Trading Long Straddles

Must have gone through one of those algorythms that calculate and adjust TIME DECAY in the QQQ weekly?
I´ve been tracking today, the IV for the QQQ 59 option from TOS and to compare the IV coming from ISE, along with the QQQ 59 CALL ASK price. The premium dropped from the $2.09 level, to .89 cents. While the noon hour market has slowed a lot and doesn´t seem to be going anywhere, the IV trend in both, from TOS QQQ 59 quote and the ISE quote have both been trending down. I was experimenting with seeing what kind of fast trade you could make in a WEEKLY type trade, if you entered when the IV current number became less than the historical IV of yesterday. After seeing the drop from time decay in the straight CALLS, it is obvious you can´t hope to catch a quickie profit, if you got underpriced options in straight option buying. Would be playing Russian Roulette. So, we shall see how the experimental STRADDLE or STRANGLE with the Vertical DEBIT STRANGLE will work out. I believe the question has already been answered, when I asked does the THETA effect a Vertical Debit Spread before and nobody answered and I couldn´t find anything in the literature, but since the spread seems to be holding it´s own, even though the QQQ index isn´t really going anywhere yet. The spread using Verticals must not suffer from Time Decay, THETA adjustments.
I guess if you had the inclination to bet on a straight CALL, you would then bet with a Vertical Bull Call Debit spread instead using weeklies. Must try that, when this IV trend bottoms out, see if I can do it inside this week before Friday.
 
My usual 3 or 4 a.m. studying. Been studying Vertical debit spreads. The many times I have studied them, I still have not got a clear understanding of how they profit. Seems they have to expire to work profitably. Maybe good for weeklies? Expire every Friday.

Wednesday morning. Happy to say only the Long Straddle trade has been continuously successful, of all my experiments. Though in this low volatility environment and slow, slow bull trend, this is not the best place to be holding a long straddle for any length of time.
 
Hi, I have little bit newbie question...

Why there is so much volatility in weeklies puts on Amazon after realesing earnings and not in calls? Could someone explain me?

Thanks a lot:)
 
Quote from ForexForex:
07-25-11 03:36 PM

QQQ 59P / 60C strangle - Live trade in progress.
More...


UPDATE - POSITION CLOSED
 
Nice trade Forex Forex

I´m still kind of waiting, trying some various experimental trades. Mostly with the Vertical debit spread, trying to learn how to do it, paper trading.

My cash long straddle was in the money a few cents the first of the week, but now it is back debit again. It didn´t have enough, to merit closing. I ´ve decided to hold it for another week and see what happens with it.

I´m also playing with a paper trade or two, in WEEKLY options. Just put on a Long Condor this morning in the WEEKLY. I only know it is going to expiration on Friday. Been having trouble mentally trying to figure out how it profits. So a real time paper trade will have to do the teaching.

I´m beginning to think 2nd or 3rd month Long Straddles are the cat´s meow. They do work eventually. I´m sort of contemplating that if I miss a week and fail to put one on, I would increase the SIZE of the trade, by one contract, to three, to make up for any loss of time in dull sideways markets, when I do put one on the next week. See if one could keep compounding the account that way.

One question? What was your decision making situation to putting on that Long Straddle in this WEEKLY.
 
Forex Forex

I see you made that WEEKLY trade decision Monday about 3:30 p.m. late afternoon. I went back to check on what might have prompted it. You might have used an oscillator? Nothing that I am using anyway. I do see it was a new shallow high, that was weak. In my 15 mins. charts I possible could have had the signal. I certainly thought about it. But with the slow bull market as weak as it is, just ignored it.
In the sense, that a Monday, or early week Long Straddle would be efficient, for trading the weeklies. I sort of had been planning on it also, but using ISE, which never gave me a lower IV than HV signal during the week. So I had been playing with trying to learn the nuances of using a Vertical Debit Spread. Also I cleaned up some of my outstanding paper trades, that made something, if not much.
Some things became obvious. Not to trade straight options in the WEEKLIES, I learned this week.

In paper trades I´m still holding a Sept Vertical Bull Call Spread,also a long straddle for Sept also. Got a cash money long straddle still holding also. In the last hour I put on an August Call 59. at $1.15. I´m trying to decide which way to go, for more intensive cash trading. I also have a WEEKLY LONG CONDOR and confess I have no clue at all how that will work out, so it is paper trading, but is an expiration Friday trade.
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Ran through the battery of indicators on FREE CHARTS. Did found one that would have given such a signal for weekly direction this week. Got it marked. Will use it from Friday to Tuesday and see if any more Long Straddles pay off in the weeklies. Good idea of yours. Faster, more frequent trades.
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Welll the increase in volatility allowed me to close two trades in paper.

The QQQ Sept. long straddle, 59 strike. It cleared after commissions only 1%

A straight August Call in QQQ done just this morning, very short trade. Cleared after commissions $33 or 28%. IV did it!
 
I´m out of Long Straddles. Been setting up a direct long trade in he QQQ, and the new system took me 6 weeks to get it up and running. I´m trading CASH MONEY, but QQQ which is the Nasdaq
 
Whoops! Must have hit the wrong key, kicked me out.

Anyway, got actual trading last half of August, and 3 or 4 successful trades so far. About 6 or 7 % profit on each bet. Small bets though, only two contracts. Plan to increase bet size as I get more confident.
 
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