Whoops! Got an error there, the trial October credit spread on scratch paper should read sell at $3.20 and buy at $2.35 for a + .85 cents.
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OEX weekly options
- Thread starter kalikahuna
- Start date
Stanford:
1. I have the blog, but did not yet post in it. I plan to share the URL, when I make some posts. It you would be good if readers here (particularly those who were not beginners a lot time ago) can share their views on some of the important questions/points/concepts/etc to answer/elucidate/explain/etc.
2. With regard to the sunken cost in the strategy in the email, you can pay it from your cash as described, but I believe that one can do better/safer by raising it from the market first, and then when you have it raised you may run the regular strategy if you so choose. A weakness I noticed in there is in money management, the risk of a blow up, and the underestimate of the cost of sunk insurance if acquired when volty is high.
Falconview:
1. If you look back in the other thread, I did an analysis of straddles in which I proved what one can expect to make most, without leverage in the straddles. Go read it again. It has some figure of 70%.
2. Leverage increases rewards, but also increases risk. I believe that you may be in dangerous grounds if your main interest in options is leverage/margins via shorting option premium. I would want to be very careful.
3. If you like the premium of a straddle, and the margin of a candor, then make equal the strike of the short strike of the candor put and candor call. The position will be a short straddle, with the long puts and calls acting as wings. Another name for this is butterfly. If you buy more puts and calls than you are short, then you have what people call "battman" (like the movie). The idea is that if market moves too fast, the wings allow you to fly.
4. Time spread: there is no margin requirements. The yield can be high on time spread. The issue: you have to wait for time to pass, and make sure the volty does not go down. So it is good for low volty environment that may go up. If you think that volty will go up, market will stay where it is or go down, and time passes (a sure thing), then you can try a put time spreads (below current price).
Please re-read my posts on time spreads and straddles (in other thread). Above points are repeats.
5. You have detected the issue that Michael may have had, which was that you "wrote" you made on the put side more than the credit which was a typo issue as you recent post indicate. I assume you have answered the core question you had.
6. I think you are using a description of options in your own words. It is a good. I am however not sure I understand all of what you mean in your posts, because of the terminology. This is not a critique, but simply a statement in case I mis-understand or do not answer some points that you have in mind.
I have received private messages from people as experienced as past fund managers, and people who doctoral degrees. They are entering the trading business (particularly options). Therefore never under-estimate the talent out there, at the same time it is reassuring that at least one may be looking in the right direction.
Regards to both of you!
1. I have the blog, but did not yet post in it. I plan to share the URL, when I make some posts. It you would be good if readers here (particularly those who were not beginners a lot time ago) can share their views on some of the important questions/points/concepts/etc to answer/elucidate/explain/etc.
2. With regard to the sunken cost in the strategy in the email, you can pay it from your cash as described, but I believe that one can do better/safer by raising it from the market first, and then when you have it raised you may run the regular strategy if you so choose. A weakness I noticed in there is in money management, the risk of a blow up, and the underestimate of the cost of sunk insurance if acquired when volty is high.
Falconview:
1. If you look back in the other thread, I did an analysis of straddles in which I proved what one can expect to make most, without leverage in the straddles. Go read it again. It has some figure of 70%.
2. Leverage increases rewards, but also increases risk. I believe that you may be in dangerous grounds if your main interest in options is leverage/margins via shorting option premium. I would want to be very careful.
3. If you like the premium of a straddle, and the margin of a candor, then make equal the strike of the short strike of the candor put and candor call. The position will be a short straddle, with the long puts and calls acting as wings. Another name for this is butterfly. If you buy more puts and calls than you are short, then you have what people call "battman" (like the movie). The idea is that if market moves too fast, the wings allow you to fly.
4. Time spread: there is no margin requirements. The yield can be high on time spread. The issue: you have to wait for time to pass, and make sure the volty does not go down. So it is good for low volty environment that may go up. If you think that volty will go up, market will stay where it is or go down, and time passes (a sure thing), then you can try a put time spreads (below current price).
Please re-read my posts on time spreads and straddles (in other thread). Above points are repeats.
5. You have detected the issue that Michael may have had, which was that you "wrote" you made on the put side more than the credit which was a typo issue as you recent post indicate. I assume you have answered the core question you had.
6. I think you are using a description of options in your own words. It is a good. I am however not sure I understand all of what you mean in your posts, because of the terminology. This is not a critique, but simply a statement in case I mis-understand or do not answer some points that you have in mind.
I have received private messages from people as experienced as past fund managers, and people who doctoral degrees. They are entering the trading business (particularly options). Therefore never under-estimate the talent out there, at the same time it is reassuring that at least one may be looking in the right direction.
Regards to both of you!
Stanfor, Falconview and others:
Example of trades: I tried today at end of day to buy a time spread on QQQQ but I did not get filled. I wanted to buy October 45 puts on QQQQs, and sell september 30 (end of month not next week expiration) 45 puts.
Quote was: 0.72 for october. 0.39 for sept. Net would have been: 0.33 cents, or 330 dollars for 10 contracts.
Falconview: could you keep an eye on this spread to tell us how it is doing? You do not need to watch it carefully because it is like watching paint dries.
PS: with end of Summer I am starting to get increasingly busy, so I may check less often, and/or post less. If any of that happen, you know I am not ignoring you. If there is something you would want more attention to, please PM me.
Example of trades: I tried today at end of day to buy a time spread on QQQQ but I did not get filled. I wanted to buy October 45 puts on QQQQs, and sell september 30 (end of month not next week expiration) 45 puts.
Quote was: 0.72 for october. 0.39 for sept. Net would have been: 0.33 cents, or 330 dollars for 10 contracts.
Falconview: could you keep an eye on this spread to tell us how it is doing? You do not need to watch it carefully because it is like watching paint dries.
PS: with end of Summer I am starting to get increasingly busy, so I may check less often, and/or post less. If any of that happen, you know I am not ignoring you. If there is something you would want more attention to, please PM me.
TJ, thanks. When you talk below about buying oct for 72 and selling sept for 39, there is no credit there. I assume you want both of these to expire worthless, so where is the profit? What am I missing? Thanks Michael
Quote from tradingjournals:
Stanfor, Falconview and others:
Example of trades: I tried today at end of day to buy a time spread on QQQQ but I did not get filled. I wanted to buy October 45 puts on QQQQs, and sell september 30 (end of month not next week expiration) 45 puts.
Quote was: 0.72 for october. 0.39 for sept. Net would have been: 0.33 cents, or 330 dollars for 10 contracts.
Trading Journal
Well you've been a good friend on here. Be sorry to see you cut back on time here.
I'm into trying to figure out buying options right now and applying insurance as it goes. That will keep me occupied for a few weeks for sure. I'm also dithering over whether or not to open a CASH account with just $5000 risk capital. To trade my weekly expiration Time Decay trades. Which have been relatively successful.
The returns are not that great, but would be mentally devastated if I tried it with $50,000 and lost the money.
In the meantime, will try on paper at least buying options. See what comes of it? Looking for a regular repetitive money machine, routine and boring as heck. Think I have one in the TIME DECAY weeklies. The trick seems to be if you can put on an IRON CONDOR so you double the returns. Maybe switching over to the NDX might do better?
Well you've been a good friend on here. Be sorry to see you cut back on time here.
I'm into trying to figure out buying options right now and applying insurance as it goes. That will keep me occupied for a few weeks for sure. I'm also dithering over whether or not to open a CASH account with just $5000 risk capital. To trade my weekly expiration Time Decay trades. Which have been relatively successful.
The returns are not that great, but would be mentally devastated if I tried it with $50,000 and lost the money.
In the meantime, will try on paper at least buying options. See what comes of it? Looking for a regular repetitive money machine, routine and boring as heck. Think I have one in the TIME DECAY weeklies. The trick seems to be if you can put on an IRON CONDOR so you double the returns. Maybe switching over to the NDX might do better?
TIME SPREADS ( Volatility trade based on direction of market.)
Just read up on the idea. It reads good as a debit spread. I like that better than the credit spread.
- Use two different months same STRIKE prices
- use either Calls or PUTS. This is a directional trade based on volatility and direction
-no margin required as the spread produces a DEBIT
- Use Deep OTM options which are cheaper. Place around where you think the future movement of the market will be ( 2 week time frame?)
-Sell the close month option and buy the further out month option
-Wants a low IV? I presume TOS option chain gives IV's?
The loss is fixed to the amount of the DEBIT if the market goes in the wrong direction.
- When market moves IV rises
Delta drops
Vega remains positive. ( going to have to look up VEGA again! )
- close the position before expiration
______________________________
Have I got it right?
Just read up on the idea. It reads good as a debit spread. I like that better than the credit spread.
- Use two different months same STRIKE prices
- use either Calls or PUTS. This is a directional trade based on volatility and direction
-no margin required as the spread produces a DEBIT
- Use Deep OTM options which are cheaper. Place around where you think the future movement of the market will be ( 2 week time frame?)
-Sell the close month option and buy the further out month option
-Wants a low IV? I presume TOS option chain gives IV's?
The loss is fixed to the amount of the DEBIT if the market goes in the wrong direction.
- When market moves IV rises
Delta drops
Vega remains positive. ( going to have to look up VEGA again! )
- close the position before expiration
______________________________
Have I got it right?
Stanford
Yeah I've been pondering the debit TIME SPREAD in my sleep. Don't know how it pays but will try one on Monday to run for a week and see what it does. The tricky part will be market direction effects. as to how far out? I'm planning to try a monthly against a weekly. The Time Decay should work it out, though I expect I will have to close it Friday morning before they expire. At .05 cents I guess.
My understanding is you want the direction right too?
As to how far out? On that question I'm planning on a 4% deviation, or 5 % if there are premiums out there. Don't want to get hit on the sold side for any reason. Will take a look on Monday.
_________________________
Projecting out with no losses, my TIME DECAY one or two trades weekly and you can do more than one index at a time if you have the money, for the margin; lthe trades seem to work fine and regular. So I have at least one trading system in my arsenal now. Projections are 62% a year return on capital. If losses can be held to Friday afternoon, you lose very little, mostly commissions, if market action goes awry.
_______________________
Still to make decent money it takes a lot of money at risk and I don't like that part. $80,000 capital would make you $50,000 gross a year presuming you make no mistakes.
You sure won't get rich at it, trading with $5000 a year to start.
_______________________
Yeah I've been pondering the debit TIME SPREAD in my sleep. Don't know how it pays but will try one on Monday to run for a week and see what it does. The tricky part will be market direction effects. as to how far out? I'm planning to try a monthly against a weekly. The Time Decay should work it out, though I expect I will have to close it Friday morning before they expire. At .05 cents I guess.
My understanding is you want the direction right too?
As to how far out? On that question I'm planning on a 4% deviation, or 5 % if there are premiums out there. Don't want to get hit on the sold side for any reason. Will take a look on Monday.
_________________________
Projecting out with no losses, my TIME DECAY one or two trades weekly and you can do more than one index at a time if you have the money, for the margin; lthe trades seem to work fine and regular. So I have at least one trading system in my arsenal now. Projections are 62% a year return on capital. If losses can be held to Friday afternoon, you lose very little, mostly commissions, if market action goes awry.
_______________________
Still to make decent money it takes a lot of money at risk and I don't like that part. $80,000 capital would make you $50,000 gross a year presuming you make no mistakes.
You sure won't get rich at it, trading with $5000 a year to start.
_______________________
Trading Journal
You had mentioned the trader ATTICUS as having a bunch of TIME DECAY trades. I looked up his posts, or at least read about a 100 of them, but didn't find anything interesting or useful. From the others he chats with, he sounds highly successful at whatever he is doing.
The only thing I got from looking through the posts was something about shorting Vega and Gamma and as a newbie I have no clue at all how to do that?
The second thing were a mention of something called selling indexvol66 which just leaves me puzzled as I cannot reference the jargon.
You had mentioned the trader ATTICUS as having a bunch of TIME DECAY trades. I looked up his posts, or at least read about a 100 of them, but didn't find anything interesting or useful. From the others he chats with, he sounds highly successful at whatever he is doing.
The only thing I got from looking through the posts was something about shorting Vega and Gamma and as a newbie I have no clue at all how to do that?
The second thing were a mention of something called selling indexvol66 which just leaves me puzzled as I cannot reference the jargon.
falconview, so for your weekly time decay you are talking about either the call or put credit spreads, right? Or have you decided to only do the call spreads for the lessor swings.How far out have you decided on each of those, more for the put spreads?
When you say 4% deviation, what exactly does that mean? 4% away from the price of the index at the time you put on the trade?
So if you can do 1% per week with no losses (which is unlikely), aren't you happy with that return? I personally would be thrilled to be able to do that consistently.
Is there enough volume in the weeklies to know you will be able to exit a position if you have to. Have you settled on the OEX? Which other indexes would you consider?
thanks Michael
When you say 4% deviation, what exactly does that mean? 4% away from the price of the index at the time you put on the trade?
So if you can do 1% per week with no losses (which is unlikely), aren't you happy with that return? I personally would be thrilled to be able to do that consistently.
Is there enough volume in the weeklies to know you will be able to exit a position if you have to. Have you settled on the OEX? Which other indexes would you consider?
thanks Michael