My option trades

Quote from falconview:

Jeff

So far the day´s action has stayed within my trendline channels. Don´see it dropping yet? It just went from above, to below. ( three trendlines, a la pitchfork.) It would have to break the lower trendline to mean anything.

I´ve been watching my Greeks. Trying to learn them. The Gamma hasn´t moved yet, either side of the straddle. I don´t know what I´m supposed to see, but the numbers should change, either up or down, I think? Not doing anything despite the small move this morning. If anything, I would expect the market to go up by weekend.

I was looking for practice how to adjust the Delta on this straddle and will have to re-read some of this stuff. But preliminary guess was an OTM Call at .10 delta to buy. Going to wait for the end of the afternoon though.
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I'm not Jeff, but.... remember you're paying a lot in commissions when you do this real time. Don't start adjusting until you're way out whack, you'll find more often than not, stock goes up (adjust)stock comes back down, damn gotta adjust again...well if you leave it be you'll usually be ok.....WITHIN REASON of course, based on the symbol's volatility.

Don
 
Don

I´m just sitting here wondering about that.

As I understand it, I have to adjust, or balance the deltas

The puts are showing delta -.55
The calls in the straddle are showing .45


So my figuring is, if I decide to do it, mindful of the commission costs. I would buy the 70 PUT with a .10 delta. That would even them up to .55 on each side. I´m wondering if I have that figured right? Care to comment?
 
I'm in another mechanical trade today for calls:
Bought March 36 calls at 1.50
Sell Limit: 1.95
Stop: 1.08

The program is beginning to tax my nerves!
 
Whoops! I wrote PUT in there in error. I really meant Calls.

An OTM 70 May Call with .10 Delta. I´m only dealing in one contract right now. So if my Call in the straddle is Delta .45 and the Put is -.55
Then the OTM 70 May Call with a delta of .10, at .18 cents would be the thing? IF I have it figure correctly?

I´m basically doing this straddle this week, to learn how to do the adjusting thingy. Balancing Delta, hands on learning.
 
Quote from falconview:

Don

I´m just sitting here wondering about that.

As I understand it, I have to adjust, or balance the deltas

The puts are showing delta -.55
The calls in the straddle are showing .45


So my figuring is, if I decide to do it, mindful of the commission costs. I would buy the 70 PUT with a .10 delta. That would even them up to .55 on each side. I´m wondering if I have that figured right? Care to comment?
More...

Sell otm put to adjust longer, sell otm call to adjust shorter.

Stop buying this stuff. Options are meant to be sold. If you insist on buying them, just buy and forget until you hit the next strike price. Use your graphs out to expiration to see the possible "damage."

Don
 
Quote from jeffalvinson:

I'm in another mechanical trade today for calls:
Bought March 36 calls at 1.50
Sell Limit: 1.95
Stop: 1.08

The program is beginning to tax my nerves!
More...

What symbol? And, why? Are guessing a big upward move? Losing more than 15 cents per day in time decay. 9 days to zero premium, right?


Don :confused:
 
Quote from falconview:

Whoops! I wrote PUT in there in error. I really meant Calls.

An OTM 70 May Call with .10 Delta. I´m only dealing in one contract right now. So if my Call in the straddle is Delta .45 and the Put is -.55
Then the OTM 70 May Call with a delta of .10, at .18 cents would be the thing? IF I have it figure correctly?

I´m basically doing this straddle this week, to learn how to do the adjusting thingy. Balancing Delta, hands on learning.
More...

Don't adjust unless goes to another strike price. And stop buying stuff, again, LOL...


Don
 
Stop buying, whoops! SELL? Now I am confused. I did put the order in but it never got filled, which is okay.

Why would I sell? This is a long straddle. I bought both Call and PUT, May options. It is showing about 21 cents profit right now. But to get the deltas balanced, I thought I have to buy another one. I only have one contract each side of the straddle. Selling doesn´t make any sense? That wouldn´t balance the deltas.

Hmmmmn! Thinking about it, I could have sold a put to bring the -55 delta down to .50. Probably, but it didn´t seem like enough to bother with. I also thought the PUT premiums would be swollen due to volatility of the direction. So, I chose to buy the CALL instead. Bring both deltas even at .55.

I take the point you are making about waiting for the strike change. Was not clear on that. The adjustment was only one contract at .18 cents. As you said, the commissions take a big chunk of that. I debated with myself about it, but need to do some hands on learning, as I learn better by doing. Then seeing what happens. Just rather be sure I´m doing the right thing.

Have no idea why you wanted me to SELL.
 
Quote from Don Bright:

What symbol? And, why? Are guessing a big upward move? Losing more than 15 cents per day in time decay. 9 days to zero premium, right?


Don :confused:
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Hi Don,

SPY Mar 2012 136.000 calls (SPY120317C00136000)
(This is my last week trading front month options, on Option
Expiration Week I switch to 2nd month options.)
I don't guess when I trade. I use mathematical trade system formula's that have been integrated into a main system program.
Different daily program outputs are used depending upon which condition A, B, or C the SPX is in:
A: An up trending low VIX condition (like now).
B: A down trending high VIX condition.
C: A trade range medium VIX condition.
The program output comes up with a direction by analyzing the last 9 days (long term trend) of data and the last 3 days of data (short term trend).
It then selects the call, or the put, or none (if no decision), and usually discounts an option entry price by .00 to -40% below its closing price.
It looks for a profit of +25% to +44% depending on the age of the trend and the VIX, and it uses a stop of -20% to -40% depending
on the VIX and the profit level its trying to achieve.
Worst case scenario for Reward to Risk: +1.0 / -1.0
Best case scenario for Reward to Risk: +2.2 / -1.0
Trade Hold Time: 1 to 4 days.
Average Win/Loss the last 4 years: 70%


Jeff
 
Okay Don! Sat on the thinking throne in the bathroom since market is closed. Picked up on the selling bit with my thinking cap on.

Couldn´t do it, because I only had one contract on each side for my trial effort. But in my thinking throne room, I figured it out.
You sell to adjust as the premium balloon, or volatility has hit that side and you are profiting from volatility. Okaaaay! Got it thankyou.

Soon as the market hits an quilibrium here, will put on a STRADDLE with five options each side. Then I would have some way to adjust to take profit out of the straddle.

Let me see, these straddles are roughly $225 each side and that is $450 for one contract straddle. So 5 contracts each side would be 10 x $225, which would be $2250. Can handle that and it will give me something to sell down in adjustment. Okay got that!

Since I only want the long straddle for one week, one strike move should be possible, which should return .40 to .50 cents, which is my goal. Once I get through learning the mechanics and nuances, will increase bet size. Sounds good!
 
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