Trading in Luxury
- Thread starter traderlux
- Start date
ok, last week I traded some weekly aug4 options on FCX, Freeport....general review as follows, I have done some rounding to make this cleaner for me to review...
on tue 8/19 prior to fed minutes release on wed 8/20 I was looking to buy either a long straddle or strangle or long calls or puts thinking the event would cause a price move in FCX that would cause OTM options to go ITM and increase in price, knowing that my entire trade dollars would be at risk of going to $0.
I wanted my trade size to be about $100. tue I saw OTM call volume building much more than put volume so I decided to go with just long calls, I BTO 3 sets of calls, 2 of 36.50 at .20 and .15, and 1 of strike 37 at .05.
I got 10 contracts of each, trade sizes were $200, $150, and $50, total $400, more than I wanted to do but the way the call ladder was building I felt somebody smarter than me had a plan, so I followed along.
on wed 8/20 am there was a up move in FCX and I closed out all positions at the following corresponding amounts $450, $300, $150, total $900, (somebody smarter did know what they were doing).
I had 6 comm. at about $15ea, about $90.
on thu 8/21 prior to Jackson hole speeches on fri 8/22 I was looking to do similar trades.
I went with a long straddle BTO at strike 36.50 @.36, 3 contacts for $108 trade size and BTO 36.50 puts @.09, 10 contracts at $90 trade size. total trade size $198 for the straddle and the extra puts.
on fri 8/22 am FCX moved down and I STC 3 puts at $75 and 10 at $250, leaving 3 calls open to see what might happen, which turned out to be nothing much and eventually closed them for $30.
so the straddle returned $75 + $30, $105, compared to $108 to open it, so the increase in the 3 puts was not enough to overcome the loss on the 3 calls.
the 10 puts returned $250, opened at $90, net $160.
to open and close the straddle 3 comm. for $15ea, $45 total, to open and close the puts 2 comm. for $30 total.
on tue 8/19 prior to fed minutes release on wed 8/20 I was looking to buy either a long straddle or strangle or long calls or puts thinking the event would cause a price move in FCX that would cause OTM options to go ITM and increase in price, knowing that my entire trade dollars would be at risk of going to $0.
I wanted my trade size to be about $100. tue I saw OTM call volume building much more than put volume so I decided to go with just long calls, I BTO 3 sets of calls, 2 of 36.50 at .20 and .15, and 1 of strike 37 at .05.
I got 10 contracts of each, trade sizes were $200, $150, and $50, total $400, more than I wanted to do but the way the call ladder was building I felt somebody smarter than me had a plan, so I followed along.
on wed 8/20 am there was a up move in FCX and I closed out all positions at the following corresponding amounts $450, $300, $150, total $900, (somebody smarter did know what they were doing).
I had 6 comm. at about $15ea, about $90.
on thu 8/21 prior to Jackson hole speeches on fri 8/22 I was looking to do similar trades.
I went with a long straddle BTO at strike 36.50 @.36, 3 contacts for $108 trade size and BTO 36.50 puts @.09, 10 contracts at $90 trade size. total trade size $198 for the straddle and the extra puts.
on fri 8/22 am FCX moved down and I STC 3 puts at $75 and 10 at $250, leaving 3 calls open to see what might happen, which turned out to be nothing much and eventually closed them for $30.
so the straddle returned $75 + $30, $105, compared to $108 to open it, so the increase in the 3 puts was not enough to overcome the loss on the 3 calls.
the 10 puts returned $250, opened at $90, net $160.
to open and close the straddle 3 comm. for $15ea, $45 total, to open and close the puts 2 comm. for $30 total.
when trading weekly options and buying calls, puts, straddles or strangles,
stock price needs to move thru an option strike price,
the option going from OTM or ATM to ITM, should increase in value,
latter in the week, options cheaper, option price move can be greater, if stock moves,
if you have directional bias, buy calls or puts,
no bias and stock is at a strike price, buy strangle at that strike,
(can also buy a straddle when stock is at a strike)
no bias and stock is between strikes, buy straddle at those strikes,
the idea with a strangle or straddle is that the gain on one option covers loss on other,
realize you can lose the entire amount of the trade,
you either have to watch market to take exits, or set contingent orders
stock price needs to move thru an option strike price,
the option going from OTM or ATM to ITM, should increase in value,
latter in the week, options cheaper, option price move can be greater, if stock moves,
if you have directional bias, buy calls or puts,
no bias and stock is at a strike price, buy strangle at that strike,
(can also buy a straddle when stock is at a strike)
no bias and stock is between strikes, buy straddle at those strikes,
the idea with a strangle or straddle is that the gain on one option covers loss on other,
realize you can lose the entire amount of the trade,
you either have to watch market to take exits, or set contingent orders
when doing option trades I keep track of the following main items,
what strategy is being used, spread, long or short call or put, etc
what underlying is being used
what is the trade plan, ie, buy 3 mo. delta 20 call on HPQ, expect 3% rise in stock, 80% gain in option
what is my edge, have I used this strat or underly before? do I have a good entry based on T/A?,
what is the trade management, watch for chance for profit taking, close if option drops 30%
what was the result, win, lose, or learn
what strategy is being used, spread, long or short call or put, etc
what underlying is being used
what is the trade plan, ie, buy 3 mo. delta 20 call on HPQ, expect 3% rise in stock, 80% gain in option
what is my edge, have I used this strat or underly before? do I have a good entry based on T/A?,
what is the trade management, watch for chance for profit taking, close if option drops 30%
what was the result, win, lose, or learn
I am reposting this with correction, see post 93
....here is a tactic i am looking at, it is a SPY/TLT swing trade with a longer term time frame. (got the idea from a guy at stockcharts)
you can be into one side or the other for weeks or months at a time....
http://stockcharts.com/h-sc/ui?s=SPY:TLT&p=D&yr=3&mn=0&dy=0&id=p06939875656
when the longer term ma is above the shorter, you are long TLT, and when the longer term ma is below the shorter, you go long SPY.
....i also have a shorter term signal that looks close to a change also...
http://stockcharts.com/freecharts/candleglance.html?SPY:TLT|D
....here is a tactic i am looking at, it is a SPY/TLT swing trade with a longer term time frame. (got the idea from a guy at stockcharts)
you can be into one side or the other for weeks or months at a time....
http://stockcharts.com/h-sc/ui?s=SPY:TLT&p=D&yr=3&mn=0&dy=0&id=p06939875656
when the longer term ma is above the shorter, you are long TLT, and when the longer term ma is below the shorter, you go long SPY.
....i also have a shorter term signal that looks close to a change also...
http://stockcharts.com/freecharts/candleglance.html?SPY:TLT|D
Why trading Has Meaning
To work with love is to charge all things you do, with a breath of your own spirit. We explore trading as an activity that brings peace – to the one who trades, to the elemental beings, to the environment. We also consider trading in relation to aspects of the karma of vocation.
borrowed with liberties from http://www.anthroposophy.org/calendar/event-details/the-making-of-peace-with-linda-thomas-1470/
To work with love is to charge all things you do, with a breath of your own spirit. We explore trading as an activity that brings peace – to the one who trades, to the elemental beings, to the environment. We also consider trading in relation to aspects of the karma of vocation.
borrowed with liberties from http://www.anthroposophy.org/calendar/event-details/the-making-of-peace-with-linda-thomas-1470/
Do you also include volatility into one of the drivers of options ?
I think that option prices changes depending on volatility, which can be a good hedge to real stocks to not lose as much if things go south on you.
yes, watching volatility is important, and it is misunderstood by a lot of traders.