Straddle for Fiscal

galvinlee888

galvinlee888

We will have crazy Christmas rally if fiscal cliff get resolved. If not, the market will tank like waterfall.

With the VIX as low as 17, my Christmas trade will be :

Straddle for SPX 1410 (Dec) ~ $21.00 based on Friday market price (or $2.1K per contract).

*The Dec contract will expire next Thursday but the chance you will get an answer for the fiscal cliff before Thursday is significant high.

You can short "wings" if you want to lower the entry cost (long 1410 call and put, short 1430 call & 1380 put) but this is not my prefer way as it limit the profits.


You can use SPY if you have small account.


Any comments ??
 
63 views in less then 2 hours but no one reply ? Where is all the bot now ? Or people get use of taking in free trading idea and don't want contribute anything ? :confused:
 
Whatever gave you the idea that it will be resolved by thursday? There's no room on either side for clear and swift answers, they'll probably let the fiscal cliff hit and then figure something out next year. That's how politics goes.
 
Quote from braincell:

Whatever gave you the idea that it will be resolved by thursday? There's no room on either side for clear and swift answers, they'll probably let the fiscal cliff hit and then figure something out next year. That's how politics goes.
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If nothing have been finalised by this Thursday/Friday, then obvious we know they will push it to next year (all the people will leave DC for Christmas), and the market will tank.

You still make $$ from the straddle. :p
 
Quote from galvinlee888:

If nothing have been finalised by this Thursday/Friday, then obvious we know they will push it to next year (all the people will leave DC for Christmas), and the market will tank.

You still make $$ from the straddle. :p
More...

the idea that the market will either tank or rally is extremely naive. the expected scenario of this thing moving into the beginning of 2013 en then being resolved has long been priced in. only if something completely unexpected happens things will start moving. it's a very bad strategy expecting volatility based on something everybody in the market knows about, kind of like doing a straddle before earnings are out just because you think that will move things.
 
Quote from galvinlee888:

If nothing have been finalised by this Thursday/Friday, then obvious we know they will push it to next year (all the people will leave DC for Christmas), and the market will tank.

You still make $$ from the straddle. :p
More...

They may not leave for Christmas. They may want to, but often people work on weekends and holidays, especially when there's important or timely work to be done.

I do agree with your sentiment about being long vol through new years. Whatever happens, people will have only a few days (if not a few hours) to make their "tax elections."
 
Quote from galvinlee888:

We will have crazy Christmas rally if fiscal cliff get resolved. If not, the market will tank like waterfall.

With the VIX as low as 17, my Christmas trade will be :

Straddle for SPX 1410 (Dec) ~ $21.00 based on Friday market price (or $2.1K per contract).

*The Dec contract will expire next Thursday but the chance you will get an answer for the fiscal cliff before Thursday is significant high.

You can short "wings" if you want to lower the entry cost (long 1410 call and put, short 1430 call & 1380 put) but this is not my prefer way as it limit the profits.


You can use SPY if you have small account.


Any comments ??
More...

As expected, the market move (rally in this case), I just close 70% of my positions with a closing price of ~$35, which is a profit of $1500/contract (40% gain as I could only bought those positions around $25 :mad: ). $10K profit in 2 days is not a bad deal.

I will keep the remaining 30% positions (3 contracts) open with the stop loss in break even.

For those who follow this ideal and manage to get into the position, don't forget to send me a Christmas Card :D
 
Quote from bjw:

the idea that the market will either tank or rally is extremely naive. the expected scenario of this thing moving into the beginning of 2013 en then being resolved has long been priced in. only if something completely unexpected happens things will start moving. it's a very bad strategy expecting volatility based on something everybody in the market knows about, kind of like doing a straddle before earnings are out just because you think that will move things.
More...

Not sure why a naive guy like me is making money and holding a big account??
 
Quote from galvinlee888:

Not sure why a naive guy like me is making money and holding a big account??
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very good question.. i don't get it either.
 
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