Glad to help. Selling strangles is great in low volatility periods, but in trends you'll need to know how to adjust and reduce risk. All my adjustments also include reducing risk, which is critical when doing strangles.
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My option trades
- Thread starter ryanpatrick
- Start date
After just closing out my current trade for a loss, I am certainly looking for something alternative.
I diddled for an hour, wondering if the QQQ might close the GAP today? Jeff with his automatic trade in SPY saying it was going UP was encouraging. However, the GAP today was down in the QQQ and broke the trendline. After due consideration, decided I would take the quick loss and start fresh.
Is there perhaps a web site someplace, that might be good reading on adjusting selling strangles?
I got a message back from TOS HELP. They said I can sell if I have the margin. Been looking for my margin, but have a cash account and they don´t particularly say how much margin that allows me? So it would be by guess and by golly. In the meantime, will practice a bit on paper, strangle selling and see what happens, to clarify the nuances.
I diddled for an hour, wondering if the QQQ might close the GAP today? Jeff with his automatic trade in SPY saying it was going UP was encouraging. However, the GAP today was down in the QQQ and broke the trendline. After due consideration, decided I would take the quick loss and start fresh.
Is there perhaps a web site someplace, that might be good reading on adjusting selling strangles?
I got a message back from TOS HELP. They said I can sell if I have the margin. Been looking for my margin, but have a cash account and they don´t particularly say how much margin that allows me? So it would be by guess and by golly. In the meantime, will practice a bit on paper, strangle selling and see what happens, to clarify the nuances.
Think or Swim makes it easy to see how much margin you have with your cash account, simply by looking at "Monitor" and "Option Buying Power." It's truly that easy.
Quote from falconview:
After just closing out my current trade for a loss, I am certainly looking for something alternative.
I diddled for an hour, wondering if the QQQ might close the GAP today? Jeff with his automatic trade in SPY saying it was going UP was encouraging. However, the GAP today was down in the QQQ and broke the trendline. After due consideration, decided I would take the quick loss and start fresh.
Is there perhaps a web site someplace, that might be good reading on adjusting selling strangles?
I got a message back from TOS HELP. They said I can sell if I have the margin. Been looking for my margin, but have a cash account and they don´t particularly say how much margin that allows me? So it would be by guess and by golly. In the meantime, will practice a bit on paper, strangle selling and see what happens, to clarify the nuances.
Quote from falconview:
After just closing out my current trade for a loss, I am certainly looking for something alternative.
I diddled for an hour, wondering if the QQQ might close the GAP today? Jeff with his automatic trade in SPY saying it was going UP was encouraging.
falconview,
Just because my system says to buy calls doesn't necessarily mean the market is going up!
Many times (like today) the system is looking for a discounted entry price on calls. Today for instance the SPY 140 calls closed at 2.72 last night and the system entry price is 2.15.
That's -21% off yesterday's closing price.
Ask yourself this question:
"How in the world am I going to get -21% off call options in this "over the top bullish, no volatility market?"
The only way its possible is buying on down days and selling on up days.
After all, this is a straight up bull market, so you need these rare down days to buy calls and then hold until the bull takes charge again.
You have a tendency to buy calls on up days. This in my opinion is wrong. Your buying the tops of these 3-4 day rallies and then panic and sell your calls on the down days.
The best trading advice that I have ever gotten in my life was,
"When nothing is working, do the opposite!"
Jeff
To Falconview, Atticus please back me up on this attempt.
Try to think of the market staying in a trading range until the next expiration. Say, between 1370 and 1440 on the SPX. Or use GE as an example, between $18.00 and $22.00.
Don't worry if GE goes to 19 or 21, or anything. Pretend you sold the $22 calls and the $18 puts. As long as GE stays within the range you think makes sense, I know I would, then your options will expire worthless.
Take a bigger snapshot, forget deltas for a bit on this strangle. Just watch Theta time decay come in. Your broker should have bell curve graphs to show you all this, based on stock price movement, and days until expiration.
Try that.
Atticus? Make sense.?
Don
Try to think of the market staying in a trading range until the next expiration. Say, between 1370 and 1440 on the SPX. Or use GE as an example, between $18.00 and $22.00.
Don't worry if GE goes to 19 or 21, or anything. Pretend you sold the $22 calls and the $18 puts. As long as GE stays within the range you think makes sense, I know I would, then your options will expire worthless.
Take a bigger snapshot, forget deltas for a bit on this strangle. Just watch Theta time decay come in. Your broker should have bell curve graphs to show you all this, based on stock price movement, and days until expiration.
Try that.
Atticus? Make sense.?
Don
And added 4 orcl mar 23 2012 calls at $1.00.