The Options Thread

thread: The Options Thread

  1. #1
    Junior Member saranox's Avatar

    The Options Thread

    Considering That the Let's Trade Options! Thread is basically no more active (I will miss ya, TF), I thought I'd continue with my choices postings here so I have somewhere to post.

    1. The Let's Trade Options! Thread has a ton of stuff of inside, some of it's good. You're likely to need to wade through a huge number of posts to find the nuggets. Alternatively, visit TastyTrade and start watching movies. The Where Do I Start (WDIS) videos are great for overall background knowledge as to how options work, as would be the Market Steps, and Anatomy of a Trade show....

    2. Contrary to the Let's Trade Options! I'm not going to be focusing a lot of instruments. I do play them from time to time, however they do not occupy a core position within my portfolio; my two cents is they probably should not be occupying a core position in yours either. They're finicky the derivative instruments that suffer from contango, and it is best that you avoid them, if you do not have a full grasp on these mean-reverting instruments act.

    Furthermore, from a more practical perspective, these instruments were designed as insurance for long positions, to hedge against a market downturn. There's absolutely no point in using them for that purpose if you're in a position to hedge a bullish SPY distribute with a bearish SPY disperse, which you're permitted to perform (i.e., an iron condor). Taking a call VXX position to hedge your SPY brief put credit spread is also capital as you're invoking buying electricity and then a second time with the index disperse. Hedging a SPY brief put spread with a SPY brief call spread utilizes as much buying power as a single-sided disperse (supposing they are of equal attack width), so that I can't see the benefit of using VIX or VIX derivative alternatives in this manner for the normal retail trader.

    Instead, my bread-and-butter transactions are choices setups from the indices, like RUT, SPX, and NDX and in individual underlyings where they are ripe for drama (ordinarily around earnings statements ). I do look at where the VIX is at on a daily basis, since it can inform my decision of whether to pull the trigger on a premium play at a index instrument.

    Naturally, however, I will see the tremendous sexiness of these transactions, by way of instance, in UVXY or even SVXY (oh, the moves... ), so in the event that you've got ideas for all those, feel free to place them. Everyone is free to say not my cup of tea to look at any trade that is given and either pull the trigger themselves.

    4. You Won't See Many Flies Here. For mepersonally, flies possess a particular, infrequent purpose I almost never use, as it requires that certain things occur during the life of a setup which are generally highly speculative as to depth or timing of motion and consequently have low likelihood metrics (in other words, I have been frued by flies previously ); I use them sometimes, but usually only in the form of an iron fly that, for one reason or another, I have been forced into due to price action during the life of a setup....

    5. ... Or Naked Longs. Most traders who use choices are using them as a leveraging tool and use a nude long option (long call or long put) to play directional motion in the underlying. There are various problems with that methodology that I will not go into here, but I primarily focus on iron condors, credit spreads, and ton for all of my plays. But you're perfectly free to post a nude long trading thought if you think it might be helpful to someone....

    6. Charts May Be Useful, But Not Required (Depending on the Trade). For the sort of trader that I'm (nondirectional), charts are almost a useless tool and occasionally can actually bias my installments. The sign (if there is one) for me to pull the trigger on a transaction is indicated volatility position (IVR) and/or implied volatility (IV), so you'll see me projecting IVR and IV around quite a bit.... For me, all of the additional stuff (indiors, candle patterns, Elliott Wave) is only sound I do not want in my premium selling trading mind.... (To be clear, I do scalp /ES on event; I do so in precisely the same way I used to scalp spot, but with a few small spins peculiar to the stock markets (e.g., TICK)).

    That having been said, every so often I do take a directional trade. For instance, post-Brexit, there was a ton of stuff that only said Trade me directionally -- EFA, EWU, EWG, TBT, etc..... In that instance, I will gander at a chart,'cuz, well, it is a directional trade....

    7. I used to exchange a ton of spot, so you'll find me dabbling in spot proxies from time to time (e.g., FXE, the Euro proxy). But, there are literally a ton of spot FX forums (it's, after all, called forum), so post spot FX setups in one of those forums unless there is some kind of alternatives play which may be derived from it (there are not many; most of the currency proxies aren't that great in an options trader's standpoint ).

    8. Trade Sizing is Peculiar to You. Most of the setups I have submitted previously are just one contract setups. In fact, I use a variety of contracts which is peculiar for my risk tolerance and account size. Risk management in trading choices is just as essential as for trading spot. As a general rules of thumb, keep the maximum loss metric of your transactions to 5% of your total account size and attempt to maintain 50 percent in cash in any way times (a principle which I kinda violate on occasion depending on the instrument and market conditions).

    9. A Signal Service'm Not Running. The transactions I make are my transactions. You're free to copy them or not. When and if you copy them, they become your transactions; they are owned by you.

    Some transactions I create because I have various items in my portfolio I am attempting to market or do something with, so they may not be good original setups to play, and I will attempt to point those out when I am doing that.

    But, the vast majority of premium sellers are doing the specific same, statistically based premium selling setups at exactly the same time in certain market conditions since the choices model is identical for you, me, and the next guy; the Aug SPY 75% likelihood out-of-the-money call is the same for everyone at precisely the same time.... In that way, my setups are hardly original as the guy who is shorting EURUSD from 1.14 isn't placing a first idea out there; everyone's shorting that amount....

    10. If You Would like I Will Critique Your Trades, But You Want to Do Your Own Homework. Homework takes some time, and nobody likes to perform it. But, I am not running a class; I'm only posting ideas....

    11. Brokers. Interactive Brokers, TDA, OptionsHouse ... . There can be others. I enjoy TDA's ToS platform for some things; TDA affiliate Dough's platform for others....

    12. This is Not a Binary Options Thread. There aren't any doubt choices threads in the Forums section. Please post any of your ideas regarding binary choices in those threads.

  2. #2
    Junior Member saranox's Avatar
    This guy's good, if you want entries as they occur: Also, a lot of very good advice if you are eager to go back in time and read his informational posts.... He's got bigger balls than I do and/or is just plain more patient/confident in consequence and takes spreads to max profit, while I'm more inclined to just money, take, run at 50% max....

  3. #3
    Junior Member saranox's Avatar
    Gradually ching up here.... I've been lax.

    Here is what I have on now; it's not much:

    VXX Feb 2nd 27.50/30.5 long placed vert:

    Remarks: Just your normal fare first OTM short put, three-wide in the weekly....

    VXX Feb 16th 27/29 long placed vert (2x2):

    Remarks: Intended to be an exemplar trade to demone how to scale to account size with a thinner spread, but a bigger contract amount....

    VIX April 18th 14/17 long placed vertical:

    Coments: Intended to be an exemplar exchange to demone how to take advantage of medium-term (M4-M7) contango drift using VXMT as a manual.

  4. #4
    Junior Member saranox's Avatar
    This week, I'm basically waiting for the Feb 9th weekly to start to do my standard first OTM/3-wide weekly long set vert in VXX.... Given where VXX is sitting today, they will either be Feb 9th 27.5/30.5's or 27/30's where I can get filled for a 2.30 debit/contract or less (.70 charge or more if you're working the short call vertical end of items ).

    Naturally, I will keep my head for VXST/VIX ratio pops to gt;1.00 or VVIX pops to gt;110 to add in spreads higher up the ladder, but these pops are sporadic and short-lived.... My guess is that when a pop will happen, it is going to be on the end of the year/first of this year, as big dicks ditch crap piles for tax reduction and also do exactly the 2018 repositioning e....

  5. #5
    Junior Member saranox's Avatar
    Introduction: VXX Feb 16th 28/31 long put vertical for a 2.28/contract debit:

    Frankly, was surprised that this appeared to get a 2.27 mid-range open, because 28 is at the money, and the market doesn't usually accommodate that kind of fill unless the short put is heavier....

    I was going to await the February 9th's to start, but I've a spot within the nooks and crannies of my February 16th 27/29 2x2 long put vertical to squeeze this into here and when a person's going to fill me for 2.30 or less onto a three-wide, well, who am I to question....