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How long $3000 will last option trading
- Thread starter skanan
- Start date
Just want to ask how much profit would you expect for each trade? If there are some quick profits would you take them before the options expire?
I was watching my spy positions
At TOS
+1 Jan 123 Put
+1 Jan 124 Put
-2 Jan 125 Put
-1 Jan 129 Call
+1 Jan 130 Call
At IB
-1 jan 122 Put, +1 Feb 124 Put
-1 Jan 123 Put, +1 Jan 121 Put
-1 Jan 126 Put, +1 Mar 126 Put
-1 Jan 124 Put, +1 Feb 124 Put
-1 Jan 124 Put, +1 Feb 123 Put
Yesterday, TOS software calculated my Delta about 96, and I planned to put on some JAN credit spread to reduce it. I was busy with my job until lunch time. After FOMC minutes, the market went up and my Delta become 0.33.
I added some goog and appl put credit spread to gain some delta back just incase spy goes up too much that I might loose money on my long put in Feb and Mar.
Summary
Delta 0.33, Gamma -31.78, Theta 4.75, Vega 19.39
I'll start putting on some more SPY Feb positions tomorrow.
At TOS
+1 Jan 123 Put
+1 Jan 124 Put
-2 Jan 125 Put
-1 Jan 129 Call
+1 Jan 130 Call
At IB
-1 jan 122 Put, +1 Feb 124 Put
-1 Jan 123 Put, +1 Jan 121 Put
-1 Jan 126 Put, +1 Mar 126 Put
-1 Jan 124 Put, +1 Feb 124 Put
-1 Jan 124 Put, +1 Feb 123 Put
Yesterday, TOS software calculated my Delta about 96, and I planned to put on some JAN credit spread to reduce it. I was busy with my job until lunch time. After FOMC minutes, the market went up and my Delta become 0.33.
I added some goog and appl put credit spread to gain some delta back just incase spy goes up too much that I might loose money on my long put in Feb and Mar.
Summary
Delta 0.33, Gamma -31.78, Theta 4.75, Vega 19.39
I'll start putting on some more SPY Feb positions tomorrow.
My total SPY delta became -13 and my spy view is bullish so I sold 124/125 Feb call for $0.20
That brought my delta down to -7.
At TOS
+1 Jan 123 Put
+1 Jan 124 Put
-2 Jan 125 Put
-1 Jan 129 Call
+1 Jan 130 Call
-1 Feb 124, +Feb 125 call.
At IB
-1 jan 122 Put, +1 Feb 124 Put
-1 Jan 123 Put, +1 Jan 121 Put
-1 Jan 126 Put, +1 Mar 126 Put
-1 Jan 124 Put, +1 Feb 124 Put
-1 Jan 124 Put, +1 Feb 123 Put
The embedded vertical Jan 122/124 put in this diag:
-1 jan 122 Put, +1 Feb 124 Put
has about $.10 left which is not much so I'll look for opportunity to convert this into Feb vertical spread from tomorrow.
That brought my delta down to -7.
At TOS
+1 Jan 123 Put
+1 Jan 124 Put
-2 Jan 125 Put
-1 Jan 129 Call
+1 Jan 130 Call
-1 Feb 124, +Feb 125 call.
At IB
-1 jan 122 Put, +1 Feb 124 Put
-1 Jan 123 Put, +1 Jan 121 Put
-1 Jan 126 Put, +1 Mar 126 Put
-1 Jan 124 Put, +1 Feb 124 Put
-1 Jan 124 Put, +1 Feb 123 Put
The embedded vertical Jan 122/124 put in this diag:
-1 jan 122 Put, +1 Feb 124 Put
has about $.10 left which is not much so I'll look for opportunity to convert this into Feb vertical spread from tomorrow.
SOLD -1 VERTICAL GOOG 100 FEB 06 410/400 PUT @1.80 ISE, GOOG MARK 465.08
Reason: bullish on goog
SOLD -1 VERTICAL TSO 100 FEB 06 70/75 CALL @1.40 ISE, TSO MARK 66.97
TSO ran up quite a bit in last couple days.
Last time TSO resistance was around $70 when there was hurricane crisis. I took this bet with resistance to help me. My view on oil sector last week was wrong. Just as I thought I would reduce selling spread in this sector, the oil price went up again so I will continue to do that on other oil stocks (probably vlo). This also serves the purpose of hedging for other put spread I'll sell in the future as well.
Reason: bullish on goog
SOLD -1 VERTICAL TSO 100 FEB 06 70/75 CALL @1.40 ISE, TSO MARK 66.97
TSO ran up quite a bit in last couple days.
Last time TSO resistance was around $70 when there was hurricane crisis. I took this bet with resistance to help me. My view on oil sector last week was wrong. Just as I thought I would reduce selling spread in this sector, the oil price went up again so I will continue to do that on other oil stocks (probably vlo). This also serves the purpose of hedging for other put spread I'll sell in the future as well.
Here is the rules I use.
I close a trade when
1. In credit selling, when I get 80% of the credit.
2. If the underlying move quite far away and I don't see any danger, I'll let it expire. However, if I need to free my margin, I'd look at #1.
3. I'd take quick profit if the underlying reach the resistance/support depends on the directional I take.
4. If I have high gamma risk (last week of expiration date) and the underlying seems to move against me. I'll close the trade even with little profit or none.
5. If it helps increase expectancy of the final trade I planned.
I close a trade when
1. In credit selling, when I get 80% of the credit.
2. If the underlying move quite far away and I don't see any danger, I'll let it expire. However, if I need to free my margin, I'd look at #1.
3. I'd take quick profit if the underlying reach the resistance/support depends on the directional I take.
4. If I have high gamma risk (last week of expiration date) and the underlying seems to move against me. I'll close the trade even with little profit or none.
5. If it helps increase expectancy of the final trade I planned.
Quote from hermit_trader:
Just want to ask how much profit would you expect for each trade? If there are some quick profits would you take them before the options expire?
Skanan,
Hello there. Did you consider rolling up your existing GOOG vertical to lock in the profits and build expectancy rather than opening a separate vertical?
What is the worst risk/reward ratio you will accept for credit spreads?
Your last PUT spread was chosen based on perceived support at 400, what is your reasoning for choosing this one?
Do you look at probabilities for determining entry strikes?
Are you still playing with $3000? Or have you increased your bank roll? How much powder are you keeping dry to buy back spreads that move against you? How are you determining your position sizing? Keep it up!
MoMoney.
Hello there. Did you consider rolling up your existing GOOG vertical to lock in the profits and build expectancy rather than opening a separate vertical?
What is the worst risk/reward ratio you will accept for credit spreads?
Your last PUT spread was chosen based on perceived support at 400, what is your reasoning for choosing this one?
Do you look at probabilities for determining entry strikes?
Are you still playing with $3000? Or have you increased your bank roll? How much powder are you keeping dry to buy back spreads that move against you? How are you determining your position sizing? Keep it up!
MoMoney.
Quote from skanan:
SOLD -1 VERTICAL GOOG 100 FEB 06 410/400 PUT @1.80 ISE, GOOG MARK 465.08
Reason: bullish on goog
SOLD -1 VERTICAL TSO 100 FEB 06 70/75 CALL @1.40 ISE, TSO MARK 66.97
TSO ran up quite a bit in last couple days.
Last time TSO resistance was around $70 when there was hurricane crisis. I took this bet with resistance to help me. My view on oil sector last week was wrong. Just as I thought I would reduce selling spread in this sector, the oil price went up again so I will continue to do that on other oil stocks (probably vlo). This also serves the purpose of hedging for other put spread I'll sell in the future as well.
True, if you had been long the stock probably would have been more profitable...but hindsight is 20/20 and long stock has unlimited downside risk (to zero anyway) whereas these spreads do not so that's a small consolation.
RE: Stop Loss
What I meant was, if the underlying moves against you, is there point where you will get out or are you willing to let all spreads expire where they expire...ITM or OTM i.e. be willing to take the max loss.
If you do have a point where you decide to take the spread off, do you use the underlying price as a trigger, if so what price are you looking at? Or do you use the price of the spread as a trigger and if so, what price do you use e.g. when the price doubles that of the initial credit etc. How do you take time to expiration into account? etc.
MoMoney.
RE: Stop Loss
What I meant was, if the underlying moves against you, is there point where you will get out or are you willing to let all spreads expire where they expire...ITM or OTM i.e. be willing to take the max loss.
If you do have a point where you decide to take the spread off, do you use the underlying price as a trigger, if so what price are you looking at? Or do you use the price of the spread as a trigger and if so, what price do you use e.g. when the price doubles that of the initial credit etc. How do you take time to expiration into account? etc.
MoMoney.
Quote from skanan:
Mo,
I don't have stop loss. This trade is set to run till it end or I might take it out in last week. This is probably my 10th goog trade since the stock was $180. Had I simply bought stock, I could have earned more than doing all credit spreads.
Thanks!
Mo,
Thanks for your questions. It always give me something to think as if you are helping me learn by question me.
Here is summary of my goog
sold Jan 390/400 put spread $1.35
sold Feb 390/400 put spread $2.5
sold Feb 400/410 put spread $1.8
My risk/reward ratio is quite flexible. I use either probability alone or support/resistance together with high probability.
1. probability
If I take a bet on neutral to mildly bullish, I'll try to get at least 20-50% of the credit (50-80% chance of winning). That translated to 4/1 to 1/1 risk/reward ratio. Some of my spy or vlo trades are like that. The goog Feb 390/400 put was open based on probabilty.
I choose my strike based on whatever give me 50-80% chance of winning depends on how aggessive I am.
Suppose goog Feb put spread has this price
410/420 $2 (chance of winning 80%)
420/430 $2.55 (74.45%)
430/440 $3.2 (68%)
440/450 $3.85 (61.5%)
450/460 $4.25 (57.5%)
460/470 $5.2 (48%)
between 420-460 are good strike for me depends on how aggresive I am. If I like 70% chance, I'd sell 430/440 put spread here.
2. support/resistance and/or high probability
In case I'm using support/resistance together and/or high probability (such as SPX or goog), I don't mind to take upto 20/1 risk/reward ratio. The goog Jan 390/400 put was open with this reason.
I chose 400 as my support based on the chart that goog bounced of 400 twice.
The Feb 400/410 was open with bullish opinion + high probability chance of winning + locking in profit from Feb 390/400 inorder to build up expectancy.
Actually, I placed BTC 390/400 Feb after selling 400/410 but the order was not executed. The profit on 390/400 won't be counted until 400/410 is closed.
I'm still playing with $3000 but my trade title was not good. I shoud change the trade title to "I will stop option trading when I loose $3000".
So far I use cash margin about $7K so if bad things really happend, I could loose that much money. I still have about $43K in cash or other form though. That could be used incase I need to buy/sell stock to hedge my delta.
My position sizing algorithm is not there yet. I found that I used too little amount of margin and not put in enough contracts. I'd like to use about 50-60% of my margin and have about 2-5% on each trade. This is the reason that I trade this often.
Thanks for your questions. It always give me something to think as if you are helping me learn by question me.
Here is summary of my goog
sold Jan 390/400 put spread $1.35
sold Feb 390/400 put spread $2.5
sold Feb 400/410 put spread $1.8
My risk/reward ratio is quite flexible. I use either probability alone or support/resistance together with high probability.
1. probability
If I take a bet on neutral to mildly bullish, I'll try to get at least 20-50% of the credit (50-80% chance of winning). That translated to 4/1 to 1/1 risk/reward ratio. Some of my spy or vlo trades are like that. The goog Feb 390/400 put was open based on probabilty.
I choose my strike based on whatever give me 50-80% chance of winning depends on how aggessive I am.
Suppose goog Feb put spread has this price
410/420 $2 (chance of winning 80%)
420/430 $2.55 (74.45%)
430/440 $3.2 (68%)
440/450 $3.85 (61.5%)
450/460 $4.25 (57.5%)
460/470 $5.2 (48%)
between 420-460 are good strike for me depends on how aggresive I am. If I like 70% chance, I'd sell 430/440 put spread here.
2. support/resistance and/or high probability
In case I'm using support/resistance together and/or high probability (such as SPX or goog), I don't mind to take upto 20/1 risk/reward ratio. The goog Jan 390/400 put was open with this reason.
I chose 400 as my support based on the chart that goog bounced of 400 twice.
The Feb 400/410 was open with bullish opinion + high probability chance of winning + locking in profit from Feb 390/400 inorder to build up expectancy.
Actually, I placed BTC 390/400 Feb after selling 400/410 but the order was not executed. The profit on 390/400 won't be counted until 400/410 is closed.
I'm still playing with $3000 but my trade title was not good. I shoud change the trade title to "I will stop option trading when I loose $3000".
So far I use cash margin about $7K so if bad things really happend, I could loose that much money. I still have about $43K in cash or other form though. That could be used incase I need to buy/sell stock to hedge my delta.
My position sizing algorithm is not there yet. I found that I used too little amount of margin and not put in enough contracts. I'd like to use about 50-60% of my margin and have about 2-5% on each trade. This is the reason that I trade this often.
Quote from momoneythansens:
Skanan,
Hello there. Did you consider rolling up your existing GOOG vertical to lock in the profits and build expectancy rather than opening a separate vertical?
What is the worst risk/reward ratio you will accept for credit spreads?
Your last PUT spread was chosen based on perceived support at 400, what is your reasoning for choosing this one?
Do you look at probabilities for determining entry strikes?
Are you still playing with $3000? Or have you increased your bank roll? How much powder are you keeping dry to buy back spreads that move against you? How are you determining your position sizing? Keep it up!
MoMoney.
If I choose probability trading, I'd take max loss. If I close the trade earlier, I'm afraid I might mess up my probability.
If I trade spread base on technical signal, I close it base on technical signal and/or when my theta become negative.
If I trade spread base on technical signal, I close it base on technical signal and/or when my theta become negative.
Quote from momoneythansens:
True, if you had been long the stock probably would have been more profitable...but hindsight is 20/20 and long stock has unlimited downside risk (to zero anyway) whereas these spreads do not so that's a small consolation.
RE: Stop Loss
What I meant was, if the underlying moves against you, is there point where you will get out or are you willing to let all spreads expire where they expire...ITM or OTM i.e. be willing to take the max loss.
If you do have a point where you decide to take the spread off, do you use the underlying price as a trigger, if so what price are you looking at? Or do you use the price of the spread as a trigger and if so, what price do you use e.g. when the price doubles that of the initial credit etc. How do you take time to expiration into account? etc.
MoMoney.