Q's Straddle before FOMC

kalikahuna · Jun 29, 2006

so...it would appear that QQQQ is not heading downwards and kept it's 37-sumpin' support level.

sorry 4re, i'm so happy to see it go up cuz I'm workin a credit spread for 36...praying that at all costs it doesnt cross below 36...although we still have 3 weeks...never know what could happen

4re · Jun 29, 2006

Quote from kalikahuna:

so...it would appear that QQQQ is not heading downwards and kept it's 37-sumpin' support level.

sorry 4re, i'm so happy to see it go up cuz I'm workin a credit spread for 36...praying that at all costs it doesnt cross below 36...although we still have 3 weeks...never know what could happen

Kalikahuna,
No need to be sorry the way I legged into the trade I bought my 38 calls when the underlying price was at 37.50. The calls by themselves put me up 20% on the trade at this time. I am thinking about selling them tomorrow and leaving the puts where they are. And just see if the Q's come back down to where I can catch something on the downside. So overall right now I am up pretty decent.

Did you do pretty good today?

4re

kalikahuna · Jun 29, 2006

Good to hear 4re...today was interesting.

Took my winnings in a JNJ straddle around 6:35am Pacific time, but kept the call in place which should make a lil more for me.

The credit spread on Q was for 36 and will get me my 6% monthly return as long as Q doesnt drop below 36 by the 21st. *was really nervous the last couple days*

All my long term straddles lost any gains they made on the puts...but whatever, still got 4-6 months in either direction.

4re · Jun 29, 2006

Quote from kalikahuna:

Good to hear 4re...today was interesting.

Took my winnings in a JNJ straddle around 6:35am Pacific time, but kept the call in place which should make a lil more for me.

The credit spread on Q was for 36 and will get me my 6% monthly return as long as Q doesnt drop below 36 by the 21st. *was really nervous the last couple days*

All my long term straddles lost any gains they made on the puts...but whatever, still got 4-6 months in either direction.

Right now I have a target of 40.50 on the Q's. We'll see if it makes it. Next pivot I have is 39.75 if we get the follow through I am thinking we will get I can us hitting that tomorrow. I am going to watch closely and decide if I need to pull my calls off the table. I won't care if my puts expire worthless or not at this point but it might be nice for me if we saw 37 again next week. Won't be good for you though, I guess.

Good to hear you are making money though.

4re

a529612 · Jun 29, 2006

Quote from riskarb:

A 5% move in the underlying? How likely is that?

How about a straddle on one of those top IBD stocks before FOMC?

Eliot Hosewater · Jun 29, 2006

Quote from Eliot Hosewater:

Yesterday I put in an order for a long ATM straddle on the OEX, and a short strangle at +/-5, just to see what happens due to the FOMC meeting. I'm also thinking of using the Turtle strategy of scaling out of the losing sides and scaling in on the winning sides.

All in TOS's PaperMoney of course.

Call leg of (long) straddle is +6.30.
Put leg is -4.175.

It would have been a pretty good live trade, maybe I'll do it for real next time with a couple contracts.

Short strangle so far is about 2 bucks in the red.

I haven't scaled in or out of anything.

Aardvark · Jun 29, 2006

Quote from Eliot Hosewater:

Call leg of (long) straddle is +6.30.
Put leg is -4.175.

It would have been a pretty good live trade, maybe I'll do it for real next time with a couple contracts.

Short strangle so far is about 2 bucks in the red.

I haven't scaled in or out of anything.

Just remember when you do it for real use the XEO ...not the OEX because of early exercise risk in OEX. At least with short options.

Eliot Hosewater · Jun 29, 2006

Thanks for the tip. Last time I traded OEX I don't think there was an XEO. (1987)

4re · Jun 30, 2006

Quote from kalikahuna:

Good to hear 4re...today was interesting.

Took my winnings in a JNJ straddle around 6:35am Pacific time, but kept the call in place which should make a lil more for me.

The credit spread on Q was for 36 and will get me my 6% monthly return as long as Q doesnt drop below 36 by the 21st. *was really nervous the last couple days*

All my long term straddles lost any gains they made on the puts...but whatever, still got 4-6 months in either direction.

I went ahead and took profits at the opening this morning. Still have my puts and am looking to sell them around 38.50. That will end up being a very nice trade if/when we get to 38.50. Would like to get it today but we'll see.

Good luck on your trade,
4re

Eliot Hosewater · Jul 13, 2006

Quote from Eliot Hosewater:

Call leg of (long) straddle is +6.30.
Put leg is -4.175.

It would have been a pretty good live trade, maybe I'll do it for real next time with a couple contracts.

Short strangle so far is about 2 bucks in the red.

I haven't scaled in or out of anything.

Dang, that long straddle would have been a great trade. I "closed" the call leg for +6.30, and now the put leg is ATM again. Could "sell" it now for 6.35, for a cost of 1.20, or wait and see what happens tomorrow and next week.

I think I'll do it with real money a week before the next Fed meeting. I think the market will have quite a reaction no matter what they do. They did what was expected last time and look what happened.