Not a bad way to swing with options

[Stockolio]

I want to start tracking IV smile and following price movement. I'm sure there are studies about this but I'm just curious what the statistics look like. Any idea how accurate IV ends up being?

Don't know

 

[jvanelli]

That´s interesting. But i still can`t understand the huge difference between yesterday and today. Falling stock but now i get a falling PUT.

Probably combination of large plus vega and declining IVol (implied volatility). Your expiration is distant, which makes vega large. In this scenario, the changes back and forth in IVol will override just about everything else, including delta. Note when trading options you are always trading against market makers, their algos are probably working off better price models than yours, they have a better view of the market than you do, and their game is essentially to manage risk whilst collecting the bid/ask spreads. My opinion, for what it's worth, if you want to trade options then start thinking in terms of what the market maker needs to be doing in the daily market context in order to stay in business.

 

[qlai]

Damn it, can't you people create your own threads!? I need answers

 

[jvanelli]

Been doing options on ES and 6E futures for several years with modest success overall, but I have never had much luck with short term price-directional strategies, thus hard for me to see how one can gain a statistical "edge" with them as a swing trade vehicle. What you can do is limit risk, and you can profit (or lose) from time decay, and you can profit (or lose) from changing volatility, as well as changes in the underlying price, of course. My favorite, back when we had volatility, was the gamma trade (maybe because I am a scalper at core) but that's a tough one now that the broad markets are becalmed. Retail options traders are almost always trading against market makers, who are living off those (excessively) large bid/ask spreads, and managing their own risk very well. Trying to trade directional moves against those guys is like running with weights around your ankles.

 

[antares66]

Damn it, can't you people create your own threads!? I need answers

We just talking about swing trading options ;-)

 

[antares66]

Probably combination of large plus vega and declining IVol (implied volatility). Your expiration is distant, which makes vega large. In this scenario, the changes back and forth in IVol will override just about everything else, including delta.

You are right and it is very difficult to assess if buying a put were the right decision at this time. Which kind of options (OTM,ATM, ITM) with which expiration would you prefer for swing trading?

 

[Wheezooo]

Been doing options on ES and 6E futures for several years with modest success overall, but I have never had much luck with short term price-directional strategies, thus hard for me to see how one can gain a statistical "edge" with them as a swing trade vehicle. What you can do is limit risk, and you can profit (or lose) from time decay, and you can profit (or lose) from changing volatility, as well as changes in the underlying price, of course. My favorite, back when we had volatility, was the gamma trade (maybe because I am a scalper at core) but that's a tough one now that the broad markets are becalmed. Retail options traders are almost always trading against market makers, who are living off those (excessively) large bid/ask spreads, and managing their own risk very well. Trying to trade directional moves against those guys is like running with weights around your ankles.

Yep, might as well start a thread, "How to beat the casino at Roulette."

 

[Wheezooo]

I thought this could be a way with a good change/risk ratio, but today i noticed a weird thing.
I was interested in a HAL OTM Put with a strike of 20 $. HAL`s closing price on 5.22 was
24,74 $.
The put`s price was 0,23 $. Yesterday HAL drops 4,97 % and the Put jumped to 0,66 $.
Today HAL drops 2,47 % but the put drops to 0,62 $, i don`t understand why.
I assumed the put would raise again, but i was wrong.
Could someone explain to me, what could have happened. Decreasing IV or something else

Vol came in.

 

[qlai]

Trying to trade directional moves against those guys is like running with weights around your ankles.

I don't know, if I trade directionally, I don't think I trade against MM ... They just pair me up with some other idiot(or hedger) and take their cut no matter what.

Yep, might as well start a thread, "How to beat the casino at Roulette."

I don't get it, let's assume there are people who have an edge doing short term (up to 3 months) directional trading ... Why can't they use options to help them better structure/execute their strategy? Many people make money simply on noise (Overreactions that have no fundamental significance) and options seem to be very good at noise exaggeration.

 

[ironchef]

Been doing options on ES and 6E futures for several years with modest success overall, but I have never had much luck with short term price-directional strategies, thus hard for me to see how one can gain a statistical "edge" with them as a swing trade vehicle. What you can do is limit risk, and you can profit (or lose) from time decay, and you can profit (or lose) from changing volatility, as well as changes in the underlying price, of course. My favorite, back when we had volatility, was the gamma trade (maybe because I am a scalper at core) but that's a tough one now that the broad markets are becalmed. Retail options traders are almost always trading against market makers, who are living off those (excessively) large bid/ask spreads, and managing their own risk very well. Trying to trade directional moves against those guys is like running with weights around your ankles.

I totally agree, especially the part about bid/ask spread and running with weights around my ankles trading thinly traded options.