Weekly Options Experiment

Quote from RichardRimes:

You do need to know commish cost. To do this trade my cost would have been $500 plus $125 comsh. you mentioned that you would hold till expiration ...the probablility of %100 loss on this trade is very high. If you wanted to close this trade say for a nickle then you still have the $125 commission......so at very best there are high odds for losing $500 ( $250 for the trade and $250 in comission)

You absolutely have to take into consideration costs of trade to make any paper trading strategy anywhere near realistic.
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I'm trading via tradeMonster paper account, which includes commissions in calculations. When I opened that trade, the platform showed max loss and I thought it includes commissions. Apparently it doesn't, my bad. On their website it says that cost of trading 50 two leg spreads is $50, so I suppose this is what they deducted.
At the moment, my total gain is around +$500, but account is down about -$150, which gives $650 in costs.

My positions (symbols, numbers of spreads and commission according to the website):
AAPL 1 $15
BAC 16 $20
BIDU 7 $15
C 5 $15
F 36 $50
FB 24 $50
GOOG 2 $15
IBM 4 $15
NDX 6 $15
RIMM 26 $50
SPX 50 $50
S 16 Calls $12.50

Total commissions $307, if I understand things correctly. Why the heck I'm down $650?
 
you might check with them on comission...Atticus was a bit harsh... but "unrealistic" is right. The problem with paper trading is you don't get the feel for what REALLY happens. Good luck in trading WAAAAAY out of the money spreads on the SPX...did you look at the volume of actual trades and the open interest? You have to make sure its very liquid to get in a trade thats reasonably fair.

You need a breakdown in transaction costs to understand why you are losing. Not familiar with their platform but it does sound a bit simplistic.
 
Quote from RichardRimes:

you might check with them on comission...Atticus was a bit harsh... but "unrealistic" is right. The problem with paper trading is you don't get the feel for what REALLY happens. Good luck in trading WAAAAAY out of the money spreads on the SPX...did you look at the volume of actual trades and the open interest? You have to make sure its very liquid to get in a trade thats reasonably fair.

You need a breakdown in transaction costs to understand why you are losing. Not familiar with their platform but it does sound a bit simplistic.
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Strike sold is 1535, market was at about 1450 at the time, so I was only 5.8% OTM. I wouldn't call that unrealistic as for 6 trading days.
Anyway, I will check on costs before opening real account, don't like such surprises.
 
Quote from optisum:


Total commissions $307, if I understand things correctly. Why the heck I'm down $650?
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Ok, I found value of paid commissions. So far I've paid $254. That's about as I'm up on my trades, but account is down about $450. Frustrating. Anyone know this broker?
 
Quote from optisum:

Strike sold is 1535, market was at about 1450 at the time, so I was only 5.8% OTM. I wouldn't call that unrealistic as for 6 trading days.
Anyway, I will check on costs before opening real account, don't like such surprises.
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6% move in 6 trading days? The ATM straddle of that duration is 22. So you're strike is outside the ATM straddle by a factor of 4.
 
Funny thing happened during the night. Market value of my AAPL position was over $1k negative (it should be in profit and actually it is now). The thing is, this is a spread with max loss equal to the price at which it was bought. I believe, the negative value was calculated from current bid/ask for my options, and because bid-ask spread was so wide at night, position value was so much in red. I'm wondering what happens in such situation on a real account, during market hours, when someone has no free cash and bid-ask spread goes wide. Do brokers understand that a spread cannot lose more than what it was bought? Obviously, I assume long gamma spreads only.
 
Not too many trades this Friday:

Buy 1 NDX Jan-25-13 2800/2850 Call vertical @2.85
Buy 10 SPX Jan-25-13 1430/1440 Call vertical @0.35
Buy 15 FB Jan-25-13 31/32 Call vertical @0.18
Buy 30 F Jan-25-13 14/14.5 Call vertical @0.18
Buy 13 C Jan-25-13 42/43 Call vertical @0.23
Buy 4 BIDU Jan-25-13 105/110 Put vertical @1.43

I've spent $105 on commissions today. Will update tomorrow how trades from last week went.
 
Some single options trades:
Buy 5 S Feb-22-13 5.5 Put @0.1
Buy 2 BAC Jan-25-13 11 Call @0.22

S option is not weekly, so I guess thread title needs to be updated. My logic is to buy undervalued options. Sometimes I will also sell other undervalued options just to finance the buying. At the moment AAPL, RIMM and IBM are overvalued so I won't buy those.
 
Ok,
I messed up auto-execution thing and had to start from scratch. I'm starting again with virtual $100k. Here are my trades done today:

Buy 1 Feb-1-13 AAPL 445 Put
Buy 38 Feb-1-13 BAC 11.5 Call
Buy 4 Feb-1-13 BIDU 110 Put
Buy 2 C Feb-1-13 43 Call
Buy 2 F Feb-8-13 13 Call
Buy 5 FB Feb-1-13 28/31 Call Vertical
Buy 1 GOOG Feb-1-13 750 Call
Buy 9 IBM Feb-1-13 205 Call
Buy 9 RIMM Feb-1-13 16/18 Call Vertical
Buy 80 S Feb-1-13 5.5 Call
Buy 12 SPX Mar-1-13 1390/1400 Put Vertical
Buy 9 GLD Feb-1-13 165 Call
 
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