nice...almost like a Pitchfork...
....then again a PF with wings?
....then again a PF with wings?
Noregrets' "Double or Nothing" Volatility Trading Journal
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Looking good, although I have no idea what all of your options trades mean, lol.
I know nothing of options.
Do you trade them as opposed to pure directional plays (short ES contracts for example) as a way of managing risk?
All seems a bit complicated for me, but I find it interesting/
Good luck!
I know nothing of options.
Do you trade them as opposed to pure directional plays (short ES contracts for example) as a way of managing risk?
All seems a bit complicated for me, but I find it interesting/
Good luck!
Quote from RichardRimes:
nice...almost like a Pitchfork...
....then again a PF with wings?
Well, Atticus is obviously the originator of and authority on PFs, but I believe that a PF put on today would be quite a bit farther down (just outside straddle range) and farther out in time (30 days or so). E.g., even for this fly expiration (13Sep, ~2 weeks out), the ES straddle is priced a little under 40, so the PF would be at 1595, and would be weighted 3:1 puts:calls, and also not have wings. These are key differences, as I expect to make money on a quick move down to my body strike whereas a PF would not. The leverage difference is also key. So overall I think there are some similarities but the differences are more critical in this case. Great to have you on the journal Richard and thanks for your comments!
Great to have you on the journal Pinkman, and thanks for the kind words! This is both a directional and a volatility play, with limited risk. All other things being equal, the spread should increase in value with the passage of time, with movement toward the body strike (1615), and with a decrease in implied volatility; and will decrease in value with an increase in implied volatility. However, this is within a band of underlying (ES in this case) prices; if ES moves too far from the body strike in either direction then the opposite starts to occur with respect to value of the spread (it would be hurt by the passage of time and would decrease in value as implied volatility decreases). I plan to hold this trade until middle to end of next week at the latest, and will close it if ES drifts too far.
There is a lot of good information out there about butterfly spreads if you would like to learn more about them. They are very versatile and I trade them frequently. This is just a leveraged version. For reference, I have attached what the p/l profile of this spread looks like at expiration.
That close to expiration why are you selling the 1620 strike? It's so close to being long the naked 1630.
Not criticizing just curious. Seems to me like being long the naked put would be more worth it to take advantage of some crazy outside gains if the market all of a sudden jumped 15 to 20 points on war news etc.
Not criticizing just curious. Seems to me like being long the naked put would be more worth it to take advantage of some crazy outside gains if the market all of a sudden jumped 15 to 20 points on war news etc.
Subscribed btw. Most of my time has been spent trading futures and some options directionally but I am starting to get very interested in butterfly spreads and trading volatility.
It's a fair point. I did the vertical because I don't anticipate us moving much beyond 1620 (if we get that far) and it reduced the cost of the 1630 put a bit. To be honest, I put the trade on quickly at the end of the speech and it is almost reflexive with me to not buy naked calls or puts so I just went automatically to a vertical. I definitely see your point though and I think you are probably right. Great to have you on the journal and thanks for your comment!
Expired just OTM. Took a lot of heat on it throughout the afternoon, then was nearly at a double at five minutes before the close. I thought for sure ES was going lower, so I held on through the reversal and into the close. In retrospect, I should have taken the trade off when the price started to reverse.
Long the ES Sep6 1640/1655 call spread from 7.25. I had to "pay up" for the spread a bit, but thought it was worth it. The goal is partly a price bet on a small rally through Tuesday and partly protection for my ES fly (1615 body strike), which I am keeping open as I am still bearish over the next 1-2 weeks. I calculated the approximate gain on the fly on a movement to the body strike on Tuesday, and used that to cap the amount I was willing to spend on the call spread.
"Don't be scared to take big steps - you can't cross a chasm in two small jumps." - David Lloyd George (British prime minister, 1916-1922)
"Don't be scared to take big steps - you can't cross a chasm in two small jumps." - David Lloyd George (British prime minister, 1916-1922)