The Options Thread

Opening: EWY June 16th 58/63/63/68 iron fly for a 2.59 cr. Will look to take profit somewhere north of 25% max.

Covering: VRX covered call for an 8.10 debit (.09 profit, so basically, a scratch). With 80 DTE, the thing was making me itchy, so freeing up the buying power to work things closer in time.

Opening: SPY June 9th 237/238.5 short put vert for a .48 credit here and to pick up some long delta for not only this position, but the overall portfolio (two birds, one stone). June SPY position scratch point at 6.79/net delta -4.56. Opened in the June 9th because I wanted the half strike and the June 16th expiry is getting "peskily crowded."

Covering AAPL May 12th 137/140/155/157.5 at 50% max for a $29/contract gross profit. "Small, but satisfying." (That's what she said).

Covering TLT May 19th 119.5 short put at 50% max (leg of diagonal); will reestablish in June 2nd expiry (30 DTE), probs at the same strike (27 delta).

Opening: TLT June 2nd 119 short put for a .69 credit. This is to replace the short put leg of a put diagonal I'm working that I took off yesterday ... .

The week ahead: https://www.tradingview.com/chart/FX...-P-NVDA-AND-M/ Basically, short FXE, /E6; P, NVDA, M earnings plays ... .

Trade Ideas for Tuesday:

NVDA May 19th 94.5/95.5/110/113 iron condor; 1.01 credit at the mid; 1.99 max loss/BPE; BE at 111.01 (no downside risk). Would really hate to get AMD'd ... .

FXE June 16th 105/108 short call vert; 1.24 credit at the door; 1.76 max loss/BPE; BE at 106.24. A straight directional play, betting on weakness post-Frenchies + FOMC associated Greenback strength around expiry.

XOP/OIH beg for some sort of bullish play. I'm working a put diagonal with the short put in the May 26th expiry (the 34 strike) and the back month in June at the 30, but am considering just laddering some Plain Jane short put vert out in time ... . OPEC jawboning regarding output cut extension (virtually zero effect yet).

An interesting article on short volatility trading: https://finance.yahoo.com/news/volat...html?.tsrc=rss

I slightly disagree that this sort of thing is "commonly done" by sensible risk management traders, although I can see some doing "exactly that" -- increasing their position size in order to keep on bringing in what they were bringing in before:



For me, short volatility trading (usually with VIX options) is a minor sideshow to other stuff I'm doing. You just can't put on enough sensible bearish VIX setups here given current levels and VIX-/VX term structure and get paid decently to do it. I mean, what dick is selling (for example) June VIX 13/16 short call verts for .50/contract -- just not worth it in my opinion (since you're tying up 2.50 in buying power for a max payout of .50 ... . Meh.)

Covering: VIX May 17th 14/17 short call vert for a .10 db, rolling out the 11/14 short put side to the June 21st 9.5/14 for a .04 db and selling the June 21st 14/19 short call vert against for a .46 credit, so that I'm net credit on the roll. Now it's a June 21st 9.5/14/14/19 iron fly with a scratch point of 2.37.

Opening: FXE June 102/103/105/107 iron condor for a .95 credit. POP%: 46%; Max Profit: $95/contract; Max Loss/BPE: $105/contract; BE's at 102.04/105.96. This is basically a synthetic short FXE position with some put side flexibility in the event that I'm just totally wrong ... . Otherwise, limited downside risk if it totally implodes around FOMC.

Opening: NVDA May 19th 91/94/115/118 iron condor for a .97 credit. I gave in a little bit, three penny-ing from the 1.00 mid ... .

Later in the week earnings appear to suck: M has the right IVR/IV metrics, but just doesn't have enough juice in it unless you're willing to short straddle/fly. DIS, background too low/no juice; SNAP, would ordinarily fly/short straddle if it wasn't such a whipsaw-fest.

Non-earnings: XOP, with IVR/IV coming in at 66/34 (six month IVR). GDX: pondering something directional with dollar firming up.

Some more bullish assumption petro: OIH June 16th 24/27/27/28 broken wing butterfly (24 long put/2x27 short put/28 long put). Max Profit: 1.12; Max Loss/BPE: 1.88; Break even at 25.88. XOP's my go-to, but already have stuff going on there that I don't want to step on.

Covering: X June 16th 25/27 short call vert for an .08 db on this down move. This is part of a broken earnings setup I'm working off.

Covering: XOP May 26th 34 put for a .46 db and closed the June 16th 30 put for a .15 credit. Really small winner ($18 gross) ... .

Covering: NVDA May 19th 91/94 short put vert for a .03 db. Part of an earnings play; the call side is in full breach with the >1 SD up move.

Opening: NVDA May 19th 112/115 short put vert for a .41 credit. Somewhat amazed that I could still get something for a setup that far below ... . Of course, this was at open; it's now worth .09 since the post-open rip ... . Just trying to mitigate a little more loss since the call side's at max.

Covering: TLT June 2nd 119 short put for a .35 db and the June 16th 117 long for a .25 credit (net .10 debit). .34 gross profit/contract on this little fella. Just taking off stuff in profit where I can before vacation.

Covering: NVDA May 19th 112/115 short put vert for a .05 db here. Still stuck with the broken call side, which is near max loss (there is a touch of extrinsic still left in it; I'll deal with it next week).

Covering: X July 26/28 short call vert for a .16 db (50% max). Was hoping for a retrace of some kind; didn't get it. Will take the call side next week ... . Didn't fill today.

Bunch of clean up mid-vacation: NVDA: https://www.tradingview.com/chart/NV...CONDOR-PRELIM/, X: https://www.tradingview.com/chart/X/...1-35-IRON-FLY/, SPY June core: https://www.tradingview.com/chart/SP...CORE-POSITION/, FXE: https://www.tradingview.com/chart/FX...7-IRON-CONDOR/

X, NVDA trades went totally off the rails with > 1 SD moves. Oh, well -- can't be all rainbows and unicorns, although I would have like to not have too poo piles in a row ... . Lol.

Opening: IWM June 16th 128/131/141/142 "Double Double" for a .76/contract credit on this VIX pop. Here's the down-low on the "Double Double": https://www.tradingview.com/chart/IW...DOUBLE-DOUBLE/

Hi ZS,
I am new to options trading. Can you please clarify what does it mean: Opening: IWM June 16th 128/131/141/142 "Double Double" for a .76/contract credit on this VIX pop ?
And second question can you recommend a book on option trading to read? ( I read only one book - "Options trading" by M.Tomsett)

The "IWM June 16th 128/131/141/142" is options short hand. The "IWM" refers to the underlying; "June 16th" to the expiry for the options contracts being used; the "128/131/141/142" refers to the strikes being used; "Double Double" is the type of setup (long put/short put/2xshort call/2x long call where the width of the short put spread is at least "double" that of the short call spread and the short call spread is "double" the number of contracts used for the short put spread -- hence the name "Double Double").

The reason why I'm putting this trade on here is because the VIX has "popped" to >15, and so the setup pays more than if the VIX were lower.

As far as resources are concerned, I would go to tastytrade.com There are virtually endless free educational materials there in video and blog format ... .

Looks very complex! Thank you.

Covering: OIH June 16th 24/27/27/28 broken wing butterfly for an .11 db here (basically, scratch). Really need to bring in more credit on these on the front end, unless you are anticipating whipsaw that would allow you to take off the high long put and maybe one of the short puts in profit and then ride the remainder (a short put vert) up ... .

Opening: EWZ July 21st 26/28/38.5/40.5 iron condor for a .61 credit (high IVR/high IV). Went small, narrow in the event I want to add to the position if the volatility stays in here. Others seem to be going straight directional (short puts) on the notion that the move is overdone or with something like a Jade Lizard where there is no upside risk.