I've being doing this "pure ass gambling" for a very long time. Thanks for sharing and if it doesn't suit you, just ignore me.
ES Journal Archive (2006 - 2008)
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I've being doing this "pure ass gambling" for a very long time. Thanks for sharing and if it doesn't suit you, just ignore me.
20.748 points to be near exact.
I think a much better way to profit from options
is to sell short out of the money ES options
about a month out from expiration (usually
selling during previous month expiration week
is good). This is the often maligned sell time
premium strategy.
I do not think the criticism applies to selling
ES FOPs because ES trades 24 hours a day
so long futures can be used to quench gamma
problems from rapid market moves.
I was totally wrong about everything in
today's trade, but still make 5.25 pts
per option.
On April 21 sold ES 1420 calls for 11.00 when
SP was at about 1387 thinking there was huge
resistance at 1400-1410. I was totally wrong
but still had a chance to make full profit
up to about 2:00PM. I was so sure the large
banking component would limit the S&P upside,
I sold too close to the market calls.
If the market had gotten strong I would have
just bought futures (gamma scalping) to convert
the trade into a covered call position for even
more profit.
I decided at today's close that I am even more
bearish so I want to convert the calls into
short futures at what I see is a very good
entry. My normal problem is entering trades
with correct fundatmental analysis but too early.
Trying to scalp options on expiration day is
just plain stupid i(dice throwing) n my view.
is to sell short out of the money ES options
about a month out from expiration (usually
selling during previous month expiration week
is good). This is the often maligned sell time
premium strategy.
I do not think the criticism applies to selling
ES FOPs because ES trades 24 hours a day
so long futures can be used to quench gamma
problems from rapid market moves.
I was totally wrong about everything in
today's trade, but still make 5.25 pts
per option.
On April 21 sold ES 1420 calls for 11.00 when
SP was at about 1387 thinking there was huge
resistance at 1400-1410. I was totally wrong
but still had a chance to make full profit
up to about 2:00PM. I was so sure the large
banking component would limit the S&P upside,
I sold too close to the market calls.
If the market had gotten strong I would have
just bought futures (gamma scalping) to convert
the trade into a covered call position for even
more profit.
I decided at today's close that I am even more
bearish so I want to convert the calls into
short futures at what I see is a very good
entry. My normal problem is entering trades
with correct fundatmental analysis but too early.
Trying to scalp options on expiration day is
just plain stupid i(dice throwing) n my view.
You can see it and slice it anyway you want, but I would have to respectfully disagree. Let me explain, first of all, as soon as you step into the arena of trading, you're "throwing the dice", the outcome is never guarranteed. My trading today was well within my risk parameters, business plan and money management. Second of all, if you took the time to look at the options that I was trading, they had a 95% + intrinsic value which means that if the market stopped moving around the 1420's I would be out with a small loss from time decay, at 1414.75, I would be down by ($800) and anything below that I would be down to -($1600). Now if the market continued lower, my deltas would rapidly change from a loss to a profit . If you model the position, you'll see what I'm talking about. So the response by the previous poster stating that I would have lost 4k is mathematically impossible unless I dumped the entire put side. Since I was constantly adjusting my delta through out the day, I ended up on top. It's really that simple. Last but not least, you can't pay me enough to be a short gamma trader. I'd rather bleed slowly from time decay, than to get hit by an adverse monster move. So I will leave the short gamma gig to you. Now if I was trading at the money options in size on the last day of expiry as someone was suggesting, then by all means, that would be vegas gambling, and my business plan forbids me from engaging in foolish activity such as that.
Great explanation.
Well thought out, intelligent and designed from the viewpoint of managing risk.
Thanks for your reply, even though they seemed to be jumping on you.
GT
Well thought out, intelligent and designed from the viewpoint of managing risk.
Thanks for your reply, even though they seemed to be jumping on you.
GT
That explains the previous 87% and current 50% drawdown on collective2.
So long as it holds above 1422 or so I'd be a buyer.
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1926083>
Quote from JSSPMK:
Hello all!
ImPO, just looking at average price oscillation parameters I see downside potential which at the moment is more visually evident than upside, no doubt price may & probably will go higher, but there are 2 significant obstacles looking at ES (sorry), 200 average & price normally oscillates from lower to higher to lower, etc. Right now we have an upward oscillation nearing 200 average. I always look for classic usage of support & resistance i.e. sell R & buy S. Monthly charts, both DAX & SPX, remain bearish ImPO, we have an upward oscillation very close to 200 average. What do we do? Well......................I will have a cup of tea right now.
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