Vega trading

cdcaveman · Aug 17, 2015

How come you picked T instead of something else to play the fed?

cdcaveman · Aug 17, 2015

Why not something more directly effected

Gimpyron · Aug 17, 2015

cdcaveman said:
How come you picked T instead of something else to play the fed?

one of 6 positions i hold right now
whats your bet on the fed meeting

cdcaveman · Aug 17, 2015

Long vix calls.... Nothing fancy.... A little differnet profile then a spx put... But a spx put would be a good one to....

cdcaveman · Aug 17, 2015

Another is sell a vix put and buy a otm vix call spread

Jones75 · Aug 17, 2015

Gimpyron said:
i understand about the bid ask spread, but do you look after the implied vol, higher vol means i buy expensive legs.. (33's). about the 35's you probably right

Unless you're trading 100 contracts or more, the difference is too small to be concerned about (the vol being 15.553% compared to the lesser 15.466%). Maybe consider looking into what the 52wk high and low iv is, and this way you'll have a better idea if they are cheap or expensive.

I would never tell you, or anyone for that matter, how to trade, however if you're trading vol, use OTM strangles, and consider a max of 60 days. I use maximum 5 days. Just remember, theta is your worst enemy, and will ruin every trade if you don't stay on top of it.

Best of luck

cdcaveman · Aug 17, 2015

Jones75 said:
Unless you're trading 100 contracts or more, the difference is too small to be concerned about (the vol being 15.553% compared to the lesser 15.466%). Maybe consider looking into what the 52wk high and low iv is, and this way you'll have a better idea if they are cheap or expensive.

I would never tell you, or anyone for that matter, how to trade, however if you're trading vol, use OTM strangles, and consider a max of 60 days. I use maximum 5 days. Just remember, theta is your worst enemy, and will ruin every trade if you don't stay on top of it.

Best of luck

what do you mean you use a maximum of 5 days?? are you saying that is your hold time? just trying to find some context

cdcaveman · Aug 17, 2015

Gimpyron said:
one of 6 positions i hold right now
whats your bet on the fed meeting

One thing you should look into if this is an event trade.. is a double calender... otm call calender and a otm put calender.. it's in other words called a strangle swap.. because your short the front strangle and long the back strangle.. this particular strategy does well when you literally straddle the event inbetween the two expiries..

Jones75 · Aug 17, 2015

cdcaveman said:
what do you mean you use a maximum of 5 days?? are you saying that is your hold time? just trying to find some context

I guess I should mention, I'm talking from the buy side. I buy front month long straddles, just before a news event such as earnings. I have no desire to hang on, especially if I'm wrong. On this strategy I buy one day, and gone the next.

If I play vol before ER, then it's an OTM long strangle, and I will hold for 5 days max. Theta is a nightmare. And I always sell the day before ER. I don't live and die by this strategy either, because I've found all the ducks have to be lined up perfectly, to show a profit, if you know what I mean.

Cheers!

cdcaveman · Aug 17, 2015

Jones75 said:
I guess I should mention, I'm talking from the buy side. I buy front month long straddles, just before a news event such as earnings. I have no desire to hang on, especially if I'm wrong. On this strategy I buy one day, and gone the next.

If I play vol before ER, then it's an OTM long strangle, and I will hold for 5 days max. Theta is a nightmare. And I always sell the day before ER. I don't live and die by this strategy either, because I've found all the ducks have to be lined up perfectly, to show a profit, if you know what I mean.

Cheers!

I've found the same thing to be true... I used to trade alot of earnings events like this with calendar spreads straddling the event instead of strangles.. It's a tough way to earn.. I never put on any double calendar spreads near earnings but i can only imagine a similar effect with more plates to balance.. Basically it's more or less another way to short gamma... If you buy the option that includes the earnings vol, and sell the pre earnings vol, your just hoping for no significant moves in the underlying