The GOOG straddle could have been closed at $660.00 if held to end of trading. Buy at $55.00, sell at $660.00.
Trading Long Straddles
- Thread starter falconview
- Start date
The GOOG straddle could have been closed at $660.00 if held to end of trading. Buy at $55.00, sell at $660.00.
Below is a screen shot of the live QQQ 55C/54P straddle trade as it progressed.
QQQ 5 day chart
Red dot: Enter trade for $32.00.
Blue dot: Position hits $65.00 later on in the day.
Green dot: Closed at $25.00, loss about $8.00.
QQQ 5 day chart
Red dot: Enter trade for $32.00.
Blue dot: Position hits $65.00 later on in the day.
Green dot: Closed at $25.00, loss about $8.00.
Kinggypo and Dolemite thankyou for the assistance and comments. In my class of Options Long Straddles, 102 trainee class.
I had a nap during the midday, had been up since the previous 3 a.m. local time.
The comments on VEGA, a) VEGA hurts if number is increasing and b) Vega helps in number is going down.
That is the meat of learning right there. Thanks for that tip.
________________________
I´ll try those straddles again next Thursday in the Weeklies. See if a couple of weeks will lead me to any conclusions.
Planning next week action.
1) Still have my original LONG STRADDLE in play. We seem to be in a trading range. I suspected as much, but didn´t do anything about it. It didn´t hit my target for further action. A problem I am experiencing with it.
2) Also got an idea on a VARIATION of the original touted mechanical trading Long Straddle system and will start it next week, alongside and at the same time, seperately.
3) The comments of eliminating all trades that would be a known losing trade in advance was a good one. I use that already, but it sure doesn´t hurt to be reminded. So I have to be sure of the low IV and wait for it.
I´ve still got to open a portfolio in Yahoo Finance. Will try to get around to it this weekend. I use TOS option chains, Big Charts and Stockcharts.com for charting.
I saw the drop coming around noon hour NY time, but quit and closed the computer and went to take a nap for 3 hours. I was feeling exhausted. Next week another go around.
I had a nap during the midday, had been up since the previous 3 a.m. local time.
The comments on VEGA, a) VEGA hurts if number is increasing and b) Vega helps in number is going down.
That is the meat of learning right there. Thanks for that tip.
________________________
I´ll try those straddles again next Thursday in the Weeklies. See if a couple of weeks will lead me to any conclusions.
Planning next week action.
1) Still have my original LONG STRADDLE in play. We seem to be in a trading range. I suspected as much, but didn´t do anything about it. It didn´t hit my target for further action. A problem I am experiencing with it.
2) Also got an idea on a VARIATION of the original touted mechanical trading Long Straddle system and will start it next week, alongside and at the same time, seperately.
3) The comments of eliminating all trades that would be a known losing trade in advance was a good one. I use that already, but it sure doesn´t hurt to be reminded. So I have to be sure of the low IV and wait for it.
I´ve still got to open a portfolio in Yahoo Finance. Will try to get around to it this weekend. I use TOS option chains, Big Charts and Stockcharts.com for charting.
I saw the drop coming around noon hour NY time, but quit and closed the computer and went to take a nap for 3 hours. I was feeling exhausted. Next week another go around.
Just remember that there are always options with options (no pun intended, then again 
On 5/24, in my Virtual account only (unfortunately!) I did the following trade with RIMM:
+5 Sep 47.5 Calls
+5 Aug 42.5 Puts
-5 Aug 32.5 Puts
Today, this has a very nice profit % obviously.
I did a very similar trade in my real account with SLV when it was going nuts - bought OTM calls and closer to the money bear put spreads for a shorter month then the calls were, even though going a shorter month is optional. When SLV started to fall, I quickly had a profit on the overall position by the Near the money put going ITM.
The reasoning here is that OTM calls tend to lose alot of value (if you have ever been long a call ATM that then goes OTM, you can see that), so therefore, that is what I was buying. OTM puts tend to hold their value OK, so I buy near the puts because they won't do so terrible in an up move by the underlying. Puts have limited gains anyway, so why not sell the farther OTM puts as well?
Anyway, my point isn't that this specific strategy is so good, but to point out that just what is shown in books, etc. isn't the only things that can be done. You can alter straddles in so many ways, bullish, bearish, buy one side longer month then the other, alter the ratio, consider selling some legs, etc. And then come adjustments!
JJacksET4
On 5/24, in my Virtual account only (unfortunately!) I did the following trade with RIMM:
+5 Sep 47.5 Calls
+5 Aug 42.5 Puts
-5 Aug 32.5 Puts
Today, this has a very nice profit % obviously.
I did a very similar trade in my real account with SLV when it was going nuts - bought OTM calls and closer to the money bear put spreads for a shorter month then the calls were, even though going a shorter month is optional. When SLV started to fall, I quickly had a profit on the overall position by the Near the money put going ITM.
The reasoning here is that OTM calls tend to lose alot of value (if you have ever been long a call ATM that then goes OTM, you can see that), so therefore, that is what I was buying. OTM puts tend to hold their value OK, so I buy near the puts because they won't do so terrible in an up move by the underlying. Puts have limited gains anyway, so why not sell the farther OTM puts as well?
Anyway, my point isn't that this specific strategy is so good, but to point out that just what is shown in books, etc. isn't the only things that can be done. You can alter straddles in so many ways, bullish, bearish, buy one side longer month then the other, alter the ratio, consider selling some legs, etc. And then come adjustments!
JJacksET4
Nice on your success. Jacksjjtet4
The more I am studying the long straddle, the more complicated and varied it can get. I´ve opened Pandoras Box for me as a novice. Got some very nice and kind helpers on here though helping me along.
So far the best play on the LONG STRADDLE seems to be the VOLATILITY PLAY. Short and sweet.
Another benefit, I´m finally after years, studying the effects of GREEKS, at least on the Long Straddle. Might even get it down and understand the relationships and how to use them practically given a few more weeks. I was always obstinate and wanted graphical indicators to tell me the same thing basically, rather than take the time to learn the relationships of the GREEKS.
There are some LONG STRADDLE twists, some of which many people do not know.
There is the Long Straddle volatility play, but also the DARVIS BOX Long Straddle play, the Overlapping Long Straddle trend following play in 2 options, 4 options and 6 options. Though I fear I could not keep them straight when it gets too many options. The earnings reports is the standard Long Straddle play, then I was introduced this week to the Expiration Weekly option play. ( got to do some more study on that one, as I used to trade weekly credit spreads and like Weekly options ) The variations seem endless?
Its going to take me a bit of time, to absorb and reject some of these by trying them in real time. Had no idea the Long Straddle was so popular. Anyway, I´m in the early morning hours making notes of the GREEKS and what they do, trying to build an automatic reflex picture in my minds eye, so I can use them instinctively. Going to be at least 2 more weeks, before I get them down pat, at least for the Long Straddle. Once I graduate, I will go from Options 101 novice, to Options 102 trainee level.
I´m looking forward to the time, I can graduate with my Masters Degree in the LONG STRADDLE. I will have earned that, hopefully by Xmas this year, if I can make back, the - $2800 I lost of my $10,000 stake a couple of weeks back, by switching from paper money trading, to cash real money trading the GAP trade and found the difference was that the sharks, market makers were waiting for me to stupidly use the MARKET ORDER, which I did in the narrow SPY spread. I never in my life dreamed I could get ripped off so fast. The trade was bid $7.00 and I pre- expected the GAP correctly and figured a market order FILL of $10.00 to $10.50. Usually the spread is 1 cent to 3 cents. What I got was atrocious, a license to steal. I got filled at $14.50, my market order was the highest price for several days in premiums. I was shocked to say the least, to go into a $7 bid and get FILLED at $14.50.. Lesson learned, only use LIMIT ORDERS. Can´t even go back to my GAP trading, as I cannot risk the money anymore on that. Smaller bets would not return enough to make back the money. Hence exploring and learning the LONG STRADDLE, so I can make small bets with the remaining of my RISK CAPITAL in real money.
I´m back to virtual trading again the LONG STRADDLE while I learn it. Lots of experienced GOOD FOLKS on here though, helping me. It is a wonderful experience, compared to some of the other forums I have been on.
The more I am studying the long straddle, the more complicated and varied it can get. I´ve opened Pandoras Box for me as a novice. Got some very nice and kind helpers on here though helping me along.
So far the best play on the LONG STRADDLE seems to be the VOLATILITY PLAY. Short and sweet.
Another benefit, I´m finally after years, studying the effects of GREEKS, at least on the Long Straddle. Might even get it down and understand the relationships and how to use them practically given a few more weeks. I was always obstinate and wanted graphical indicators to tell me the same thing basically, rather than take the time to learn the relationships of the GREEKS.
There are some LONG STRADDLE twists, some of which many people do not know.
There is the Long Straddle volatility play, but also the DARVIS BOX Long Straddle play, the Overlapping Long Straddle trend following play in 2 options, 4 options and 6 options. Though I fear I could not keep them straight when it gets too many options. The earnings reports is the standard Long Straddle play, then I was introduced this week to the Expiration Weekly option play. ( got to do some more study on that one, as I used to trade weekly credit spreads and like Weekly options ) The variations seem endless?
Its going to take me a bit of time, to absorb and reject some of these by trying them in real time. Had no idea the Long Straddle was so popular. Anyway, I´m in the early morning hours making notes of the GREEKS and what they do, trying to build an automatic reflex picture in my minds eye, so I can use them instinctively. Going to be at least 2 more weeks, before I get them down pat, at least for the Long Straddle. Once I graduate, I will go from Options 101 novice, to Options 102 trainee level.
I´m looking forward to the time, I can graduate with my Masters Degree in the LONG STRADDLE. I will have earned that, hopefully by Xmas this year, if I can make back, the - $2800 I lost of my $10,000 stake a couple of weeks back, by switching from paper money trading, to cash real money trading the GAP trade and found the difference was that the sharks, market makers were waiting for me to stupidly use the MARKET ORDER, which I did in the narrow SPY spread. I never in my life dreamed I could get ripped off so fast. The trade was bid $7.00 and I pre- expected the GAP correctly and figured a market order FILL of $10.00 to $10.50. Usually the spread is 1 cent to 3 cents. What I got was atrocious, a license to steal. I got filled at $14.50, my market order was the highest price for several days in premiums. I was shocked to say the least, to go into a $7 bid and get FILLED at $14.50.. Lesson learned, only use LIMIT ORDERS. Can´t even go back to my GAP trading, as I cannot risk the money anymore on that. Smaller bets would not return enough to make back the money. Hence exploring and learning the LONG STRADDLE, so I can make small bets with the remaining of my RISK CAPITAL in real money.
I´m back to virtual trading again the LONG STRADDLE while I learn it. Lots of experienced GOOD FOLKS on here though, helping me. It is a wonderful experience, compared to some of the other forums I have been on.
whassup falconview.
Here's something I use that you might be interested in experimenting with:
1-You pick a price level where "price will not stay for a long time". This is tricky but not impossible. This is point X. That's where you initiate the spread. You attempt to initiate at a price near "middle" and not pay market unless the bid-ask is very tight and you are nearing the end of the day.
2-If price moves towards 1, you do nothing except you place your offer for the whole spread to exit for a small profit. (This happens often, because neither you or me can predict price accurately 100% of the time, or even 85% or 75% for extended periods of time, no matter what other assholes tell you). With price increasing, normally volatility drops slightly and you have a fair chance of getting filled. (This can happen a few hours to days later, depending on the market and on your greedy offer).
3-If price hits point 2, then you DOUBLE your risk by increasing your position. AT THE MARKET. Here you are in a maximum position of agression. If you can create somehow an earthquake in Japan, you do it!.
4-If prices continue to slide, you find a way to exit some of your position, at a profit or sell some puts to DIMINISH your risk while prices continue to crash. This is in case prices stop crashing and rebound.
5-If after hitting point 2, and you have doubled your risk, prices return slowly to point 1, you seek to exit at least half your position with a 1-2 tic profit and diminish your risk again, till you can exit the rest at small profit if prices continue to increase (and volat drop) or you get a shot again at point 2 to double your position again.
All of the above work much better if you manage to initiate near an extreme in price, and have a bearish outlook.
The beauty of this strategy is that catastrophic risk is always playing for you, and that you can control your exposure at all times. The downside is that time decay works against, and therefore you cannot initiate it at random, but pick your spots.
If you add/reduce puts/calls at key support-resistance levels, you can "scalp your way out" of the time decay effects that are working against you on the left side of the price graph. On the right side of the graph, time works for you and you can afford to be patient.
The strategy works equally well in bull or bear outlooks, but you can experiment with the call-backspread too if you are extremely bullish and forecast an explosive move up.
Study it and practice it for a few months, and notice the nuances in realtime execution (which are many), getting a good price for the whole of it being the main nuisance.
Cheers and don't tell it to anyone. OK?.
Here's something I use that you might be interested in experimenting with:
1-You pick a price level where "price will not stay for a long time". This is tricky but not impossible. This is point X. That's where you initiate the spread. You attempt to initiate at a price near "middle" and not pay market unless the bid-ask is very tight and you are nearing the end of the day.
2-If price moves towards 1, you do nothing except you place your offer for the whole spread to exit for a small profit. (This happens often, because neither you or me can predict price accurately 100% of the time, or even 85% or 75% for extended periods of time, no matter what other assholes tell you). With price increasing, normally volatility drops slightly and you have a fair chance of getting filled. (This can happen a few hours to days later, depending on the market and on your greedy offer).
3-If price hits point 2, then you DOUBLE your risk by increasing your position. AT THE MARKET. Here you are in a maximum position of agression. If you can create somehow an earthquake in Japan, you do it!.
4-If prices continue to slide, you find a way to exit some of your position, at a profit or sell some puts to DIMINISH your risk while prices continue to crash. This is in case prices stop crashing and rebound.
5-If after hitting point 2, and you have doubled your risk, prices return slowly to point 1, you seek to exit at least half your position with a 1-2 tic profit and diminish your risk again, till you can exit the rest at small profit if prices continue to increase (and volat drop) or you get a shot again at point 2 to double your position again.
All of the above work much better if you manage to initiate near an extreme in price, and have a bearish outlook.
The beauty of this strategy is that catastrophic risk is always playing for you, and that you can control your exposure at all times. The downside is that time decay works against, and therefore you cannot initiate it at random, but pick your spots.
If you add/reduce puts/calls at key support-resistance levels, you can "scalp your way out" of the time decay effects that are working against you on the left side of the price graph. On the right side of the graph, time works for you and you can afford to be patient.
The strategy works equally well in bull or bear outlooks, but you can experiment with the call-backspread too if you are extremely bullish and forecast an explosive move up.
Study it and practice it for a few months, and notice the nuances in realtime execution (which are many), getting a good price for the whole of it being the main nuisance.
Cheers and don't tell it to anyone. OK?.
Clarification> You never use AT THE MARKET orders in options. You simply enter a bid for the spread you want at the current offer.
Options are a relatively illiquid market, and using market orders is generally a bad idea as you can get filled miles away from the fair price (middle or theoretical).
Options are a relatively illiquid market, and using market orders is generally a bad idea as you can get filled miles away from the fair price (middle or theoretical).
Eudamon
Thanks for that. On the market orders, I learned the EXPENSIVE WAY. Set me back at least for a few months.
I will have to print out your missive. A quick read didn´t really give me any indepth understanding. I take it this is not LONG STRADDLES? Mind you I will trade anything that works every time.
Thanks for that. On the market orders, I learned the EXPENSIVE WAY. Set me back at least for a few months.
I will have to print out your missive. A quick read didn´t really give me any indepth understanding. I take it this is not LONG STRADDLES? Mind you I will trade anything that works every time.
Quote from falconview:
Eudamon
Thanks for that. On the market orders, I learned the EXPENSIVE WAY. Set me back at least for a few months.
I will have to print out your missive. A quick read didn´t really give me any indepth understanding. I take it this is not LONG STRADDLES? Mind you I will trade anything that works every time.
It is like a long straddle, with one wing chopped off at the start, to reduce the cost. It behaves like a straddle on the left side and like a spread on the right side. Also by varying the number of options long versus short you can make it look any shape you want. You do this as position evolves.
The idea is to diminish your risk till your risk is zero, very low, or even positive. You don't know how it'll evolve at the outset, but you know how you will react when prices get there. For example if volatility explodes and price drops, you can sell a number of at the money (now at lower strikes) puts at high premium. You diminish your gain if price keeps crashing, but you reduce your risk to zero or at least decrease it, etc.
For example>
Backspreads are great trades on vehicles that have had a big up day or a long run up. Volatility has come out and there isn't as much fear being priced in to those otm options you are buying so you can get them on at a lot better price. As eudaemon mentioned, play with the short to long ratios along with where the short is to get the trade you like. You can even look at other expiration months to manipulate the theta/ vega of your trade. Backspreads have been a huge part of my portfolio insurance over the years and they have really saved my bacon. Generally you will find that put backspreads perform better than call backspreads. As the price climbs your additional long calls in your call backspread don't gain like the additional long puts in your put backspread do on the downside.