Search results

You can trade ES with IRA in IB. Unlike margin with stock trading, margin with ES trading is not a loan.

Murray, You are right that if the underlying moves toward your short position. The best case for diagonal spread is for the underlying to move slowly to your front month short. However, if the underlying moves further away from your short, both legs will lose values, and it is likely that...

Coach, How do we compute the return on risk for diagonal spread? Since you have traded both ES and SPX, can you tell me the benefit of trading ES as compared to SPX? It seems to me the only benefit of trading ES option is lower margin requirement using span margin calculation. If ES is...

The daily swing for OIH can go as high as $10. I don't like to have strikes close to the daily range. It makes me hard to adjust my positions.

I have a lot of naked writes for OIH in both Jul, Aug and Oct :)

Calls. I think the strike difference was $5 and 10. The problem was that the bid ask spread was too big (for PD). I probably could make money before the front month expired, but the gain was too small for me to take it because of the wide bid ask spread.

I agree. BTW, yesterday i opened a credit spread 1130/1100 @ 1.40, today the mid point for 1130/1100 is around 0.7. Should I cover it or should I wait till it both worthless? The expectancy for the trade initially was 0.7 and I got it today.

I probably can't comment on SPX or ES. Yesterday it was my trade with SPX, thanks to the idea from this forum. My past experience with stock options was that when the market dropped like in May, the front month leg expired worthless but the value of the long leg dropped to almost 0 as well...

It is hard to get IV lower than HV. MMs want to make $ (IV higher than HV is one of their edges ). One way is compare the current HV (short-term) with historical HV (long-term). I am not the type of traders using volatility as my trading strategy. I think someone can provide a better...

I used the diagonal and calendar spread in the past. One thing I didn't like was the initial debit. As the market continues to go down, even a rise in IV might not give u any profit. I will try to find a past trade to illustrate it in my next post.

Richard, theo. value is calculated based on HV, so you will never get filled using these calculation. FOTM options are priced using IV that usually is higher than HV. Coach probably can explain more on volatility skew or smile. The advantage of selling FOTM option (or credit spread ) is...

I suspect: FOTM/OTM is good for a steady up/down, or sideway environment ATM is good for event play (like buying at low vol, and selling at high vol ) ITM is good for trending market. Am I right? Too bad I can't check your historial return :)

It seems to me that the diagonal spread depends on VIX. Can you elaborate how VIX affects your position? Vega should be small initially and your position should depend on when the change occurs.

Richard, How do you use the theoretical value? You don't know the IV, and IV are different for the two strikes. You can't use HV for your calculation.

Cache, Did you check and see which one provides you a better return. 50%---FOTM/OTM 35%---ATM 5%---ITM (or simply long puts/calls single leg plays) 10%---CASH Your return is already very impressive. I am just curious if you can improve the performance by changing the ratio.

MoMoney, I totally agree with you. If GARCH doesn't provide any better predicting ability than ATM IV, I will say that it is not useful. Even a lot of option traders (i mean successful traders) use this model, it doesn't mean GARCH provides a better prediction. I know a lot of top...

Coach, I have used a strategy like this for some time. I don't know what it is called. An example is: On 7/13 when iwm = 68.2 Long Aug 70 call @ 1.65 Short Aug 71 call @ 1.2 Short Jul 70 call @ 0.55 Net credit = 0.1 If the Jul short expires worthless, I will be taking a...

MoMoney, Any live chat for option trading?

Thanks Coach. The second spread (1130/1100) has been filled. This is my first trade with credit spread strategy inspired by this forum. Return on risk = 1.4/(30 - 1.4) = 4.9% I have used naked puts a lot when my Monte Carlo Simulation shows a positive return for naked writes. However...

Ben, Why would European options make a calendar spread riskier than American type options? I thought European options didn't have the risk of early exercise. Can you elaborate on this issue?