This post is highly misleading, suggesting you don't trade options very often. There is no free lunch.
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My option trades
- Thread starter ryanpatrick
- Start date
This post is highly misleading, suggesting you don't trade options very often. There is no free lunch.
For better or worse, til death do us part. Or the account balance.
Bought 3 QQQ this morning at 64 June QQQ CALLS $4.35
CASH TRADE
______________________________
I also played with a paper trade strangle in Apple. OTM calls and puts. That didn´t work out at all.
While the AAPLE calls gained $4, the strangle PUTS shranks $8 or twice as much.
Lesson there, is strangles don´t seem to be any good? Trade only direct in the direction.
_______________________________
Bought 3 QQQ this morning at 64 June QQQ CALLS $4.35
CASH TRADE
______________________________
I also played with a paper trade strangle in Apple. OTM calls and puts. That didn´t work out at all.
While the AAPLE calls gained $4, the strangle PUTS shranks $8 or twice as much.
Lesson there, is strangles don´t seem to be any good? Trade only direct in the direction.
_______________________________
Jeff
YOu have mentioned CREE before I believe. Out of curiousity I just took a look at it.
What was your trade yesterday in buying CALLS?
Also what time frame are you dealing with and the month.
See if I can get a picture in my mind, of what you did?
YOu have mentioned CREE before I believe. Out of curiousity I just took a look at it.
What was your trade yesterday in buying CALLS?
Also what time frame are you dealing with and the month.
See if I can get a picture in my mind, of what you did?
Quote from Nine_Ender:
This post is highly misleading, suggesting you don't trade options very often. There is no free lunch.
Misleading? To let short $40 calls expire when stock is around $35? I don't understand what you could possibly mean? Please help me out here, what am I missing? Never said anything about a free lunch, was using my 15 years on the options floor and 30 year overall trading experience to try to help new people. We still trade a few thousand options each month, thank you.
Don
Quote from falconview:
For better or worse, til death do us part. Or the account balance.
Bought 3 QQQ this morning at 64 June QQQ CALLS $4.35
CASH TRADE
______________________________
I also played with a paper trade strangle in Apple. OTM calls and puts. That didn´t work out at all.
While the AAPLE calls gained $4, the strangle PUTS shranks $8 or twice as much.
Lesson there, is strangles don´t seem to be any good? Trade only direct in the direction.
_______________________________
(Broken record time) again, that's why we sell puts etc.
Don
Thats an interesting comment Don.
If instead of a strangle in Apple, one bet the direction in straight calls and did a credit spread in PUTS I presume that would work? That would be selling. I was two months out.
So what causes the PUTS to contract so much, as APPL goes UP and gains a bit on CALLS?
Im wondering at the mechanical effects of this?
If instead of a strangle in Apple, one bet the direction in straight calls and did a credit spread in PUTS I presume that would work? That would be selling. I was two months out.
So what causes the PUTS to contract so much, as APPL goes UP and gains a bit on CALLS?
Im wondering at the mechanical effects of this?
Quote from falconview:
Thats an interesting comment Don.
If instead of a strangle in Apple, one bet the direction in straight calls and did a credit spread in PUTS I presume that would work? That would be selling. I was two months out.
So what causes the PUTS to contract so much, as APPL goes UP and gains a bit on CALLS?
Im wondering at the mechanical effects of this?
Much less chance of aapl going down to that price. AND ALWAYS look at the 3 way conversion. THEY MUST TRADE AT FAIR VALUE, sorry for the cap's, but you have to understand conversions if you're going to be involved in options.
All the best,
Don
Quote from Don Bright:
The $40 calls are still worthless pretty much at $35, right? Don't do anything (depends of course on which expiration, I generally am referring to near term.
Don
thanks Don,
How do we/you handle a May 6th 2010 type situation?
Just cut losses as soon as we can - as best we can?
[covering Puts]
I'm much less concerned about the upside calls.
marc
Quote from Don Bright:
Much less chance of aapl going down to that price. AND ALWAYS look at the 3 way conversion. THEY MUST TRADE AT FAIR VALUE, sorry for the cap's, but you have to understand conversions if you're going to be involved in options.
All the best,
Don
I met a group of traders that had spent thousands of hours analyzing the conversions expecting to earn some multiple of LIBOR. IIRC they was assuming that the things would net them 20-30% return on haircut. People were building elaborate excel sheets and talking about trading them in HFT and colo to the CBOE. This amp goes to 11. They had no idea that the structure was known.
If ONE of them had read an intro book on options they could've saved 1000s of man-hours.
The most active arb since the mid-70s and how the futures markets have settled the options for decades. As Don alludes; all option trades should be able to solve for pricing algebraically before trading actual funds.