups this cycle. I think the markets will be reacting to US elections, eurozone concerns, etc, so I am mostly just trying to set up a long vol safari for the next 6 weeks and beyond.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,167
  • Oct 5, 2016 1:31am Oct 5, 2016 1:31am
Quoting The Fool
I like the VIX call flys because they can give you good r:r across a wide range
I'd like to see a green to flat finish for the week, bring the ^VIX down and get in some of those flys for cheaper
"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,168
  • Oct 5, 2016 7:11am Oct 5, 2016 7:11am
filled another one o these @ 12c - that was 4c below the mid - a good habit to get into is to try to fill these vol product spreads below the mid, they sometimes will do that.......still, I bot the same spread for 7c last week...
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,169
  • Oct 5, 2016 9:51am Oct 5, 2016 9:51am
Quoting The Fool
{quote}Hey bro. I usually only trade a few names at earnings season, and I like to trade calendars which benefit from the iv rise into the ER date, ....
I usually set these up as double calendars up to 2 months in advance of the next ER, while iv is still collapsed from the last ER. Only thing I have done for this cycle is NFLX. I filled NFLX Oct/Nov $105 and $110 call calendars for around 60c, never got the price I wanted on the put side of the DC. NFLX has been rallying and the $105 set is worth about a net double....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,170
  • Oct 7, 2016 10:41am Oct 7, 2016 10:41am
last few days have filled a few bearish trades - SPY put flys like Jan $206/200/194; VIX call flys like Nov 9 $18/20/22 for 13c, etc.....not making much money, just breaking even m/l in the interminable flatline market....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,171
  • Oct 10, 2016 1:42am Oct 10, 2016 1:42am
Yahoo Finance I see today has reverted back to its old format, but .... no more message boards. Sad.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,172
  • Oct 10, 2016 1:55am Oct 10, 2016 1:55am
Quoting The Fool
Yahoo Finance I see today has reverted back to its old format, but .... no more message boards. Sad.
That's strange. I've been off the board since the change and looks like we will never have a chance to be back. I'm guessing they received plenty of complaints.

I'm still looking for a seat in on the VIX play. Question is when. VXX seems like a better play. It appears to have found a floor at the $33 level. From now thru to November - 37,000 contracts in open interest at the 33 strike puts with about 25,000 of theses were added in the past 10 sessions.

But the most popular near term call is the 34 strike with fewer than 20,000 cumulative calls outstanding. So looks like investors are betting for a near term pop higher - but who knows. I always preferred the VIX vs VXX but hard one to play this time round.

The run up to elections could be predicted, but if the outcome heads towards Donald Duck; VIX will likely takeoff as it did Brexit.
  • #14,173
  • Oct 10, 2016 8:49am Oct 10, 2016 8:49am
NO TREND not your friend. SPX flatlining, @ 2,150 +/- 35 or so for the last 3 months....tough to find even a run of 3 like candles....shit market to trade directionally obviously and not enough premium to sell.....
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,174
  • Oct 12, 2016 7:42am Oct 12, 2016 7:42am
Quoting StrayDog
{quote} Bought AAPL Oct 120/121 call verticals, for $0.07 ....
That was on Sep 30.
Yesterday thanks to Samsung, AAPL broke $118 and those expanded to $0.31... Didn't see that max price in time, but I sold part of the position to get the rest for free.

So now we wait for FOMC... like there is going to be some information...
Hope is dangerous in this game.
  • #14,175
  • Oct 12, 2016 9:58am Oct 12, 2016 9:58am
Quoting StrayDog
{quote} That was on Sep 30. Yesterday thanks to Samsung, AAPL broke $118 and those expanded to $0.31... Didn't see that max price in time, but I sold part of the position to get the rest for free. So now we wait for FOMC... like there is going to be some information...
yep, dawg I remembered your trade yestiddy and I thought you might want to take some off before time gets too thin. AAPL kind of acting like its old self again.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,176
  • Oct 13, 2016 6:57pm Oct 13, 2016 6:57pm
Hi Fool. I have a question if you can assist me with.

I received a trade recommendation, but something is not clear to me.

Recommendation:

SELL (TO OPEN) THE ISHARES RUSSELL 2000 INDEX (IWM) NOVEMBER 18, 2016 112-STRIKE PUT
BUY (TO OPEN) THE ISHARES RUSSELL 2000 INDEX (IWM) NOVEMBER 18, 2016 111-STRIKE PUT

WITH A LIMIT OF 0.12 CREDIT OR MORE FOR THE CREDIT SPREAD.

My question is: when I place the sell (to open) trade, I am asked for covered or uncovered sell to open. I am attempting to comprehend the deference yet it's not clear to me.

Thought I ask you since your option trading is far superior to mine.
  • #14,177
  • Oct 13, 2016 8:18pm Oct 13, 2016 8:18pm
hi pete,

I show the P/L graph for the trade you have in mind - quite unattractive. Typically, I will look for some minimum reward to risk ratio, like 0.30, for a short vertical like this. Here you are risking $1.00 to make $0.12? ...not good, imho. If you are asked if the puts sold are covered I guess that would only refer to whether or not you own a corresponding quantity of IWM shares - 100 shares per 1 put contract sold would cover the trade and you wouldn't have to use margin. If you don't own any of the IWM then you don't have to make this decision.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,178
  • Oct 13, 2016 8:29pm Oct 13, 2016 8:29pm
earnings season, yes....I have a few ER-related trades on, put on many weeks ago, will talk about them later maybe.....but for the most part I have been out of it the last month, been spread very thin with multiple workloads.

However, there are still opps to be found in the earnings moves. I see the banks are coming - WFC & C post tomorrow......I might look to go long WFC if it drops hard on the ER, and I would prolly play a otm call calendar like Jan/Apr, to try to catch and upswing for the financials on Fed rates moves starting Dec....will wait post-ER to see the iv's crater and so get in some cheap call spreads....we'll see....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,179
  • Oct 13, 2016 8:32pm Oct 13, 2016 8:32pm
Quoting The Fool
hi pete, I show the P/L graph for the trade you have in mind - quite unattractive. Typically, I will look for some minimum reward to risk ratio, like 0.30, for a short vertical like this. Here you are risking $1.00 to make $0.12? ...not good, imho. If you are asked if the puts sold are covered I guess that would only refer to whether or not you own a corresponding quantity of IWM shares - 100 shares per 1 put contract sold would cover the trade and you wouldn't have to use margin. If you don't own any of the IWM then you don't have to make this...
Thanks Fool. I was looking to get into the spread with max entry at $ 0.12 between the 2. Now the spread is at $ 0.11. Yet still not clear whether I should sell to open covered, or not. I do not have any shares of this equity.

Its been trending higher since February bottom. Earnings season is on the way and a lot of implied volatility into options I hope.
  • #14,180
  • Oct 13, 2016 8:48pm Oct 13, 2016 8:48pm
iv increase in IWM will only come about significantly if it is dropping. Selling vertical spreads is a good way to make money, but I just look for better risk to reward. Risking $1,000 to make max $120 doesn't get it.
"If The Fool persists in his Folly he will become wise." - William Blake
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