Option trade ideas

Multiply your options IV by square root of 52 for the Implied weekly volatility then divide by 2 to get the 1 Std Dev down move for the week.

That's an interesting trade that I might copycat. You have down trending volatility averages (not skew) and backwardization working for you. I can't say much about where ZS could go but you are short at a very steep part of the forward curve.
 
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xandman said:
Multiply your options IV by square root of 52 for the Implied weekly volatility then divide by 2 to get the 1 Std Dev down move for the week.

That's an interesting trade that I might copycat. You have down trending volatility averages (not skew) and backwardization working for you. I can't say much about where ZS could go but you are short at a very steep part of the forward curve.
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I will not lie to you XM, but I don't have a clue what you are talking about, although I would like to understand it and see why it is in synergy with my way of screening for viable options trades that might work out in your favor.

I look at charts and then look at prices!

Volatility is range, so when you see a WRB you can be assured the volatility is changing, which means the option prices are changing.

I was never any good at high level maths, but I would like to learn more about the way other option traders screen for possible viable trades, and more importantly, how they manage risk when the underlying moves against the trade.

My thoughts are that one requires a good piece of software that is easy to use and understand, for, what better to work out maths than the PC!

I think what matters most is where the price is going next, so, if you have a high probability method to determine where price might go, you indeed have an edge and thus have an easier life in monitoring and adjusting trades to limit losses.

BTW, the spread I am talking about traded at -18 in the past.

J_S
 
The premium between the months is the biggest between Aug/Sep. Nice spot to express your directional bias via a Horizontal spread.

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I would like to hear about your trade screening methods. Futures markets are somewhat fragmented and to get the functionality available to retail stock options traders is somewhat expensive.

Aside from that, I am a city boy who doesn't know much about farming.
 
XM,

Seems like you know things I want to know about, and I might know a few small things that might benefit you. I will have to think about this one, as the last thing we want is to let anyone jeopardize progress and advancement.

You know as well as I do that all of this work takes a vast amount of time (experience) and money (losses), so one has to be very careful what one shares with others - I am not funny here or messing, just talking plain and simple truths.

I believe the spread has gone up today, I will check know and see what it is.

Sometimes it is just best to sit and wait, if it happens then good, if not, so be it, there are many more trades out there, in several markets, they just need to be identified and be within risk parameters.

J_S
 
Just so we are not accused of not being friendly, here is what the trade is about in the textbooks.

http://www.optionseducation.org/str...pts/strategies/long_call_calendar_spread.html

Summary
This strategy combines a longer-term bullish outlook with a near-term neutral/bearish outlook. If the underlying stock remains steady or declines during the life of the near-term option, that option will expire worthless and leave the investor owning the longer-term option free and clear. If both options have the same strike price, the strategy will always require paying a premium to initiate the position.

J_S
 
That's a good web site. However, I wouldn't recommend holding the trade close to expiration. With 2-4 weeks left, there's not much premium left and the spread could go underwater really fast even when though premium decays faster.
 
So,

We are not dealing with a stock here, but with a commodity, and with different underlying futures months.

Different futures months will have different prices, so again, we are back to the stupid maths which I just hate, and me trading options, now that is funny as options are all about maths!!

Typical prices of ZS futures today.

ZS May'15 @ECBOT...968 1/2...-10
ZS Jul'15 @ECBOT...964 1/2...-11 1/2
ZS Aug'15 @ECBOT...959 1/4...-11 3/4
ZS Sep'15 @ECBOT...947 1/4...-11 3/4

J_S
 
xandman said:
That's a good web site. However, I wouldn't recommend holding the trade close to expiration. With 2-4 weeks left, there's not much premium left and the spread could go underwater really fast even when though premium decays faster.
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I would say that any trade should be closed out if a decent profit is achieved, as per initial risk reward values.

It is always good to have closing limit orders, as it is to have open limit orders.

Being too greedy is foolish, as profits are not profits until cashed in.

Anyway, I am enjoying this discussion XM, and have a feeling that this thread may be of benefit to those who are willing to participate.

Thank you for your time.

J_S
 
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