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Let's Trade Options

  • #14,481
  • Jan 3, 2017 11:55pm Jan 3, 2017 11:55pm
Quoting ZebraSquirl
I seem to have taken a seat on the VIX/VIX derivative bus and just can't seem to get off ... . Lol.
...this could be one of those years where some cheap long vol could help pay off the farm...damn, just when I was getting tired of the shit....but we'll see. It's kind of hard to identify some clear mega- "binary event" targets right now. Hell, the whole year looks like it could be one. US equities will either post a 20+% gain or a 20+% loss for the year, maybe both.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,482
  • Jan 4, 2017 9:10am Jan 4, 2017 9:10am
best of luck for your threads.
  • #14,483
  • Jan 4, 2017 1:01pm Jan 4, 2017 1:01pm
Quoting nalin1982
best of luck for your threads.
thanks, buddy .....I took off some bullish SPX and SPY weekly spread units this morning ahead of the FOMC minutes....not that I think anything will ever stop the bull rally. It truly is a golden time.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,484
  • Jan 4, 2017 1:42pm Jan 4, 2017 1:42pm
Quoting The Fool
{quote}maybe, but it's tricky. After the 1:5 rev split UVXY will trade at let's say $35. So you'd be able to buy atm puts a couple months out for lets say 15% of the strike maybe 20%, so ~ $500-$700/contract....and they immediately start time-decaying and losing value because of declining iv....but if UVXY will move enough in your time window, it might work out well. Why don't you try it and let me know how it works out?
I like trading the inverse of the VXX which is SVXY. I will sell OTM puts hoping to get filled along with selling covered calls on my long position.
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  • #14,485
  • Jan 4, 2017 2:04pm Jan 4, 2017 2:04pm
Quoting pip-boss
{quote} I like trading the inverse of the VXX which is SVXY.
SVXY sucks and I am sick of the whole vix space. I could grow old and die waiting for any premium to come back into the markets...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,486
  • Jan 4, 2017 5:13pm Jan 4, 2017 5:13pm
Quoting The Fool
HYG Jan06 $87 long calls remain from a cheap calendar now, could make it itm on that slow-moving shit, but fml look at the bid/ask spreads on the HYG weeklies - all the volume is on the monthlies on HYG - live & learn.
closed today for a 3x net on the original calendar
"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,487
  • Jan 4, 2017 5:14pm Jan 4, 2017 5:14pm
Quoting The Fool
just a lil fade bet for next week, SPY Jan 6/11 $227 calendar calls for 17c, maybe the btfd will be back.
in for 18c want out for 50c or better, just another day and a little more upgrind'll do it...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,488
  • Jan 4, 2017 10:07pm Jan 4, 2017 10:07pm
Quoting The Fool
{quote}...this could be one of those years where some cheap long vol could help pay off the farm...damn, just when I was getting tired of the shit....but we'll see. It's kind of hard to identify some clear mega- "binary event" targets right now. Hell, the whole year looks like it could be one. US equities will either post a 20+% gain or a 20+% loss for the year, maybe both.....
Fireworks are fun ... as long as you don't blow your fingers off.
  • #14,489
  • Jan 5, 2017 5:23pm Jan 5, 2017 5:23pm
Quoting The Fool
in for 18c want out for 50c or better, just another day and a little more upgrind'll do it...
pin $227 tomorrow for the full chikkin dinner......
"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,490
  • Jan 5, 2017 5:42pm Jan 5, 2017 5:42pm
CERN call credit spread looks promising
  • #14,491
  • Jan 5, 2017 8:11pm Jan 5, 2017 8:11pm
Quoting charron
CERN call credit spread looks promising
OK, sure, put up an actual trade and I'll tell you what I think.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,492
  • Jan 5, 2017 9:36pm Jan 5, 2017 9:36pm
sometimes I fish earnings moves with cheap flys.....AMZN ER's 1/26....2 lot fly cost 20c and AMZN immediately spiked north.....fml, was gonna be a dbl fly centered @ $700 and $800
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,493
  • Jan 6, 2017 5:41am Jan 6, 2017 5:41am
Quoting charron
CERN call credit spread looks promising
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Does this make sense?
CERN is reporting 46 days from today, right after its Feb expiration.
According to my pea-sized brain, [Mar+50c/Feb-52.5c] bull call diagonal costs $0.95, allowing the Feb52.5c to, most likely, expire worthless and also allowing the Mar50c to, hopefully, increase in IV.
  • #14,494
  • Jan 6, 2017 8:49am Jan 6, 2017 8:49am
THE trade you show goes on for a credit, requires $250/contract margin. You have to mind your upside b/e on a diagonal, because the loss beyond that is steep. CERN has thin volume and wide strikes, not a good combo for adjustment.
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,495
  • Edited 1:29pm Jan 6, 2017 8:57am | Edited 1:29pm
if the Feb $50 call expires worthless, though, and you hang in to catch the ER right after Feb expiry, then you are in a risk-free position to catch a spike with the Mar long calls. Could be a nice trade....
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,496
  • Jan 6, 2017 1:04pm Jan 6, 2017 1:04pm
prolly get that Dow 20k close today. I took off SPY Jan 6/11 $227 calendar calls for almost 3x net.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,497
  • Jan 6, 2017 1:44pm Jan 6, 2017 1:44pm
Quoting SnoopyAKQJT
{quote} {image} Does this make sense? CERN is reporting 46 days from today, right after its Feb expiration. According to my pea-sized brain, [Mar+50c/Feb-52.5c] bull call diagonal costs $0.95, allowing the Feb52.5c to, most likely, expire worthless and also allowing the Mar50c to, hopefully, increase in IV.
oops Snoopy I see I missed what you had shown there, will revisit
"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,498
  • Jan 6, 2017 8:47pm Jan 6, 2017 8:47pm
Quoting SnoopyAKQJT
Does this make sense? CERN is reporting 46 days from today, right after its Feb expiration. According to my pea-sized brain, [Mar+50c/Feb-52.5c] bull call diagonal costs $0.95, allowing the Feb52.5c to, most likely, expire worthless and also allowing the Mar50c to, hopefully, increase in IV.
here's your trade as you called it, at expiry
Attached Image (click to enlarge)
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,499
  • Jan 7, 2017 4:34pm Jan 7, 2017 4:34pm
some ER trade ideas for the upcoming season
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #14,500
  • Jan 8, 2017 12:00am Jan 8, 2017 12:00am
Hello, I asked in another forum but I want to ask here as well and maybe you will have some answers or atleast where to find the answers.

---

I notice some OTM call options are very expensive compared to others. Yes, OTM.

I am confused why some OTM call options are very expensive compared to others? Is this based solely on historical volatility or how close Delta is close to the value of 1.00?

I googled it but I can't find how OTM options are priced and I am confused on what determines the value of a "essentially" worthless option. Is there anyone that can explain this to me or share a link that explains it? Is there anything that can help determine a "value" OTM call option?

Thanks.
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