In fact, the best example is GOOG. Looking at GOOG shares today closing near $610, who'd ever thought GOOG missed EPS by $1? That right there tells you this market's rally is intact.
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My option trades
- Thread starter ryanpatrick
- Start date
I´m not following this. What kind of spread are you putting on?
Thankyou Forex Forex. I´ve never had any luck with debit spreads. I think I do not have the feel for them or something? Credit spreads I understand. I was contemplating a credit spread on the OEX for late tomorrow, expiring Friday, but do not think I will get the premiums needed to make it worth the risk. It is looking like straight plays are the best, buying and selling.
I´ve been contemplating cutting back my size of trade move, to just double the commission, for faster action in this low volatility environment. It is hard to get a swing past the commission cost in one or two days, to make any money.
I´ve been contemplating cutting back my size of trade move, to just double the commission, for faster action in this low volatility environment. It is hard to get a swing past the commission cost in one or two days, to make any money.
Quote from falconview:
I´m not following this. What kind of spread are you putting on?
exactly what forex said, these are usually just debit spreads. I have started doing this when I see that the risk ratio is quite beneficial to me. Ex, the 34 calls were trading near $2 with AKAM at $34. Instead of a full $2 risk, I checked my notes and it showed AKAM had about a 14% run up or down from its previous close. I used 38 calls as the short which would make the run up at 11.7%, just enough room to catch the max gain. Instead of risking $2, and getting a potential return of only $4-$4.50, I'm now risking $1.45-$1.50 for a max return of $4. I went from a 1:1 risk ratio to 1.7:1 risk ratio. Just added another 0.70 gain for every dollar risk from just trading the long 34 calls.
Hope that gives you a better idea as to why I jump into the debit spreads from time to time. Options have to be priced fairly expensive to do this too.
Thankyou Ryan for that insight.
I get the general idea, but since I don´t trade stocks but indexes it probably would not apply. However your way of figuring the risk reward was interesting. I´m still not too clear on it, with the $2 bit, but I can certainly see there would be something in there, if I desired to learn more and persue it. Everytime I tried debit spreads I lost money in the past. It could be I don´t know how to figure it, for risk and reward, vs premium cost?
I get the general idea, but since I don´t trade stocks but indexes it probably would not apply. However your way of figuring the risk reward was interesting. I´m still not too clear on it, with the $2 bit, but I can certainly see there would be something in there, if I desired to learn more and persue it. Everytime I tried debit spreads I lost money in the past. It could be I don´t know how to figure it, for risk and reward, vs premium cost?
Quote from ryanpatrick:
exactly what forex said, these are usually just debit spreads. I have started doing this when I see that the risk ratio is quite beneficial to me. Ex, the 34 calls were trading near $2 with AKAM at $34. Instead of a full $2 risk, I checked my notes and it showed AKAM had about a 14% run up or down from its previous close. I used 38 calls as the short which would make the run up at 11.7%, just enough room to catch the max gain. Instead of risking $2, and getting a potential return of only $4-$4.50, I'm now risking $1.45-$1.50 for a max return of $4. I went from a 1:1 risk ratio to 1.7:1 risk ratio. Just added another 0.70 gain for every dollar risk from just trading the long 34 calls.
Hope that gives you a better idea as to why I jump into the debit spreads from time to time. Options have to be priced fairly expensive to do this too.
Huh? You're long the call vertical and you're looking for high implied vol? Uh, no.
Quote from atticus:
Huh? You're long the call vertical and you're looking for high implied vol? Uh, no.
Put it simple this way, IV high = better risk ratio in debit spread. IV low = straight call/put. Can't get any simpler than that right atticus?
Now, if the market can just open up so I can lock in the gains on AKAM, then I'm fine.
Quote from ryanpatrick:
Put it simple this way, IV high = better risk ratio in debit spread. IV low = straight call/put. Can't get any simpler than that right atticus?
Now, if the market can just open up so I can lock in the gains on AKAM, then I'm fine.
You're simply wrong. Anyway, keep up the good work.
forget closing akam, I'm going to try to leg out of the trade, might even get a better exit. History shows AKAM should move an additional 3-4% from its opening gap. Should translate into a 1-1.50 point move above its opening price before stalling.