My Options Play

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Quote from uninvited_guest:

optionpro007.........My answer to your question and riskarb's answer both have the same conclusion, both worded very differently but same conclusion.

Do you not see that?
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We all trade our own mind. And there is no right or wrong answer. The way Riskarb makes money, and the way I and Multi make money can be from two completely different strategies.

Still, profit can be generated both ways, if you learn how to do it.

I will post my trades, only to show that is it also possible to make money with an only long option strategy. (long tetas ?):D

But you still didn't answer my question. What about your trades ? Are you willing to put yourself on the line ? like Multi did ? Or you just like to criticize others who think differently than you ?

Cheers !
 
Would've recommended selling the Jan 32h straddle at $2.80[30%vol]. You're ignoring vol when selling an option that's 20x25 cents. The 27.50 put is pure gamma, no vega.
 
Would've recommended selling the Jan 32h straddle at $2.80[30%vol]. You're ignoring vol when selling an option that's 20x25 cents. The 27.50 put is pure gamma, no vega.

Now this post is better. At lest you are recommending something. That is what I want. Maybe it is not wise for a person who has no position in TXN to do what I did. I have lots of Calls for Jan 32.5 and I am selling PUT 27.5 to match with my Calls. I also sold 20 contracts PUT 25 Jan a couple of months ago at 0.90 and now they are 5 cents each. I am waiting for them to expire but who knows, in Jan 10th, it might go to $24 and I might lose in that position that I was winning. At least in that situation my Calls would expire.
By the way, I like polite discussions and arguing on trading. I don't get offended at all if you disagree with me.
 
To riskarb:
Now that I look at your suggestion, I like it. It is good for a fresh entry. My plate is full now. Actually very full. I do small defensive trades now. I don't add a major position. I just want to get gas money and sell time and maybe that gas money will burn my house. Who knows.:confused:
 
To Anyone:

What streaming charts program do you use, and what's the best offer for not too much money you've encountered? I'm currently using MarketWatch's streaming charts for ~$30/mo and it has glitches regularly. Am going to "free trial" Esignal's program but is expensive to subscribe to at ~$120 + $60 options info/mo. - at least for my calibre of activity.
 
Medved's FREE QuoteTracker

Any reasonable broker should provide such a tool for free.
Quote from Rob on Business:

To Anyone:

What streaming charts program do you use, and what's the best offer for not too much money you've encountered? I'm currently using MarketWatch's streaming charts for ~$30/mo and it has glitches regularly. Am going to "free trial" Esignal's program but is expensive to subscribe to at ~$120 + $60 options info/mo. - at least for my calibre of activity.
More...
 
Which trade you would take? Look at the following two cases and their possible profits or losses and let me know which one you would pick as your trade. I will put the average of bid and ask as the premium and will ignore commission.

Case 1: Sell Call and PUT TXN 32.5 for Jan.
You will get $1.50 for Call and $1.35 for PUT. Total of $2.85. Margin needed will be 20% x 32.5 x 100=$650 per contract.
We assume that TXN is at 32.5 now.

Case 2: Sell Call 35 and Put 27.5 both for Jan.
You will get $0.575 for Call and $0.175 for Put . Total of $0.75
Margin needed will be (20% x 32.5- 2.5) x 100=$400 per contract.

Some more info. Six month chart of TXN shows low of about 27.2 and max of 34.

Max gain in case one is 285/650 x 100=44% which is almost impossible. If it closes at 34,your profit would be 135/650 x 100=20% and if it closes at 27.2, your loss will be -245/650 x100= -38%

Max gain in case two is 75/400 x100=19% which is quite possible. If it closes at 34, you will still get 19% profit and if it closes at 27.2, your gain would be 45/400= 11%. You will only lose if it goes over 35.75 or below 26.75.

Untrained eyes will hate Case 2 as you are dealing with nickle and dime but $2.85 looks attractive in Case 1. I would definitely go with Case 2. (nickel and dime case)
If one of the days before option expiry date shit happens and stock goes up or down like $10, in both cases you are smoked. In that case, putting money under pillow would be the best choice.
 
See the two graphs:
  • -10 ctr. straddle-strangle
  • -10 ctr. strangle
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=912841>
  • Quote from hajimow:

    Which trade you would take? Look at the following two cases and their possible profits or losses and let me know which one you would pick as your trade. I will put the average of bid and ask as the premium and will ignore commission.

    Case 1: Sell Call and PUT TXN 32.5 for Jan.
    You will get $1.50 for Call and $1.35 for PUT. Total of $2.85. Margin needed will be 20% x 32.5 x 100=$650 per contract.
    We assume that TXN is at 32.5 now.

    Case 2: Sell Call 35 and Put 27.5 both for Jan.
    You will get $0.575 for Call and $0.175 for Put . Total of $0.75
    Margin needed will be (20% x 32.5- 2.5) x 100=$400 per contract.

    Some more info. Six month chart of TXN shows low of about 27.2 and max of 34.

    Max gain in case one is 285/650 x 100=44% which is almost impossible. If it closes at 34,your profit would be 135/650 x 100=20% and if it closes at 27.2, your loss will be -245/650 x100= -38%

    Max gain in case two is 75/400 x100=19% which is quite possible. If it closes at 34, you will still get 19% profit and if it closes at 27.2, your gain would be 45/400= 11%. You will only lose if it goes over 35.75 or below 26.75.

    Untrained eyes will hate Case 2 as you are dealing with nickle and dime but $2.85 looks attractive in Case 1. I would definitely go with Case 2. (nickel and dime case)
    If one of the days before option expiry date shit happens and stock goes up or down like $10, in both cases you are smoked. In that case, putting money under pillow would be the best choice.
 

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