Selling premium is less risky in indexes than in specific stocks that could move huge on news.
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S/R Emini Journal
- Thread starter 4re
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Quote from 4re:
Yes, you could have. For about 1,000 you could have bought some calls that would have helped you. Like I was telling you yesterday my option trade that I enetered on monday. The call side had already doubled by yesterday afternoon. I sold all my calls and left the puts where they are. Today I am going to enter a new play on the q's that will give me 2 levels of puts since i still have my other ones going for free. This is how a pyramid into a short position without costing me anymore money.
Maybe I misunderstood, romik were you asking about hedging futures with options ?
\Quote from volente_00:
I don't trade options anymore. 90% of all of them written expire worthless.
90% expire worthless because most are sold as insurance not as trades. The straddles and strangles I use have a lot that will expire worthless but I still made money. My CAL play I just got out of I still have 120 Sep 40 calls sitting there worthless right now. If CAL goes up before next month I might make something out of them. But I made good profit on the overall trade.
Quote from 4re:
Yes, you could have. For about 1,000 you could have bought some calls that would have helped you. Like I was telling you yesterday my option trade that I enetered on monday. The call side had already doubled by yesterday afternoon. I sold all my calls and left the puts where they are. Today I am going to enter a new play on the q's that will give me 2 levels of puts since i still have my other ones going for free. This is how a pyramid into a short position without costing me anymore money.
I'll have to look into that on a more detailed scale. Currently, I offset losses in my short-term account, so I am not totally exposed in this short, if/when I decide to cover at a potential loss.
Buying calls for $1k, how much profit I could be sitting on right now, roughly?
Quote from romik:
I'll have to look into that on a more detailed scale. Currently, I offset losses in my short-term account, so I am not totally exposed in this short, if/when I decide to cover at a potential loss.
Buying calls for $1k, how much profit I could be sitting on right now, roughly?
That I don't really know because I don't know when you started building your short play. But the past 2 days my calls doubled in price.
What was ES at when you shorted romik ?
If you shorted 1 ES at 1262, and bought 5 spy 1260 calls for 1, you would be under 1700 on ES but those calls would be worth 1900.
When S&P was at 1262, if you had bout 10 spy 1260 puts for 1, and 10 spy 1260 calls for 1 your up front cost would be 2000. Now the puts are worthless but the calls are worth 3800, so you are still up 1800 on your initial cost. This only works when you think the underlying will move big one way. If it just chops the trade can go to crap.
If you shorted 1 ES at 1262, and bought 5 spy 1260 calls for 1, you would be under 1700 on ES but those calls would be worth 1900.
When S&P was at 1262, if you had bout 10 spy 1260 puts for 1, and 10 spy 1260 calls for 1 your up front cost would be 2000. Now the puts are worthless but the calls are worth 3800, so you are still up 1800 on your initial cost. This only works when you think the underlying will move big one way. If it just chops the trade can go to crap.
You do a lot of straddles Gary ?
Quote from volente_00:
This only works when you think the underlying will move big one way. If it just chops the trade can go to crap.
This is the key to what I do because it is absolutely correct. I only use straddles and strangles on options and I only use options on stocks that make big moves very fast. That is also why I think Bollinger Bands are more important for options than anything else.
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