I personally have enjoyed success selling option that I thought were overpriced at expiration, not all options and underlying. I was simply saying that I see the validity in your approach. When there is a sharp move, you benefit quite nicely. That is exactly the reason I tend to stay away from selling those very cheap options near expiry.
Expiration week trades, let's hear 'em
- Thread starter tradermike79
- Start date
how is it that he could find a an option cheap relative to IV when he specifically said that he believes they are accurately priced relative to IV. He was making the case for a liquidity crunch which I have admitted to observe and in which I can see validity. Furthermore, I specifically stated my strategy near expiration and what I am looking for when I get into positions. did I say that I never buy options? when I do like to be long gamma in specific cases or have a directional inclination, I do prefer to use the next month out when near expiration.
Outside of that, why the fuck are you still posting in my thread? You are the type of douche that enjoys anonymous banter online. I, for one, find it to be a waste of time. you have tried to make your point, and have filled a thread with a clear objective in the title with your negativity and critique of a short strategy near expiration. In fact, I think only one guy posted a potential trade given the parameters in the thread title. I am inclined to believe that you are the type of person who talks big but has never traded his own money in his life. I hope that is the last i hear form you in this thread. unless, of course, you have a trade of your own to grade (long or short) but I doubt that.
I finally had to chime in after the last post Xflat. YOU ARE COMPLETELY WRONG. During the last 3 days leading into expiry, as the theta and vega begin to collaspe, there is ALOT OF VERY FATTED UP PREMIUM THAT YOU CAN SELL AND MAKE HUGE $$$$.
The normal pricing models simply miscalculate this accelleration. As far as the option mm giving fair prices on volatility and liquidity, I will have to disagree there as well. I believe that the option mm use liquidity and volaitility more than anything else to manipulate the prices.
So how do you win? You run scanners that give you the fattest premium on the quietest stocks and sell then into expiry. On high beta stocks you can make huge $$$$$ is you swing to both sides of the market, have to be fast though.
The easiest method of making big $$$$, however, is selling the fatted premium.
As far as the 5 and 10 centers? You can make 1000% sometimes if you catch the stock's explosive move early enough in the day of expiry. Tough to do, I have done it several times.
The normal pricing models simply miscalculate this accelleration. As far as the option mm giving fair prices on volatility and liquidity, I will have to disagree there as well. I believe that the option mm use liquidity and volaitility more than anything else to manipulate the prices.
So how do you win? You run scanners that give you the fattest premium on the quietest stocks and sell then into expiry. On high beta stocks you can make huge $$$$$ is you swing to both sides of the market, have to be fast though.
The easiest method of making big $$$$, however, is selling the fatted premium.
As far as the 5 and 10 centers? You can make 1000% sometimes if you catch the stock's explosive move early enough in the day of expiry. Tough to do, I have done it several times.
I am frustrated because I don't understand what you think you are contributing here. You are calling me childish? In my opinion, this thread achieves the highest utility when people constructively offer opinions and politely offer alternative views to ideas presented by other forum members. Your original post may have vaguely represented the latter, but your subsequent stubborn and rude defense of an efficient IV market has, unfortunately, placed you in the destructive category. Saying you will post as you see fit in any thread because we are in an open forum is to me a very childish statement. Yes i am frustrated because these forums are filled with worms like you and I have have no recourse when I see my e-mail INBOX has another message from said worm.
mike, listen, first of all, I have nothing whatsoever against you, so pls take my comments in the spirit they are given, i.e. neutral.
Firstly, xflat is right. When I say "cheap", I am not referring to the total amount of premium paid or received.
Secondly, I can also see why xflat is so frustrated. According to the posts you have made with a brief description of your strategies, here's the two possibilities I see:
A. You indiscriminately sell options close to expiry, because you believe they're mispriced.
B. You actually pick "expensive" options arnd expiry and sell them, because you believe these particular contracts are mispriced.
From your first few posts it looked like you were doing A, in which case you would have been an accident waiting to happen (which is what, I think, xflat was trying to get you to realize). However, when you got into a bit more detail, it started to look like you were actually doing B. While I don't like strategies like B (I mentioned why already) and you make an impression that you don't have a good understanding of your rich/cheap metric (perfectly willing to be proven wrong about this), B makes infinitely more sense than A. Basically, at heart you're a relative value (RV) trader, like a whole bunch of us, including myself and xflat, I'd guess.
My Z$2c...
Firstly, xflat is right. When I say "cheap", I am not referring to the total amount of premium paid or received.
Secondly, I can also see why xflat is so frustrated. According to the posts you have made with a brief description of your strategies, here's the two possibilities I see:
A. You indiscriminately sell options close to expiry, because you believe they're mispriced.
B. You actually pick "expensive" options arnd expiry and sell them, because you believe these particular contracts are mispriced.
From your first few posts it looked like you were doing A, in which case you would have been an accident waiting to happen (which is what, I think, xflat was trying to get you to realize). However, when you got into a bit more detail, it started to look like you were actually doing B. While I don't like strategies like B (I mentioned why already) and you make an impression that you don't have a good understanding of your rich/cheap metric (perfectly willing to be proven wrong about this), B makes infinitely more sense than A. Basically, at heart you're a relative value (RV) trader, like a whole bunch of us, including myself and xflat, I'd guess.
My Z$2c...
Quote from stock777:
take your bs elsewhere
You are basing this on what? I sold vix premium just like I do every month. I will generally ratio these but maintain positive theta decay; however, sometimes I will cover vix options with the vxx (depends on time of month since the vxx is a rolling average of the two front month futures). Do you think I am going to try and sell you something? I don't know why you think I would make something like that up; To inflate my anonymous online ego I suppose. I try to generate some ideas and post some of my trades and and I get called a liar for it. What is wrong with some of the people here? How about this, next time I will give you a time stamp when I make a short side trade in the Vix. what joke, where do you get off?
what don't you enlighten all of us as to what is actually "decent." While you are at it, why don't you post a trade idea for this week per the title of the thread.