Vol-trading for beginners

destriero · Mar 6, 2021

I don't think we'll see 15,000 NDX or 4500 SPX this year. The rotation into cyclicals is to be expected. I really only see GOOGL as a buy here. It's the only long-term equity position that I own.

I would actively short a touch of 3250 AMZN.

Same Lazy Element · Mar 6, 2021

destriero said:
I don't think we'll see 15,000 NDX or 4500 SPX this year.

Hmm. I don't want to comment on the level of spooz (*) but i do think we gonna have more of these explosive rallies

(*) though I am tempted to do an over/under vs current level - the winner pays for the gun range tickets in Vegas?

destriero · Mar 7, 2021

Same Lazy Element said:
Hmm. I don't want to comment on the level of spooz (*) but i do think we gonna have more of these explosive rallies

(*) though I am tempted to do an over/under vs current level - the winner pays for the gun range tickets in Vegas?

lol OU on current after we drop 200 spooz? The bet was 4500 for the year.

deltaf0rce · Mar 7, 2021

Preference for straddle, diagonal or backspread? Was thinking of a put backspread 3850 June, about 4.90 CR to put on. Vol 24

InAllHonesty · Mar 7, 2021

destriero said:
I don't think we'll see 15,000 NDX or 4500 SPX this year.

Why not?

With record earnings, low interest rates, stimulus and an economy re-opening, I can't see this pullback being nothing but washing out weak hands. Unless there's any undesirable developments with Covid or another black swan, a 10-20% annual return would be reasonable.

The only question I have is whether the current pullback has caused enough pain for it to be over. NDX almost. S&P not sure.

destriero · Mar 7, 2021

InAllHonesty said:
Why not?

With record earnings, low interest rates, stimulus and an economy re-opening, I can't see this pullback being nothing but washing out weak hands. Unless there's any undesirable developments with Covid or another black swan, a 10-20% annual return would be reasonable.

The only question I have is whether the current pullback has caused enough pain for it to be over. NDX almost. S&P not sure.

Cool story, Bro.

InAllHonesty · Mar 7, 2021

Uh, ok

Same Lazy Element · Mar 7, 2021

destriero said:
The bet was 4500 for the year.

lol! Mkay, my back of the envelope price for 4500 one-touch is even odds (you never gave me a quote) which feels fair

Same notional, i.e. gun range tickets in LV? I always wanted to go, just never had a jungle guide

horizon · Mar 7, 2021

destriero said:
So we've established that long 100 shares X short two calls is a short synthetic straddle. It's simply a matter of reducing the transaction to 50 shares X short one call to trade a half-sized synthetic straddle.

UCO's synthetic (forward) is trading at shares. I am long 50 shares from 52.03 and short a Mar19 51C from 4.11. There is 1.03 of intrinsic in the call, so I am short the half-lot 51 synthetic straddle from 7.19. This half-lot has the same payoff as the full size (one contract) Mar19 51 straddle. Stress it as a full lot and reduce the payoff by half.

It's the only method by which to trade a listed half straddle. The only issue is if converting the half straddle to a fly as you will be synthetically buying twice the wing exposure. Buying a one lot strangle to convert the half lot to an iron fly will result the same payoff as a one lot synthetic iron fly with two lot wings (stressed at 50% payout for the half-lot).

Hi Destriero,
When will you exit this trade if it wins? Like after gain 50% then you get out or you will try for the maximum gain? Also, do you manage it if it starts going south? Or cut loss and open a new one? And if cut loss, do you cut loss after 50% loss?

destriero · Mar 7, 2021

horizon said:
Hi Destriero,
When will you exit this trade if it wins? Like after gain 50% then you get out or you will try for the maximum gain? Also, do you manage it if it starts going south? Or cut loss and open a new one? And if cut loss, do you cut loss after 50% loss?

I haven't looked at it. I should probably cut it here. I only traded it for illustration. I wasn't trading an opinion on UCO; I was showing how to start trading (URO) positions small. I can't tell ppl when to take profits or cut risk. I suppose it made more sense than stating "buy 50 XYZ and short one call."

IMO, I cover all positions when I have earned more than 4X the vega position (on the day). Delta is another matter and beyond the scope of this thread.