Trading Long Straddles

Well I´m out of my 10 contracts Straddle at $2.37 Not sure how I ended up profit wise. But around 11 to 12% in 6 days. Will know by the end of the day.

I also learned that Riff Raff is trading price, while I´m trading trends. So a conflict in approaches seemed natural.

For my second time around I got to practice morphing, a straddle into some other classic strategy. Several contributors on another forum have advised me to learn how to avoid losses by changing the strategy and at least in the STRADDLE it is working out. Some people call it RISK CONTROL or adjustments.

Apparently, I could have returned 16% if I had my TIMING better. Timing was done by different charts and the best one seems to be for the bottom of a trend the 10 minute chart. There was also a double bottom on the hourly chart in QQQ which pointed to an OPEN GAP up this morning. I saw on Big Charts that the last daily bar which apparently reflects AFTER HOURS trading yesterday, closed Gap up yesterday afternoon and had jumped 75 ticks in the QQQ. That amounts to about .42 cents so I was looking for a $2.13 open in my 66 strike. Pleased to see I got $2.37. If there was anymore I will have missed it, but don´t care too much, as the EXIT was simply to preserve the profit from the PUTS earlier in the life of the STRADDLE. ANYWAY I´M OUT AND SMILING.
 
Quote from falconview:

Well I´m out of my 10 contracts Straddle at $2.37 Not sure how I ended up profit wise. But around 11 to 12% in 6 days. Will know by the end of the day.

I also learned that Riff Raff is trading price, while I´m trading trends. So a conflict in approaches seemed natural.

For my second time around I got to practice morphing, a straddle into some other classic strategy. Several contributors on another forum have advised me to learn how to avoid losses by changing the strategy and at least in the STRADDLE it is working out. Some people call it RISK CONTROL or adjustments.

Apparently, I could have returned 16% if I had my TIMING better. Timing was done by different charts and the best one seems to be for the bottom of a trend the 10 minute chart. There was also a double bottom on the hourly chart in QQQ which pointed to an OPEN GAP up this morning. I saw on Big Charts that the last daily bar which apparently reflects AFTER HOURS trading yesterday, closed Gap up yesterday afternoon and had jumped 75 ticks in the QQQ. That amounts to about .42 cents so I was looking for a $2.13 open in my 66 strike. Pleased to see I got $2.37. If there was anymore I will have missed it, but don´t care too much, as the EXIT was simply to preserve the profit from the PUTS earlier in the life of the STRADDLE. ANYWAY I´M OUT AND SMILING.
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Congrats falcon...glad it worked out for you.

The risk however is u were simply playing a directional trade overnite in essence. Extremely high risk. If aapl dissappoints u r staring at quadruple digit losses already.
 
Quote from MushinSeeker:

What I meant about buying the weeklies 5-7 days out is to still keep it as a daytrade. I am not advocating buying on monday and holding till wednesday. Lower gamma BUT lower theta rate-so it evens out.

I can definitely see the cheapness though since I have a measure of straddle cost / projected sigma move 5,4,3,2,1 day(s) out and what I have found is from monday-Wed noon the ratio hovers 1.4 which means on a stock with a projected 1 sigma move of $1, the straddle is 1.4 Once wed noon hits, the ratio starts plunging down to about .85 thursday 10am.

That being said, using your reasoning, buying mondays with a ratio of 1.4 seems ok as long as you sell it same day still on a ratio of 1.4.

Will "TOS ondemand" that today.

BTW I got sigma charts on TOS using thinkscript . It calculates variance ratios between Op-Cl/Cl-Cl and PrevCl-Op HistVol. U want it? say the word..
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Gotcha.

I have studied performance on Mondays and Tuesdays and it seems unless there are extreme moves the premiums erode rather quickly intraday.

Wednesdays are doable... for instance today aapl 610 straddle produced a respectable 10% profit from 9:38 est to 9:53 approx this morning... that same move however on Thurs or Fri is easily 20-30% or more.

Although I havent studied with 7-8 days expiration...I suspect performance will even be worse than M/T unless a parabolic rapid move out of normal distribution curve takes place... like 6 or 7 std deviations. Otherwise the chop will bleed rapidly.

Thanks for the offer on the sigma charts. I would love to check them out.
 
Quote from Riffraffpatrol:

Gotcha.

I have studied performance on Mondays and Tuesdays and it seems unless there are extreme moves the premiums erode rather quickly intraday.

Wednesdays are doable... for instance today aapl 610 straddle produced a respectable 10% profit from 9:38 est to 9:53 approx this morning... that same move however on Thurs or Fri is easily 20-30% or more.

Although I havent studied with 7-8 days expiration...I suspect performance will even be worse than M/T unless a parabolic rapid move out of normal distribution curve takes place... like 6 or 7 std deviations. Otherwise the chop will bleed rapidly.

Thanks for the offer on the sigma charts. I would love to check them out.
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The other benefit btw when premiums are dirt cheap on thurs or fri is it is very feasible to get price appreciation on one side so much so that the entire straddle is profitable by closing out one side.... leaving the other side a free position. To me this is the ideal scenario that I look for... if price continues in the original direction, yes you end up leaving money on the table... but if a reversal does take place....it can be a mini lottery ticket. Virtually impossible scenario with 7-8 DTE.
 
on the big difference between 6-7 dte vs. 1-2 dte trades.

On the subject of getting the free ride trade, I was thinking about this yesterday . In a case where you own straddles (ex $50 straddle when XYZ=$50, XYZ goes up to $52.5 one hour later, sell the 50/52.5 call vertical leaving you long 50P and long 52.5c with the $ of the 50 c in your pocket.

IOW, starting w a straddle gives you the flexibility to bank $ and turn it into a strangle for next 3-5 hours so if xyz keeps running ur in on either direction still....

Thinkscript is forthcoming thru pm .
 
How is this for getting too fancy. Being that you already own the ATM straddle and will get rid of it by day's end, BUt stock goes away from it early but not a lot which means ur sitting on a little profit, but it is still early in the day, would you sell something in the back months-a vertical perhaps to move your delta back to flat?
 
Quote from MushinSeeker:

How is this for getting too fancy. Being that you already own the ATM straddle and will get rid of it by day's end, BUt stock goes away from it early but not a lot which means ur sitting on a little profit, but it is still early in the day, would you sell something in the back months-a vertical perhaps to move your delta back to flat?
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Yep bringing back to delta neutral is certainly an option (no pun intended)... I'm keeping it very simple however and wouldn't do that.

You are a deep thinker arent u? LOL
 
RiffRaff quick question if u don't mind.

Did a TOS simulation on an AMAZON Nov4 2011 215 straddle . IV at 38 w/ AMZN around 215 around 11AM.

AMZN hung around 215 for next 1.5 hours and IV got hammered down to 33 and position on a 1 lot straddle went -40 .Is there a way you can play this better ? I don't mind losing but $40 seems outsized to the other losses on other straddles (10-20$) on other tickers .

Do you consider the IV levels of the straddle relative to the hi/lo of the year?

IOW, would you put on a straddle having a 50 IV if the hi/lo of IV for the year is let's say 30/50?
 
Quote from MushinSeeker:

RiffRaff quick question if u don't mind.

Did a TOS simulation on an AMAZON Nov4 2011 215 straddle . IV at 38 w/ AMZN around 215 around 11AM.

AMZN hung around 215 for next 1.5 hours and IV got hammered down to 33 and position on a 1 lot straddle went -40 .Is there a way you can play this better ? I don't mind losing but $40 seems outsized to the other losses on other straddles (10-20$) on other tickers .

Do you consider the IV levels of the straddle relative to the hi/lo of the year?

IOW, would you put on a straddle having a 50 IV if the hi/lo of IV for the year is let's say 30/50?
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I look to be in the lower half of volatility range always.
 
Quote from optionbull:

Hello

What's youre opinion using options instead of futures in the following

Lets say ihave a fut's model that goes long short swing trading. Sometimes for a day but usually a few days. Most a week
Would it be better or worse to buy a strdl or put / call in the direction of my futures?
Example my model says I want to buy gold. What's a good option choice at the moment given directional bias for 2-3 days? Thnx
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Hi any takers on my question above? Thnx
 
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