Vega trading

[Gimpyron]

hello everyone,

i would like to share with you one trade i bought.
most of my trades are not buying calls or puts, but in this specific trade i tried to take the upper hand on this low volatility stock.

Rick: T

impld vol' on low enviorment:

I decided i want to take a bet on increase in implied volatility for the next 40-60 days, therefore i bought a strangle, in the money but 242 days till expiration.
the main idea was reducing time decay, take advantage on high long vega position (as you can see in the pic', i have around 0.2 +vega)

What do you think on such trade?
Do you guys trade vega positions? do you have better way trading volatility besides buying options & selling the stock?

Would like to here from you,

Ron

 

[newwurldmn]

that's the appropriate trade if you think the 1 year implied vol will go up in 40-60 days.

 

[trilogic]

hello everyone,

i would like to share with you one trade i bought.
most of my trades are not buying calls or puts, but in this specific trade i tried to take the upper hand on this low volatility stock.

Rick: T

impld vol' on low enviorment:

View attachment 155807


I decided i want to take a bet on increase in implied volatility for the next 40-60 days, therefore i bought a strangle, in the money but 242 days till expiration.
the main idea was reducing time decay, take advantage on high long vega position (as you can see in the pic', i have around 0.2 +vega)


View attachment 155805

What do you think on such trade?
Do you guys trade vega positions? do you have better way trading volatility besides buying options & selling the stock?

Would like to here from you,

Ron

Also would be interested in the bid ask spread getting and and out, ??

Thanks

 

[cdcaveman]

Why would one year implieds go up ... The tendency is longer term options to be closer to mean vols... Therefore midterm vols could go up and long term vols might not move very much... If you think longer term vols will go up sure that's a good expression as new world said but that means that the average vols in that stock will go up for the long term... It's like saying the vix will average to 20 a year from now instead of 15..meaning the market now prices a more permanent level of implieds .... I think your looking more for mid term vols to rise temporaryly... But idk I could be wrong

 

[Gimpyron]

Also would be interested in the bid ask spread getting and and out, ??

Thanks

Trilogic as you can see in the pic' the spread is really tradable.

Why would one year implieds go up ... The tendency is longer term options to be closer to mean vols... Therefore midterm vols could go up and long term vols might not move very much... If you think longer term vols will go up sure that's a good expression as new world said but that means that the average vols in that stock will go up for the long term... It's like saying the vix will average to 20 a year from now instead of 15..meaning the market now prices a more permanent level of implieds .... I think your looking more for mid term vols to rise temporaryly... But idk I could be wrong

I see what you mean, please notice there is moster vega value for reason,
i have to check myself about what you wrote you could be right

 

[cdcaveman]

sorry if i'm confusing.. volatility is mean reverting in the long run.. your basically implying the mean will elevate, not that vols will just go up.. if your trading around a particular event best to position yourself closer to it , as longer term vols might not be effected

 

[Jones75]

hello everyone,

i would like to share with you one trade i bought.
most of my trades are not buying calls or puts, but in this specific trade i tried to take the upper hand on this low volatility stock.

Rick: T

impld vol' on low enviorment:

View attachment 155807


I decided i want to take a bet on increase in implied volatility for the next 40-60 days, therefore i bought a strangle, in the money but 242 days till expiration.
the main idea was reducing time decay, take advantage on high long vega position (as you can see in the pic', i have around 0.2 +vega)


View attachment 155805

What do you think on such trade?
Do you guys trade vega positions? do you have better way trading volatility besides buying options & selling the stock?

Would like to here from you,

Ron

Unless I'm reading wrong, you bought a straddle, not strangle. The actual strangle looks ok. You get a better b/a spread at 35, and a tighter b/a ask at 33.
Unless you know something is going to move the underlier, it seems like a lot of money to tie up for 60 days.
Just my humble opinion, but glad to see action in the markets.
Cheers!

 

[cdcaveman]

i still think you should be buying implieds right near the event in which you believe vols will go up... buying longer term vols won't do you any good.. That is like buying jan 17 straddle on spx for this sept 15 fed meeting.... won't work

 

[Gimpyron]

Thank you for the replies guys, all been very helpful
i start to understand about trade my position closer to the bloodbath that i expect (fed..)
i strongly consider rolling back this straddle

 

[Gimpyron]

Unless I'm reading wrong, you bought a straddle, not strangle. The actual strangle looks ok. You get a better b/a spread at 35, and a tighter b/a ask at 33.
Unless you know something is going to move the underlier, it seems like a lot of money to tie up for 60 days.
Just my humble opinion, but glad to see action in the markets.
Cheers!

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