CME options melting fast !

I could be wrong and it looks increasingly like I am wrong, and the stocks is in an uptrend. I think NYX trading marked a top in exchange stocks, how significant a top I don't know. I am also rather bearish on the overall market. When CME will tank it will come out of the blue adn I think it's coming soon. This stock never had a real decline. I can't see any reason for the drop I expect and I suppose you can make a case that they would be immune to a bear market , volume and revenues are only going to rise over time. That's why I only bought a lottery ticket.
 
Quote from hellomarket:

What do you mean? There won't be any news until 4/26 hence collapse in vol ? What's APR options neutral/event free? sorry
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As of last week, some people (e.g. briefing.com) thought CME was going to announce earnings soon - on March 21 - so the IV on options was higher than usual. Now it looks like earnings won't be announced until April 26, so the IV has dropped.
 
Quote from hellomarket:

I could be wrong and it looks increasingly like I am wrong, and the stocks is in an uptrend. I think NYX trading marked a top in exchange stocks, how significant a top I don't know. I am also rather bearish on the overall market. When CME will tank it will come out of the blue adn I think it's coming soon. This stock never had a real decline. I can't see any reason for the drop I expect and I suppose you can make a case that they would be immune to a bear market , volume and revenues are only going to rise over time. That's why I only bought a lottery ticket.
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IV might not drop a lot in actual number, but the drop brought the IV to its 4 %ile over past 580 days. 4 %ile is VERY low and actionless for a stock.
 
hellomarket. Use the time decay and relative low volatility in your favor. Sell out of the money credit spreads. Sell the put spread roughly 30 points otm, and ditto for the calls. better known as the iron condor.

I have a -400p/+390p spread initiated for $1.45 credit. then i sold the -470c/+480c for $0.95. My hope is that CME will trade btween 400 and 470 by apr expiry 4.21.06. with low IV, expected range is pretty tight, plus earnings(gap risk) is minimal.

Since my max risk is $7.60 I have contingent OTO(one trigger other) order with my broker to buy back the spread if short strikes are violated.

These types of plays give you 75%-80% probabilities and you'll win more than you lose, the key is to not let your losers go.
 
A spread with positive vega increases value when IV moves up. So CME seems a good candidate for calendar spread to take advantage of both low IV and time decay. A ratio can add more to the upside.
 
I bought one more put, for 25 cents so I have a cost basis of 1.35 now. It doesn't look too good but let's see what happens next week, hopefully it doesn't break out and I can get out even . One thing that could pressure the stock is if they announce an acquisition.

re:condor

I have done some credit spread with ETF's options. I don't like to sell premium on individual stocks, has there ever been a case of the long leg being busted by the exchange and then the trader was left short and got killed ?
 
Adding to a losing trade and the hoping and praying is not a good investment strategy.... Cutting losses and understanding the basics of the instrument you are trading is.


www.888options.com

Do not put any money into a new option position unless you understand the Greeks and what happens to OTM options with time decay and IV drops.

Also, the analysis on the stock itself seems off so review how you are selecting investment decisions.
 
Quote from hellomarket:



re:condor

I have done some credit spread with ETF's options. I don't like to sell premium on individual stocks, has there ever been a case of the long leg being busted by the exchange and then the trader was left short and got killed ?
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That sounds like some shit that would happen at the AMEX. Seriously tho, I have never heard of anything like that, I suppose it's possible?

I usually do condor's on indices and etf's as well, sometimes I just like to mix it up with stocks.

calendar looks juicy too!
 
Quote from optioncoach:

Adding to a losing trade and the hoping and praying is not a good investment strategy.... Cutting losses and understanding the basics of the instrument you are trading is.
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I know , I am experimenting with doubling down with options if the stock hasn't moved decisively the opposite way or the reasons for the trade are still there AND there is a few weeks left to expiration. I think it makes sense . As I said we will see what happens in the next 2 weeks. In this case an extra $20 could allow me to get out even. So it's worth it IMO.
Otherwise I try to cut losses at 50% but in this case it went so fast in 2 days or so it had gone past my cutoff point and the stock had not really moved against me
 
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