Let's Trade Options

oil plays could get jiggy with the Iran vs USA prologue to WWIII thing - I hope to make some bux just in time to buy extra Spam for the bunker....

re: UVXY, VXX, VIX, SVXY, etc....yep I have traded them alot and can not say I have the key to Happiness there. However, for the "scheduled" volatility events, like big elections, announcements, alien landings, the return of Jesus, etc - well there are a few ways to play:

1) Reconsider. Things never work out like you think they will.
2) If you must, try to catch the run-up as well as the aftermath. For big vol events it's usually more likely vol will rise steadily into the event and crash hard immediately thereafter.
Uh) time spreads are good for both sides - have some that expire in the week(s) before the event - these may be the best paying trades.
) Let's say you want to catch a volatile aftermath of the scheduled event: position your calendar or diagonal with the short leg expiring before the event (a week or 2 max) - these will benefit from the vol rush and you might close in good profit before the event. Leave some on if the short legs are going to expire worthless and you will have long options to run thru the event and maybe just maybe go sick itm.

Kahuna-ize the Mar17/Mar24 UVXY diagonal....not too crazy about these numbers, though. I don't like the $2 spread and still have to pay 20c. Getting a diagonal right means you are not paying much over $0. Takes some shopping to get something looks good on these and that's important because often they're going to return nada, so must keep debit low...

VXX has halved since the election....that's a clue

the problem with short ^VIX.....VXX has dropped $6 in the last month - the $15 Mar17 puts are $6 closer to itm but they have not gained in value

and so on...will be plenty time to load these as markets will prolly continue rallying and ^VIX falling...

tack on a vert outside the downside b/e = Big Kahuna, usually can be done cheap for SPX diagonals

Honestly man that's a good way to catch vol spikes

I just put vega bombs on spy or spx for literally nothing as insurance. Basically iThey are always bearish insurts just like a back spread, logic is to net buy units for net no cost.

Buy multiple units OTM/ Sell 1 OTM (but closer to current price) to fund the purchase. They are always bearish insurance on indexes(SPY or spx specifically) but not individual stocks since when indexes drop its systemic and it typically means IV will rise sharply. Not so with individual stocks all the time.

So I like to -P ($) -> buy +2p AOB ($)
-10 vega +5vega (2) = +10 vega = neutral vega/ neutral thetha (neutral cost)/ delta neutral

as the spy drops ... the 2 units get close to ATM units 2p( vega x 2) > -1p(vega x 1)
that net gain to position of vega coupled with increase in IV


example o vega ( -10 / +5 x 2)
drop.... (-12 /+7 x 2) net 2 vega = iv rose 3 points => net change to value up 2 vega x 3 points is $6 more- 18
drops more... (-18 / +12 x 2) net 6 vega = iv rose 10pts => net change value up 6 vega x 10 pts so $60 more


because basically as OTM units become ATM units the net VEGA THETA DELTA of that unit increases so if you have 2 vs 1 than the 2 units willmove net greater than 1 unit


I always go out 6 months as a blueprint as a minimum since you need strong VEGA and too small a time frame has smaller " vega gamma"
My goal is a pure vega play. The ONLY risk is that the short unit moves more than the long unit(basically only occurs when the market grinds down). I avoid that by setting my short unit outside a "grindable range"

For example I put a vega bomb on middle of last month on the spy as a Jun 175/192 put spread. I paid nothing. I'm in the red now because those spreads are asking like -.05 but its cheap insurance and by the end of june if it hasn't dropped(unless its dropped below 190 in a grind) it will cost me nothing but commissions. Of course the upside is monsterous and I could make $300-$400 per spread if some black swan event happens.

snowing here, praying for some accumulation so I can blow off Monday work. Nothing much on the US data docket this week so I have to guess we will see equities grind up. I will do some SPX weeklies spreads, looking at Feb10/13 2,315 calendar calls maybe pay <75c....

I get the nil debit but that's a huge margin hit, no? Honestly, my accounts are so small, I don't know why I even bother....

Nah man its like $1700 per spread... not chump change but for the insurance, Ill take it considering if DJT goes postal one of those spreads could make tens of thousands.

cool, i have cheaper (re: margin) ways to stay ready for a vol pop, but variety is always good.../ES up, /GC up, /CL up, U/J up....if DJT would get off twitter the S&P would go to 2,500 by Summer....

Ya man, I'm always looking for cheaper and more efficient.... so if one of those situations comes up share the wealth.

Ya The frankie could be giving us a fake before reversing all these early sunday moves. Or maybe since the Pats pulled it off today everything will be nicely facked

https://www.yahoo.com/finance/news/c...--finance.html

about time......

Chipotle, sheesh...I'd like to get in some of this overblown sheet with some cheap otm puts and watch it crash...been a while since I had somethink go itm >$10....CMG could easily drop $100 in a few months. Or not.....

I just hate how thinly traded those options are. But yah, chipotle always gave me the runs. Thank god they arnt in hawaii

yeah, they suck...the options, I mean....I went to Taco Bell for the 1st time in 20 years last week and I shat out an amoeba the size of a manatee....

Might as well just buy the Chalupa(sp?) and go throw it in the toilet.

I'm still lookin at $dxy to drop down and kiss 99 or real close too it before pulling out the sledgehammer to smackdown some currency and commodity ETFs.

tough call and the same ole shit, everyone wants to talk down their cash. I am eyeing a bit of an oil rally into the Summer, but I have my doubts that it will be very big...

Ya I suck at calling bottoms, especially on things like oil. Ill just keep shorting it whenever I feel like there is any sort of decent R:R. Went through the phase of trying to outthink the market only to realize that if I could barely graduate the 7th grade than macro econ might be a little beyond my feeble comprehension.