A last "hail-mary" pass, from a guy who knows a bit about knowledge acquisition: you can't learn if you start with prejudice; it must be discarded, because it's taking up the exact space that's needed for knowledge.
Best of luck.
BlueWaterSailor: trading journey and journal
- Thread starter BlueWaterSailor
- Start date
A last "hail-mary" pass, from a guy who knows a bit about knowledge acquisition: you can't learn if you start with prejudice; it must be discarded, because it's taking up the exact space that's needed for knowledge.
Best of luck.
@Magic - thanks for keeping me humble. Every time I think I'm beginning to understand, it turns out I don't even speak the language.
Maybe I'm obtuse this morning, but - ~1.3x of what? (If it's premium, then... what's the base value?) And -20 shares per - how do you do that, given that it's 100 per contract? Do you mean 20 lots?
Bonus question: can you give a synopsis of what your thoughts are on ROKU? I recently realized that I'm modeling my learning process here on what I used to do when I was a kid learning to play chess - working through Fisher's, Capablanca's, Botvinnik's, etc. games and figuring out how they got there - so I'd appreciate whatever of that you can expose.
(Nice to see that you don't consider ROKU a bottomless pit, anyway.
)Sorry, the spreads went off at different prices in the $1.30's. x was intended as single digit integer, not a multiplier. My avg credit was something like $135. Options are 100 shares yeah but I only shorted 20 shares for each spread I sold.
Outlook is that when liquidity dries up the near-end term structure gets bid up beyond what's realistic. I would've preferred to go further out in time but don't have a good idea of what we're likely to realize over a longer time-frame. Distressed stocks aren't my bread and butter but if I see something obvious I'll put on a speculative position.
Outlook is that when liquidity dries up the near-end term structure gets bid up beyond what's realistic. I would've preferred to go further out in time but don't have a good idea of what we're likely to realize over a longer time-frame. Distressed stocks aren't my bread and butter but if I see something obvious I'll put on a speculative position.
Awesome, thanks! I had a slight inkling that "-20 shares" meant hedging... I still haven't figured out how to structure those correctly, but I'm pretty sure I'll run across it in Hull or Cottle at some point.
(Part of what makes this so frustrating and fascinating at the same time is that you can't look up even basic things like "how to hedge a trade" in Google; all you get is noise and advertising. But... we shall persevere.)
Huh. The only Sep chain I see is for the 27th, and the -97/+95 put spread is ~0.28 right now. 1.30 was a pretty sweet deal!
...oooh. You've just made that vol-related ratchet in my head turn another click. Of course it does; you can see it on the option chains. I still don't have a metric for what "realistic" might be, but this is a good clue.
Makes sense. Thanks again!
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OK, time to reconcile the log. I've been a Bad, Bad Trader... not keeping everything up in a timely manner... actually, I've been on the road covering 2k+ miles from CO to FL in a 40' RV with a 24' tow behind it, and trading every day the market was open. Just got home last night, bloody exhausted but triumphant: I did not screw anything up with rookie technical mistakes, even with all those distractions and pressure. No guarantee of the future (actually, it's guaranteed that I will screw the pooch at some point...), but - learn to walk first, PIC of first manned Mars mission later, right?
So, wheel trades:
9/23/2019 $107.00 ROKU 191018C135/ROKU 191018C205 -$0.98 $198.00
Closing call spread (most of the value captured)
9/23/2019 $107.72 ROKU 191115C125/ROKU 191115C250 $6.49
Cost basis change: 129.37 captured so far plus 6.49 credit taken in (122.88 if held to exp)
9/23/2019 $90.77 SBUX 191025C94/C91/P91/P80 $3.25
Opening IF ("Jade Lizard"); no upside risk, B/E at 88. Trying this as an alt wheel entry.
9/25/2019 $152.23 IWM 191011P150.5 $1.35
9/25/2019 $79.26 TMUS 191004P78 $0.56
9/25/2019 $154.24 IWM 191011P150.5 -$1.15 $20.00
9/25/2019 $79.78 TMUS 191004P78 -$0.44 $12.00
Quick $32 in profit, on underlyings that I am now careful to ensure I really don't mind owning.
Non-wheel trades:
9/20/2019 $269.90 NFLX 191018C315/320/P240/245 $1.55
Opening an IC, with ~1/3rd of spread in credit
9/25/2019 $255.76 NFLX 191018C315/320 -> NFLX 191018C285/290 $0.72
Dropped >14 points; rolling down the call side. Credit is now 2.27 on a 5-point wing spread.
Between the low VIX during much of this period and dealing with the crash in ROKU - mostly, wrestling the ol' brain around to see it in proper context and learn to work with a stock that's doing this (again, first time ever) - I didn't make all that many trades. But thanks to the terrific help I've been getting, I've learned enough to do relatively competent things with these instruments - and I've been watching myself do it with no small degree of amazement. No, let's be honest: I'm stunned and overjoyed... even lately, while watching my ROKU P&L going several thousand dollars into the red.
Who the hell is this stranger that I've become, where is he going, and what's his mind going to be like when he gets there???
Damn, but this stuff is addictive fun.
So, wheel trades:
9/23/2019 $107.00 ROKU 191018C135/ROKU 191018C205 -$0.98 $198.00
Closing call spread (most of the value captured)
9/23/2019 $107.72 ROKU 191115C125/ROKU 191115C250 $6.49
Cost basis change: 129.37 captured so far plus 6.49 credit taken in (122.88 if held to exp)
9/23/2019 $90.77 SBUX 191025C94/C91/P91/P80 $3.25
Opening IF ("Jade Lizard"); no upside risk, B/E at 88. Trying this as an alt wheel entry.
9/25/2019 $152.23 IWM 191011P150.5 $1.35
9/25/2019 $79.26 TMUS 191004P78 $0.56
9/25/2019 $154.24 IWM 191011P150.5 -$1.15 $20.00
9/25/2019 $79.78 TMUS 191004P78 -$0.44 $12.00
Quick $32 in profit, on underlyings that I am now careful to ensure I really don't mind owning.
Non-wheel trades:
9/20/2019 $269.90 NFLX 191018C315/320/P240/245 $1.55
Opening an IC, with ~1/3rd of spread in credit
9/25/2019 $255.76 NFLX 191018C315/320 -> NFLX 191018C285/290 $0.72
Dropped >14 points; rolling down the call side. Credit is now 2.27 on a 5-point wing spread.
Between the low VIX during much of this period and dealing with the crash in ROKU - mostly, wrestling the ol' brain around to see it in proper context and learn to work with a stock that's doing this (again, first time ever) - I didn't make all that many trades. But thanks to the terrific help I've been getting, I've learned enough to do relatively competent things with these instruments - and I've been watching myself do it with no small degree of amazement. No, let's be honest: I'm stunned and overjoyed... even lately, while watching my ROKU P&L going several thousand dollars into the red.
Who the hell is this stranger that I've become, where is he going, and what's his mind going to be like when he gets there???
Damn, but this stuff is addictive fun.
I'm sure you are already aware that NFLX is reporting on 16-Oct (after close). A suggestion I have is that the IC is closed before you get too close to the earnings date as the volatility will ramp up in the last few days.
Good luck.
The options's IV will rise but we will be realizing less than the current implied figure each day leading into earnings, since event vol is blended into the IV figure but realized vol is still relatively normal until the announcement. If things are priced fairly the loss from increasing IV * vega exposure will be balanced by thetas in excess of the avg losses from short gamma. If it was an simple as event vol coming in and blatantly adding net value to options, there would be large profits from indiscriminately buying straddles coming into earnings.
That said, agree that unless you have an opinion on the size of the earnings move vs. the current implied move it's best not to hold short or long through the announcement.
That said, agree that unless you have an opinion on the size of the earnings move vs. the current implied move it's best not to hold short or long through the announcement.
Thanks; yeah, that was the plan. Not real big on holding any trades to expiration... in fact, a friend of mine recently got assigned ten lots of SPY after she thought she was safe (spot was close to but still OTM on her 0-day IC when the market closed.) Fortunately for her, it rallied a bit and she got out OK, but that cute little trick was rather instructive.
I really liked the writeup that @TheBigShort did elsethread on this - I certainly used to have a simpler (but clearly incorrect, once you realize how pricing works) view on it. In fact, thinking about it from the arbitrage perspective that you point out makes it obvious: are the MMs and the other market participants going to leave money lying around? Um... not very likely.
There are sure to be inefficiencies along the chain - no perfect knowledge, etc. - but exploiting that takes a bit more than just being aware of a coming event along with everyone else.