Trajan's second option journal

Quote from cvds16:

Not so sure that is the solution: in the electronic world you better be right about your vol, because the spread is so small it seems hard to make a living out of it except for the big financial groups who can offset things over many stocks. Not sure there is a place for small locals, or am i wrong ... ?
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I don't disagree, the trend is towards larger groups with more capital and has been that way for years, but I want to be able to trade more stocks myself. Right now, even with enough capital, I couldn't trade more than couple stocks like this and could never get past two as a floor trader. As you know, a MM haircut is different than a retail customers, at least here, it is up or down 20% or down 50%. Properly managed, this could go a long way on 200k. As far a trading vol goes, there were people 5, 6 years ago who swore the only way to make money was either being a delta trader or vol trader. I anticipate on being a vol trader even more so at that point. This current trade is a volatility play. I am very comfortable with these and think it is one of my strengths.

My concern isn't about finding what edge exists. Personally, I could care less if it is a choice market, the tighter the better with tons of liquidity is preferred. My main focus is on access and cost. Access meaning being able to mass quote several different series and have MM margin(could get this now without becoming a member). Cost is low upfront fees each month to the exchange and low transaction costs(not bad, could be better). I just want to put together my model in a computerized form, mass quote it, and wake up every half hour from my nap and make sure it didn't blow up. I would say go to Starbucks twice a morning, but sadly, I've given up coffee officially today.
 
I was bidding on the May 35's for 4.10. Cancelled it after the stock fell back down and they didn't fill me. I gave them a minute when the stock reached a point where they would have had good edge on the trade, then said fuck it. May try again tommorrow, but in IP.
 
Quote from Trajan:

I don't disagree, the trend is towards larger groups with more capital and has been that way for years, but I want to be able to trade more stocks myself. Right now, even with enough capital, I couldn't trade more than couple stocks like this and could never get past two as a floor trader. As you know, a MM haircut is different than a retail customers, at least here, it is up or down 20% or down 50%. Properly managed, this could go a long way on 200k. As far a trading vol goes, there were people 5, 6 years ago who swore the only way to make money was either being a delta trader or vol trader. I anticipate on being a vol trader even more so at that point. This current trade is a volatility play. I am very comfortable with these and think it is one of my strengths.

My concern isn't about finding what edge exists. Personally, I could care less if it is a choice market, the tighter the better with tons of liquidity is preferred. My main focus is on access and cost. Access meaning being able to mass quote several different series and have MM margin(could get this now without becoming a member). Cost is low upfront fees each month to the exchange and low transaction costs(not bad, could be better). I just want to put together my model in a computerized form, mass quote it, and wake up every half hour from my nap and make sure it didn't blow up. I would say go to Starbucks twice a morning, but sadly, I've given up coffee officially today.
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Come to think of it, I don't know what I'll do at that point. The exchange thing is just an idea. I'll have to wait and see how thing turn out, besides the fact of me lacking 200,000 is an important part. It may be a bigger headache than it is worth.
 
Slept in today after an evening at the track. Many people here like to make a comparison between trading and poker. For me, it is similarities between trading and horse racing. I don't particularly like poker because of having to sit for an extended period of time. I can typically last about 30 minutes before getting antsy and start betting the farm. Also, it goes too quick, I like to study the relationships and odds, which many times I can't do in the time frame of the game. The most important aspect why I don't like poker is that it isn't a very good game to enjoy a beer while playing. You need to have 100% focus all the time, alcohol makes this virtually impossible for me.

Horse racing on the other hand is nice and slow. I can enjoy a beer and place my bets whenever I want to without some dickhead freaking out because I'm taking more than a couple of seconds. It also isn't so dependent on the dumb luck of the cards you get. After all, there is going to be winner in every race and you can place a bet on him. You could sit at a poker table for a couple of hours and never get anything better than a pair of twos. Track betting is about relationships. If your studying the Racing Form, you look to see not only how fast the horse is, but how well it does against a certain level competition. Also, when betting, you look at the expected payoff to see if it is worth the risk/reward to place a bet on a certain horse. Sometimes it can make sense to place a bet on the favorite and at others you look down the line for a payoff on second or third place. You can place bets on one horse or many, it all depend how the odds line up and it makes sense. It is entirely possible to place bets on three different horses to win if the payoff is worth it. The main reason I like it is that I have always won at the track. Last night was no different, not enough to cover my beer but close enough.
 
Vol is holding steady right here, this is what I expected as the stock is at a point where a lot can happpen and doesn't make any sense to annihilate the 15s at this point. The stock could easily blow through that strike or drop back down to the bottom of its recent range. Until it gives a signal that neither one is going to happen, premiums will remain robust. The stock is fairly volatile right now, it would be nice if it was volatile in one direction.
 
I would like to apoligise to all those who I've mocked on these boards for their belief in conspiracy theories. Goldman Sachs must have some sort of derivative with a strike at 14.35. Yesterday, they were the ones driving it down to this level on the close. Today, they were ramping it up to this point.

Stock traded as high as .39 after the close. Tried to sell some stock up there but was too slow and dropped down to the level it was trading before GSCO ramped it.
 
Nice rally in the market today. Cisco is up which makes me glad I bought 1000 shares on Friday. Technically speaking, the stock appears to be strong right here. Last week, it broke above a resistence level and the technical indicators at the bottom of my charts are on the upswing. Earnings are released a week from tommorrow. Like I said when entering in this position, the plan was to hold it for a week but it was also to let this thing run. The nice thing about being long premium in the weeks before earnings releases is that it mitigates premium decay. I have time to see if this stock wants to make a run towards the 16 area and leave a tight stop to scale out it in the 14.60 area. The risk reward here is still in my favor. I could take a small profit here or an even smaller profit if it declines but a large profit if it continues in the trend. My thoughts are to stick with the trend. One thing which will change my mind is failure of the S&P to break out. A collapse from here in the index would have me exiting the long deltas and reducing the overall position.
 
Couple thousand of the 15s traded on the close for .55 which dumped a 100,000 on the crowd. I actually want to see people selling premium at this point. I view the selling of 15 calls as bullish.
 
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