Had my five hours of sleep and at 2.30 a.m. on a Sunday morning.
Fresh mind! Took a look at the Vertical Spread calculator. Entered my stuff. Index QQQ at 59.56
sell the 59 Call at $1.97 and buy the 58 Call at 2.64, with a debit of .67 cents. Hope I got the set up right? This is in paper money. I think I´m doing a Vertical Bull Call Spread. I may not be?
It says my maximum profit is 47% at .33 cents. The rest of it didn´t make any sense. The Break even was 58.67 which is obviously nonsense, or I did something wrong. Anyway, lets assume it calculated in reverse, then my Break Even is roughly 1 strike move?
I get that I let the thing run, until it gets close to .33 cents and then close it. NEVER ever succeeded in making a Vertical Spread work before when playing with them.
Comments by anybody familiar with trading them?
______________________
Been thinking of the LONG STRADDLE in cash I´m holding. The P & F charts using 1 strike boxes, about a week ago, had enough of a swing as it entered congestion sideways to cover my 57 long straddle, ( 5 strike swing ) but as the market moved sideways ( QQQ ) the flutter, or internal swings got shorter. So nothing doing for my two long straddles pretty much over two weeks of sitting around waiting. The P& F chart showed we were forming a pennant, with the bottom sloping upward and we are bucking an overhead resistance line. I expect a breakout UPWARD into a BULL run. So I am still sitting on one Long Straddle, which I now know is not a good thing, in a bull trend, as the IV or VIX moves down, the implied volatility also reduces the premiums. Still my TR + index calculation shows a breakout confirmed upward at QQQ 61.5. Long way from there yet. Still in the 59.67 level of the QQQ. On the other hand, the VIX did break downward past the BULL TREND 18 number and went into VIX 17.50 thereabouts indicating a bull trend was in the making. Some of the index bar charts already show the resistance was broken with new highs. Maybe Fed budget default news will give me a volatility balloon on Monday? Letting me close out the Long Straddle. This is definitely a BULL slow trend. A Fed budget default would make the market plunge into a BEAR trend though they say on the news.
In line with my conclusion to trade when I have indications of a bear trend with the long straddle, looking at the P & F charts, that would mean trading when you get 0´s running down in that type of chart, which works only by price movement and not by TIME. the X´s line running upward would not be very good for long straddles due to dropping IV and dropping premiums.
I was thinking about my experience experimenting with Pairs trading, in which you trade an index when it is going up and take an opposing set of options in the VIX options, because they gain premium at the same time, because the VIX is going down. I was trying to figure some way you could increase the number of Long Straddles entered. As my original premise was using hourly charts, I could try to catch a trend and complete a long straddle trade once a week. This didn´t work out, because in some kinds of congestion, as showed on P & F charts, the congestion forming a bull penant, or flag, will not have the necessary strength, or wide enough swings to make a short term Long Straddle work. What you need is when the market has a BEAR PENNANT, or FLAG.
However, I do my best thinking when I´m sleeping. There is something nagging at the back of my mind, that says in PAIR TRADING, premiums go up in VIX options, in a bull trend. And Index options also go down in premium value in a bull trend. So would it work that you could increase the number of long straddle trades, if in bear moves, you you traded Long Straddles in index options and in bull moves if you traded VIX options, the premiums moving opposite to each other? Will have to try it with a paper trade and see how it works out I guess.
Fresh mind! Took a look at the Vertical Spread calculator. Entered my stuff. Index QQQ at 59.56
sell the 59 Call at $1.97 and buy the 58 Call at 2.64, with a debit of .67 cents. Hope I got the set up right? This is in paper money. I think I´m doing a Vertical Bull Call Spread. I may not be?
It says my maximum profit is 47% at .33 cents. The rest of it didn´t make any sense. The Break even was 58.67 which is obviously nonsense, or I did something wrong. Anyway, lets assume it calculated in reverse, then my Break Even is roughly 1 strike move?
I get that I let the thing run, until it gets close to .33 cents and then close it. NEVER ever succeeded in making a Vertical Spread work before when playing with them.
Comments by anybody familiar with trading them?
______________________
Been thinking of the LONG STRADDLE in cash I´m holding. The P & F charts using 1 strike boxes, about a week ago, had enough of a swing as it entered congestion sideways to cover my 57 long straddle, ( 5 strike swing ) but as the market moved sideways ( QQQ ) the flutter, or internal swings got shorter. So nothing doing for my two long straddles pretty much over two weeks of sitting around waiting. The P& F chart showed we were forming a pennant, with the bottom sloping upward and we are bucking an overhead resistance line. I expect a breakout UPWARD into a BULL run. So I am still sitting on one Long Straddle, which I now know is not a good thing, in a bull trend, as the IV or VIX moves down, the implied volatility also reduces the premiums. Still my TR + index calculation shows a breakout confirmed upward at QQQ 61.5. Long way from there yet. Still in the 59.67 level of the QQQ. On the other hand, the VIX did break downward past the BULL TREND 18 number and went into VIX 17.50 thereabouts indicating a bull trend was in the making. Some of the index bar charts already show the resistance was broken with new highs. Maybe Fed budget default news will give me a volatility balloon on Monday? Letting me close out the Long Straddle. This is definitely a BULL slow trend. A Fed budget default would make the market plunge into a BEAR trend though they say on the news.
In line with my conclusion to trade when I have indications of a bear trend with the long straddle, looking at the P & F charts, that would mean trading when you get 0´s running down in that type of chart, which works only by price movement and not by TIME. the X´s line running upward would not be very good for long straddles due to dropping IV and dropping premiums.
I was thinking about my experience experimenting with Pairs trading, in which you trade an index when it is going up and take an opposing set of options in the VIX options, because they gain premium at the same time, because the VIX is going down. I was trying to figure some way you could increase the number of Long Straddles entered. As my original premise was using hourly charts, I could try to catch a trend and complete a long straddle trade once a week. This didn´t work out, because in some kinds of congestion, as showed on P & F charts, the congestion forming a bull penant, or flag, will not have the necessary strength, or wide enough swings to make a short term Long Straddle work. What you need is when the market has a BEAR PENNANT, or FLAG.
However, I do my best thinking when I´m sleeping. There is something nagging at the back of my mind, that says in PAIR TRADING, premiums go up in VIX options, in a bull trend. And Index options also go down in premium value in a bull trend. So would it work that you could increase the number of long straddle trades, if in bear moves, you you traded Long Straddles in index options and in bull moves if you traded VIX options, the premiums moving opposite to each other? Will have to try it with a paper trade and see how it works out I guess.
