ES Journal Archive (2009 - 2010)

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What I believe the pros are doing is either buying the DNDN vertical put spread for example long the Nov 30 puts and selling the Nov 25 puts, or they are selling the Nov 30 puts and buying the Nov 25 puts for protection.

For example, those buying the vertical puts, would make around $ 4/contract if DNDN closes around $ 25/sh.

For those selling the vertical puts, they are risking a $ 4/contract loss to make $ 1/contract. They may also be selling the call spread say the $ 50 call and buying the $ 55 call for Nov, since if DNDN stays around current price, they will make money on both sides, and 100% one of the sides will be profitable.
 
What I am doing is being Warren Buffet and selling the super protection insurance to the vertical put sellers since I believe the option is so far out of the money, that even if the stock goes down, it will not go down that far.

For example Buffet will sell hurricane insurance to the insurance sellers so that if the damages exceed a certain amount above a normal storm, he will have to pay out.

My theory being the lower price of the call or put option plus the lower volume compared to other options means that option strike price is less likely to be hit.

Quote from oraclewizard77:

What I believe the pros are doing is either buying the DNDN vertical put spread for example long the Nov 30 puts and selling the Nov 25 puts, or they are selling the Nov 30 puts and buying the Nov 25 puts for protection.

For example, those buying the vertical puts, would make around $ 4/contract if DNDN closes around $ 25/sh.

For those selling the vertical puts, they are risking a $ 4/contract loss to make $ 1/contract. They may also be selling the call spread say the $ 50 call and buying the $ 55 call for Nov, since if DNDN stays around current price, they will make money on both sides, and 100% one of the sides will be profitable.
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Quote from oraclewizard77:

So lets assume you are long or short POT or CL, and an adverse event occurs, you would lose MORE money than me on THIS trade, because you are USING EXCESSIVE LEVERAGE to make HUGH AMOUNTS of money on SMALL movements of the price. This is trade is by far a much safer trade which is why I posted it.
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Actually, I trade small size looking for larger moves. Not scalping (to my detriment lately, leaving good profits to b/e constantly). Anyhow my risk is tiny at this point.
 
I agree that you are doing good trading. However, you don't understand my definition of adverse risk. What I am saying is supposed you are short CL, and Israel nukes Iran while you are still in the trade. Your stop will not function and price will gap up.

Quote from NoDoji:

Actually, I trade small size looking for larger moves. Not scalping (to my detriment lately, leaving good profits to b/e constantly). Anyhow my risk is tiny at this point.
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Quote from oraclewizard77:

I agree that you are doing good trading. However, you don't understand my definition of adverse risk. What I am saying is supposed you are short CL, and Israel nukes Iran while you are still in the trade. Your stop will not function and price will gap up.
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You are absolutely correct and that's why I trade smaller now than I was during the pre- and post-"crash" volatility.

However, biotech news happens far more often than one country nuking another. At least for now...
 
Quote from futureT88:

bastardos.
stoppedout
done for day..
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I hear you.. them 5 point lunges got me frazzled... good to see another NQ trader posting.. Was by my lonesome for a while... Will join you next week.. 5 red daily candles in NQ.. go figure.. Monday "should" be a guaranteed up day..
 
Quote from wave:

I think we need to take the ES Journal to the next level. It needs to go beyond ES and be voice-based. A group with a good mix of technical and macro contributors with some sort of gatekeeper requirements.
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I don't want to rain on anyone's parade/idea but here is why this can be a bad idea:

1. Sooner or later the chit-chat will outnumber the trading related talk.
2. It is much harder to follow who said what, who is in what position and why.
3. There is no recordkeeping.

Instead of a voice based room, a blog with limited posting access (or Twitter) is probably better with 6-10 people posting, but everyone can read it.

Advantages:

1. Record keeping and timestamps.

2. It is accessable for everyone, but only a few can contribute.

3. Talk is mostly/strictly trade related...

But again, just an idea... On days when I am away, I like to read through quickly the day's posts. In a voice room it is obviously impossible....
 
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