Trading Long Straddles

Now...you are holding long puts...twice...in a rising market with potentially imploding volatility...THAT is not related in any way to anything I have posted. OK?.

SIMPLE is better. But I know most like it more complicated. This is why I suggested papertrading for a few months.

You are now long puts gambling on a big decline that should start inmediately or you'll lose money. Convex with no way out if wrong. Bad.:mad:

fwiw: I have the june close near the highs...so rally till then most likely...your current put position if that is correct will be evaporated.:(
 
Quote from falconview:

Seems to be much the same, volatility picture and the volume picture?

I wonder how you get this graph in real time for something you are trading? Does it come up on an option calculator? I was looking for position X.
More...

You can use excel and import realtime prices directly from IB.

Volume is useful but it is not in the graphs or in the discussion, so far. And it is generally not correlated with volatility. Two very different things. Why do you say volat pic and volume pic are the same?.:confused:

In fact the highest volume points are normally where volatility is contracting/smallest generally speaking. Only the best of the best can trade or are lucky enough to trade at the lowest volume points.:eek:
 
"Now...you are holding long puts...twice...in a rising market with potentially imploding volatility...THAT is not related in any way to anything I have posted. OK?.

SIMPLE is better. But I know most like it more complicated. This is why I suggested papertrading for a few months.

You are now long puts gambling on a big decline that should start inmediately or you'll lose money. Convex with no way out if wrong. Bad."
¨¨¨¨¨¨¨¨¨¨¨¨¨¨¨¨¨¨¨¨¨¨

Hmmnn! I guess I did not understand what you said then? That point bothered me as well. In the mechanical method, you simply drop the puts when selling the CALLS. I chose to try what I thought was your method as I apparently did not understand it? I thought you were selling the CALLS when you guessed point 1 above the X, but still holding the losing PUTS. It was a dilemma I was trying to figure out. Close the whole straddle, and place a new one. In the mechanical method you close the losing side at a specific target. Not necessarily point 1, but say one STRIKE in the SPY. You hold the winner for two strikes and this method it is touted will earn 30% a year.
When I tried the 1 strike move, it would have to go 3 strikes to make some money. The few times I tried it the market turned around before triggering a profit and I decided to try it by ruducing the target in half, at .5 ticks. What happened I got too many trades and became overwhelmed. Plus it didnt make enough NET after commissions. So I widened the range to .60 ticks, that I´m trying this morning but it is still a bit narrow. 1 strike is a 100 ticks. So I did this morning again, widen the last trade to a target of .75 ticks trying to find the point which would work most often, at least in the SPY.
However I am carrying PUTS I dont want to carry. So what am I doing wrong by your lights? I don´t quite have a clear idea of what you tried to explain and assumed you were being hazy as it is a public forum. You could email me though.
 
Quote from falconview:

I like simple, but feel chagrined ( see I wrote that without a dictionary ) that I do not know enough. :)
More...

here is simple. keep going you are on the right track........:)
 

Attachments

Quote from kinggyppo:

here is simple. keep going you are on the right track........:)
More...

Since QQQ is 12% AAPL I would enter a QQQ straddle. Risk is only $125.00, and will be lower tomorrow, this would be a good live trade for a beginner. Paper trade the AAPL straddle.
  • Options expire on June 24
  • AAPL straddle = $6.50 (paper trade)
  • QQQ straddle = $1.25 (live trade)
 
Ha! Ha! King Gypo. Thankyou for chiming in. Bit of cheer in here.

Actually, my long Calls with the new indicator I´m trying is up to $132 and seems to keep me in the trend ignoring the pauses. I´m pleased with that, was just trying it in a trading range and might get whipsawed there. Will need more work then.

The LONG STRADDLE has passed BREAKEVEN finally and now showing a .11 cents profit.

What I thought was Eudamons system, he tells me is wrong. So I don´t understand it I guess? Have cancelled it at a loss. Just paper trading so no biggy here. A trial and error process.
The straight buying though is encouraging. Might get into CASH TRADING with that next week again.
 
Quote from falconview:

Ha! Ha! King Gypo. Thankyou for chiming in. Bit of cheer in here.

Actually, my long Calls with the new indicator I´m trying is up to $132 and seems to keep me in the trend ignoring the pauses. I´m pleased with that, was just trying it in a trading range and might get whipsawed there. Will need more work then.

The LONG STRADDLE has passed BREAKEVEN finally and now showing a .11 cents profit.

What I thought was Eudamons system, he tells me is wrong. So I don´t understand it I guess? Have cancelled it at a loss. Just paper trading so no biggy here. A trial and error process.
The straight buying though is encouraging. Might get into CASH TRADING with that next week again.
More...

Eudaemon is pointing out a fairly complex position, its likely easy for him, sounds like he's been at it a while, that's all. Don't get discouraged, but you have to protect YOUR capital like a mother bear, you are asking good questions, Eudaemon is really trying to help you here so keep going after what he is telling you, good trading. :)
 
Hmmmn! I had planned to do QQQ as you suggested just after lunch on Thursday in CASH. Apple as a paper trade would be okay on paper.
Is there a reason you suggest Wednesday? I know you mentioned it before.

I don´t show a reversal of trend yet though. Maybe tomorrow.

I guess what I am learning that long straddles are best done with a dropping index or stock, not on the rising ones. More volatility.
 
Quote from falconview:

Is there a reason you suggest Wednesday? I know you mentioned it before
More...

A QQQ straddle should be less than $100.00, and you would have a two day trade. QQQ would not have to move much for a profit.

PS - I prefer a strangle over a straddle. Strangles are cheaper.
 
Quote from falconview:

Gentlemen

...As to the reasons for the failures...

Gap Trading was very lucrative with 4 months of funny money trading. Made 297% in four months. But when I opened a $10,000 cash account, I won the first trade, but lost the next three, which has put me down 30% of cash account...
More...

I can't give you any advice on trading options (greeks are "greek to me"), but this snippet you posted early in the thread caught me. Based on what you posted, you risked an average of 10% of your capital on each trade? I don't care what system you are using, risking 10% of your capital per trade is suicidal.

On a long position, figure out your max loss if all contracts go to zero. Make that AT MOST 2% of your trading capital. For a straddle, it's the total premium paid plus commissions (BOTH ways). For a short spread (bear call/bull put), it's the difference between strikes, plus commissions. For a long spread (bull call/bear put), it's the net cost plus commissions. Strangles are tougher, because you have unlimited risk. Either put some sort of stop loss on the underlying or go long far out of the money puts/calls as a synthetic stop.

You may find a method that works, but risking too much equity per trade may blow you out before you even realize that it works in the long run.
 
You must log in or register to reply here.
Back
Top