OEX weekly options

Stanford

Wednesday afternoon I got a fill on an overhead weekly credit spread. Put in a limit order for .20 cents as that was what my TOS option chain was showing on a 20 min. delayed data. Got filled immediately at .35 cents, a whopping amount as far as weekly credit spreads are concerned on the OEX.

If the market breaks downward in the morning ( I hope! ) I will try to get in the other half of the IRON CONDOR, and complete it. Especially as that side will be margin free. My trades cost $25,000 in margin.

Tomorrow morning gap we shall see?
 
09-29-10 10:49 PM

Quote from falconview:



. I know I can do $48,000 to $60,000 with what I have now, gross returns, before paying income tax.
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Falconview: Good to read about your abilities. How much risk capital is assumed in your estimation and for how long are the figures? How certain are you to get those numbers? People might also ask you whether there are chance of loss and is yes how much.

I am impressed by your patience in the face of the market. Were you as patient in the past? If no how did you develop the patience part? I believe patience can be a friend to investors/traders.
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The risk theoretically is $25,000 in margin. ( 50 contracts ) In fact, the risk comes down to about - $250 + commissions of $320 = - ( $570 ) as possible loss.

I don't want to explain any more than that, as it would be my SECRET EDGE. I've taken 5 months to learn this.

You are correct in that my experimental sample is very small. Actually two losses only. However while my first loss was huge, an adjustment as to trading style and timing, brought it down to being a practical earner. ( I think? ) I won't really know until I go through some more losses. But experience so far in this short time, seems to indicate this will stay roughly so. I've run it backwards, forwards and sideways in my head and until something different happens here, I will stick with my estimate. I'm not going to actually do this with real money, ( not yet ) as the $25,000 risk is too great for my wife. I'll probably start off with CASH of $5000 and just make net $90 net a week or something with it for starters, until the account by other means gets bigger.
Or perhaps I will take in a few more shareholders to boost the amount to be traded. I've got a few family and friends want to pool money with me.
I'm not ready to move yet into cash. I want to get the DEBIT SPREAD figured out and operating as well. After that, I'll probably run a test on the Long Straddle. This long straddle is not clear in my mind, how I can capitalize on that one. I will have to actually do some on scratch paper. Right now I'm bogged down with the credit spreads and debit spread trading. I'm unable to multi-task comfortably as a beginner, until things become instinctive.
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PATIENCE? Comes naturally I guess, though I suppose a life's environment contributes? In real estate development you work in 7 to 10 year time frames. When I was a younger lobster fisherman, you had to wait on the weather and take your lickings. Can't change mother nature, with HOPE and WISHES. Sort of similar to old time wooden boat building ( built a dozen boats up to 50 ft, and one airplane ) They take 2 or 3 years and if you didn't have the money, you sort of have to go with the flow. No other choice! Nothing is either learned, or acquired in a hurry. ( my opinion ) Just keep plugging away at it and adjusting your methodology by increments as you see corrections are needed.
My TOS account is now $90,105.51 from a learners low of $82,000 over the last two months. If my trade is successful this week will add about $1800 or so this week, things act the way I think they will. Tell you Friday at expiration. Depends if I can make a complete IRON CONDOR this Thursday morning.
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I appreciate your contributions on technical insights. They are not always what I want or need, but am accustomed to looking for a gold nugget in the gravel. ( Did prospecting in my youth in different countries ) :) You are certainly very skilled in the knowledge department. I often wonder if you have been able to translate that knowledge into personal wealth? Is there any meat in the bun is the question? :p Every once in a while you will say something that rings a bell in my mind. That is worth waiting for! Anyway, you act like a friend, and I'm treating you like a friend and friends are few and far between.
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Wow! That Thursday morning opening is scary. With my credit spread at 525 in the OEX. The jump up on the open, canceled any thoughts of doing an Iron Condor. Now I worry about my upper credit spread. It was one strike too close than I wanted at the time.

A check of the OPEN INTEREST is most of it is at 530 and the claim is for two years that the expiration has settled within 1.6% of that. Which puts a possible OEX 522 as the best case scenario for me. Or worse?

Ah well! We watch and see.
 
Sheesh! Well I got a LOSS this week. The index broke through the resistance, so I panicked and CLOSED the credit spread. For a total loss after figuring commissions of - $2320.
C'est la vie!

Now I wish I had stuck to my guns and done it at the 530 strike as originally planned and waited another day. Just checked and strange as it may seem, there is no premium yet at the OEX 530.

That will teach me to jump the gun by a day.
 
falconview, but at least this was sensible panic. Could you still get back in today to recover some that?
I am well aware of the tendency to get in and out early, that is why I want a numerical system to take out the emotional part of this. Still working on that.

Michael
 
My calculation based on the POI strategy, puts the nearest top was the 521.75 of the index, to be within the majority OPEN INTEREST. Now the index is retreating again and it does look like the panic opening jump upward might have let my credit spread be okay. Too late now, I closed it when it pushed through the overhead resistance line.

What am I learning from this? To check the OPEN INTEREST on the weeklies on Monday and Tuesday to help guess from market action and deviation, where the parameters will be, BEFORE I put on my weekly credit spread.

The trading loss damage doesn't seem to have been that bad though? Which is an improvement on my reaction time. Because of breaking through the resistance, I believe still I took the right action. What I did wrong was not going for the 530 strike and having the patience to wait for it, until today.

Does that help you at all STANFORD with your credit spreads?

I'm not rolling over, there is only .10 cents available for premium up at the 530 and I would want the 535 to make any sense of this.
 
Interestingly enough. I can reopen my same 525 trade and make another .35 cents, but would still be at the same risk and the reward would certainly reduce my loss substantially. However to stick to the formula I need a 2% deviation which is the 530 strike and that is only paying .10 cents, which to rollover into that would only give me $340 net. Hardly enough to take such a risk for, I would think?
I think we have a secondary signal forming here, for a market top and trend change? If the index tomorrow drops then we will have a down day tomorrow.

If I had played this by my rules, I would be taking the .10 cents at the 530 strike this morning. Don't know whether to do that or not now? Guess I will wait another hour and make up my mind.

That's what you get when you break your strategy rules ( grin ).

Now the question arises. Can I figure a way of working my way out of this still? With an IRON CONDOR? DOUBLING THE BET?
 
Stanford

The OPEN INTEREST is in TOS. Go to the option chain and then there are a couple of things above it, you can click on to get stuff like DELTA, GAMMA, all the greeks and OPEN INTEREST among other information. It comes up on the first column of the Option Chain.

Look at that damned thing drop and go down, down, down. Sheesh! I panicked mon! Plain panicked and should have held. Another five minutes and I would have been okay!
 
Guys:

I would be careful here. EUR/USD was topping the whole morning. strength in the dollar is typically bearish for stock market. This gap up in the morning is suspicious. One needs all wheels aligned to strike.

Stanford: I am not familiar with TOS platform. But if you can take a picture of the options chain, and email it to me, I should be able to let you know where to look for open interest.

Falconview: Pooling money is a good idea to reduce risk. Be careful about leverage. Leverage needs to be right only once to get the trader, while the traders needs to be right all the time to get the leveraged profits.

Here is what I observed: Stanford has the instinct to deal with the risk as soon as it appears (consistent with his professional career--- stop the bleeding is a name of the game); Falconview: good sense of direction, and does not care about daily gyration, and has a good sense of laying and waiting for the target to show up to strike. Stanford seems to also be good in being realistic in expected return, and probably would be reasonably capitalized (a plus).

Those are some strengths as I see them.

I have to answer some questions posed by both of you. Will do later.

Cheers guys!
 
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