Wednesday, April 25, 2012
Great APPLE earnings
Well AAPL reported blow-out numbers (again) My free advice, don’t bet against this company. A lot of sellers in the last two weeks sold as they either expected a negative surprise or believed the story of slowing sales etc.
Another good performer is GOOG. I am using both right now and only those two. Not always a smart decision to limit an account to only two stocks but they provide consistent rewards for those that use them. I am doing mainly Vertical (or calendar) spreads. I am buying the Jan 570 and some 580’s and selling the 610 for this week for both stocks. If the stock gets past my sold strike more than a few dollars I will close or roll out to next week for a credit and a higher strike. The idea, which is hard to stick with in times like last week, is to sell calls each week 15-20 points over the existing stock price. Try to not get distracted by the normal up and downs. Just make a deposit each week and ride the apple train to great rewards.
Lots of ways to play this market now that earnings for AAPL is past. You can make a pretty easy 1% a week selling spreads both put or call. If you combine them you have an IRON CONDOR. The beauty of those is only maintenance is charged on one side. So you get a free play at the other end. You open these on a Wednesday and can stay around 30 points away from the stock price and still make 1% on one side and with an Iron Condor you get another 1%. 2% a week is darn good ROI. But these need a little more watching than a Diagonal spread. But plenty of money out there for traders that pick their spots with care..
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95 comments:
Good time to buy puts, or don't fight the tape?
SBUX down, AMZN down, should have bought puts!!!!
Quick question Jerry, Why do you buy the Jan AAPL calls? Seems like the Octs are cheaper and therefore would yield even higher ROI. I seem to liquidate these verticals (guess we've been calling 'em calendars) whenever threatened on the short side posiotion way before expiration anyway, then re purchase for the following week. Better ie higher delta? Just wondering
Glad tohave escaped earnings week in tact. Boy is it hard to sit in cash with all that activity and rumor swirling around. Guess that's the gambler in me. Just a couple of small spreads to keep it interesting. Now back to making $.
Crumbs-R-Us
Nice job amzn, up 12% right now.
@Dave/henngiss,
they start 9:00 and close the next day 16:00. they are brilliant.
i am using them for a couple weeks now.
Son of a Beeeeeeeee, AMZN is up, straddle would have worked again!!!!! I have to stop talking about it and put it into play!!!
Nicky..lol
ihaveoptions; The oct would work and even the Aug but the delta effect is better especially nice in a down mkt. Usually the Jan's have a higher open interest also. If i were to hold on to the long side until expiration, the Jan's cost around 13 more at this time. But assuming i can make the 3-5 points per week, by going out to the next qtr that equals around 13 weeks times 3? points for a potential of 42 points each option. But as you mentioned, I will probably never hold on to a position that long.. I might rotate more into closer long side options.
I see AMZN is up 27 in after mkt.
Pick your stocks carefully as the earnings are coming along and you don't want to make a mistake and be on the wrong side of a big move.
Trade careful and we will all be here for years. Probably on of the safest trades is to do an Iron Condor. Open it on late Tuesday or Wednesday. Leave a ton of cushion and settle for maybe .04 cents on each side for a ROI of 1.3 % per week. Don't use a stock with news coming. Doing these can generate around 75% roi per year.
If you started with 10k in 10 years that is over 2 million. Well now that you are one of the mean 1%ers you will of course want to pay bigger taxes. So really you only have less than one million.. still not bad and you can sleep better knowing you paid your 'fair share'.
Jerry,
Here is an idea. Put the 10k in a roth ira, assuming you are eligible. May have to do it over 2 plus years. but you could do a 2012 and 2013 at the same time in the beginning of next year. pay taxes on the 10k when you earn it. grow it to 2 million and take it all out tax free. you can earn more along the way too, since your earnings are all tax free. your tax savings are compounded because all your earnings are short term, unless you hold a leap long enough, or trade etfs.
Dave
I know this annoys you, but the only way I can compare strategies is to look at the greeks. If you are still reading, I'll try to use regular english. i compared the jan/weekly strategy to the oct/weekly strategy. jan provides a higher delta, so the position will increase in value faster at first, as the stock price rises. However, the jan position has a lower gamma, so the oct position will quickly overtake the jan position as the stock price continues to go up. The jan theta is higher so the jan position will increase in value a faster as time passes. The jan position has a higher vega, so it is more sensitive to changes in volatility. To me, the biggest differnce may be the gamma. I like how the oct position gains in value faster, if the stock moves quickly upward. the differences in delta, theta and vega are probably less significant. I question how important the length of time left on the long contract is. Most of these stocks are moving and will basically be going up or down. If the stock moves down, you will probably close the position plenty early. If the stock goes up, then you will close and roll up anyhow. I don't know, that's just how I see it now.
Dave
Well, its all Greek to me. I do think that intuitively, the Oct is my choice and you (Henn) seem to provide date to support that conclusion. Glad somebody knows about that stuff! I was and am attracted to Jerry methods because I don't have the patience/brain power to assimilate all those details and yet I still want to participate..We all gotta play with the hand we are dealt. Thanks
Henn/Dave--How do you get from 10k to 2 mill? I've got the Roth all set up tho need to move it out of Schwab. Have a LEAP AAPL call in it and tried to sell a weekly against it. They say 'you can't go short' in this account. I say 'i'm not short, I'm neutral' They win the argument but pretty sure I can move this account to TK and do spreads. Have my reg IRA there and seem to be able to do what I need to do.
Just closed my long put weekly AEX en my last daily schort put AEX for this week. 8% ROI.
Opend a new weekly put long and sold a daly for the coming monday.
How did you guys do this week?
Ihaveops
I guess Jerry was componding 75% roi for 10 years. Decided to get back into AAPL leaps. Used Jan v Oct for the xtra 13 weeks at 4%.
Deltas were about the same.
Did an earnings play on AAPL with leap/weekly and made a whopping 24%in 4 days. Compound that for 10 years WOW!!! Love counting those dead presidents.
24%in 4 days?!?!?? Nice!
actually compounding 10K at 75% roi for 10 years get you to 2,693,893.98. ROTH IRA here I come. Screw SocSec and the IRS.
Country won't be here in 10 yrs anyway.
I'm bumping up against mandatory disbursement in my IRA's. Guess I'm an old F*** now! What is the max age one can continue in a Roth? Wonder if its possible to take a minimum distribution and still build the account balance using our high yield techniques? Just sitting here thinking....for a change.
Regarding 75% ROI for ten years, that's an nice optimistic goal. Now about the country disintegrating in 10 years, not so.
75% ROI seems really nice. Although you have to keep in mind, if it was achievable, there are a lot of people out there with far better technology, far better research and more leverage available to them and they still dont ever get beyond 15-30% annualized.
Iron Condors, only one trade has to go wrong to wipe out profits for your last 10-15 trades. Been there, done that.
Settle for 1-2%/month selling puts, 15-18% annualized is a good return as long as you can achieve it year over year. I would do iron condors or put spreads for 20% of my porfolio.
Remember if it sounds too good to be true, it probably is.
Haveops
Since I don't know your complete tax situation, as for IRA contributions & RMD's. You have to take RMD from all taxable retirement accts when you reach 70.5. You are never required to take RMD from a ROTH IRA. As for conributions, you have to have earned income and can only make traditional IRA contributions thru 70.5 but no age limit for Roth IRA.
Hope that helps. However, please consult with your OWN tax advisor for more detailed info.
@Pascal
What is the ticker for AEX? AEX has no options on ThinkorSwim
Thanks
Brad
IHO,
I'm not going to pretend that I know very much about the greeks. They may be worthless to you, and that is ok. If you are so inclined though, understanding them gives you are greater understanding of how and why options work the way they do. As Jerry says, the greeks are estimated and ever changing. They can only give you a rough idea of how your position might behave given changes in stock price, time, and volatility.
Dave
I was in no way disparaging knowledge of the Greeks. I just don't get a lot of it. I think I understand delta which does help and I'm sure I could learn 'em with more time and exposure. Right now, I'm just trying to learn how to pick up crumbs.
Taxman, thanks for the info. Didn't wnt you to violate any code of CPA ethics. My tax guy is quite good and he will be able to flesh out my plan. Think maybe the Roth is the way to $2 million.
@ShoNuff ticker for AEX is EOE
Hi all, Dave, by all means if the Greeks work for you I am in full support. I just don't have the time to look them up and go through all the what if's etc. I have an investing buddy that is all into charts and greeks and probably chicken bones and the farmers almanac. He loses money consistently. I hear him complain that "i don't get it, it was a perfect head-and-shoulds pattern, or it was ripe for a fall as insider trading was up..ect
For the newer traders out there, here is what I use (and some luck thrown if for good measure)
I think it will work for you also.
Pick good stocks
With decent PE
Maybe a dividend
Needs decent premiums
Decent O-I
In favor with the buying world
No major news coming soon.
--Avoid stock such as this--
Falling value (ex; RIMM)
Earnings,FDA,EPA etc reports due
Don't try to out-guess when a stock has hit bottom.
Avoid close strikes and big returns
Be careful of low open interest
Don't fight the tape.. Let the market tell you if things are bullish or bearish.
*Probably many more that you might use and this is just a starting point. Even if it is using the Greeks, have a plan don't just out and out guess and take flyers. Discipline will pay off.
Someone above mentioned that a wrong guess with Iron Condors can wipe out a lot of previous winners. True but also true with nearly any option position. But when you use a stock like AAPL and now that earns are past and you can go 50 pts below the current stock price and 50 above while setting up a weekly I-C, that is about as safe an option as i have found in many years.
Good luck all and I really enjoy the different plays and ideas presented by you guys. I might have to explore the ROTH stuff?
Hi, great blog. I've been using Jerry's put selling strategy for a while and have done pretty well, but I'd like to be able to pull data directly off Yahoo Finance instead of entering it manually. Does anyone have a good macro to do this? I'd really appreciate it! Thanks, Tony
Hi Tony,
Alex may be the one to tell you about that. I only know how to download historical stock prices. That is found on the left side of the screen, near the top. You may already know about that though. I think Alex does more advanced downloads, not sure.
Dave
Jerry,
That's why I like you, you are so pragmatic. You're right, don't lose sight of the basics, that's what really matters. as long as you have some kind of basic understanding of your option position, you will do fine. frankly, I'm not smart enough to understand options without charts and greeks. They help bring clarity to me. You're also right that it doesn't matter what a stock should be doing according to any kind of indicator or chart pattern. What matters is what the stock actually is doing. If more people are buying versus selling, the stock will go up, no matter how strange that may be.
Have a nice weekend,
Dave
"The jan theta is higher so the jan position will increase in value a faster as time passes."
While I can't claim any particular expertise with the Greeks I don't see the Jan theta as higher than Oct on the option chains I see on my screen. Also my understanding is that theta represents time decay so in any case a lower theta value would be more desirable.
BP
Hi BP,
Sorry for the confusion. What I meant to express was the fact the time decay is faster on the October options than the January options. If you pair a weekly short option with a long January option, you will get get a larger positive time decay than the weekly paired with the Oct option. Service providers may express theta (time decay) differently, but a positive theta generally indicates the position will increase in value with time right? That is the way Tradeking expresses theta anyhow. Long option positions will have negative theta and short positions will have positive theta. Hopefully I have addressed your question properly.
Thank you,
Dave
Need an up day to sell some calls against my AAPL Oct and Jan LEAPs. Where do we sell this week. Pretty bumpy ride these days...
ihave o... i have sold the 615's for this week. If just opening I would probably do the 610's? If aapl should run past me I will let a lot of the TV leak out then either roll to next week or May 18 or close and reopen at higher strikes. AAPL sure is a bumpy ride lately and I try to keep in mind that a year from now it will be 800 or so. I let the daily activity do what it wants (since I can't control it anyway.. lol) and just keep making weekly deposits. I'm treating AAPL like a cash machine. I also have some GOOG that I treat the same way. The prem's are not as good as AAPL but just keeps making a depo weekly.
Sounds good. I'm in the 610's tho not too sure given recent market volatility. I'll take a look at the GOOG's also as I'd like a little diversification.
I'm in for a whopping 2 570 leaps. Sold the 615's last Friday and just rolled down to 600's this AM.
Made some good money weekly altho my leap is hurting. I plan on a worst case that the leaps will expire worthless and I'll make my $ on the weeklies. Plan on rolling to next week on Thurs. I'll see what strike I'll use. Trading mostly weekly SPX, RUT & NDX
BTO TTWO LEAPs - Jan 19 2013 $12.50 calls for $2.60, I just don't understand why this stock has stalled, how it is below $14 is beyond me, but history shows that big releases make this stock pop, May 15 they have a big release "Max Payne 3", May 22 earnings are released, last two earnings they reported a narrower loss than estimated, that should happen again, along with a great forecast, I have 68 May put contracts open, now I have the LEAPS open, I have everything riding on this stock, sink or swim.
Sounds dangerous, but good luck on ya!
So AAPL is staying in this trading range for now? I closed my short position for cheap. If AAPL jumps up again, I'll reopen a short position and do it again, or ride the stock on up. If AAPL stays here or goes down more, then I'll reconsider what to do.
Dave
Love to see Thurs come, new weeklies, place your bets
Tax...Finding anything juicy?
Just rolled my May1 AAPL call to a May2 605 call for a 2.9% ROI. Trying to place an NDX bull put
2550/2525 credit spread for .40 but no takers yet. Might have to get less greedy. Have to wait for tonights close for my RUT spreads to expire. Then see what tomorrows reaction will be to the jobs report.
Just closed my weekly put AEX en my last daily schort put AEX for this week. 8,2% ROI.
tomorrow i'll BTO a new weekly put and STOs a daly for the coming monday.
Pascal,
Could you specify your trade, Its sounds interesting. Eg
Anybody find Pascal's daily on AEX trading in the US?
NOPE I tried both symbols AEX & EOE
When I use interactive brokers the ticker name is EOE when when I use one of the Dutch brokers the ticker name is AEX. It stands for the Amsterdam Stock exchange maybe your broker uses a different name. here is the site of the exchange
https://europeanequities.nyx.com/markets/nyse-euronext/amsterdam
The strategy I use is a diagonal spread, I simply make a choice does the exchange go up or down so for example if it goes down I'll buy a weekly put on friday ( they go from friday 9:00 till the next friday 16:00) for the next week and sell daily's against it every day so I pick up the money from the daily's and if the exchange goes down I make an extra profit on the bought putt. worst-case scenario the exchange goes totally the wrong way I'll just keep on writing daily's and make my money back that i paid fore the bought putt when the exchange goes to wrong way slowly you can still make a profit with the daily's.
I like the daily combined with the weekly better then a weekly with a monthly or yearly putt/call. With a weekly you can change your mind every week where the exchange is going to go and the delta's seem to be more in sync. If you want I'll post my trades
so check it out everybody and let me know what you think. If you have any questions just let me know.
Jerry, what do you think of the daily/weekly options?
HI Pascal, interesting and I will check them out.. Where are you located?
All; I continually rolldown my aapl short options Tomorrow I will roll down again to the 595 (unless it is up big) I rolled down from the 620 to 615 to 600's and each for a credit spread. AAPL does seem in a trading range for awhile.
Soon the July earnings will play a role and also the coming new I-phone/I-pad or even I-TV ??
But this is a longer term view than I normally use. I trust AAPL to start move before the Jan's expire. So I am content to make cash deposits until it starts moving. But there are many stocks out there that work also. Iron condors or just plain naked puts are still a viable way to make a respectable ROI. Again i enjoy hearing of all the different ways to play this market. It is fun to hear the nice remarks and helpful hints you guys pass on to other traders.
After tomorrows trades I will start a new post.
Keep up the good work..
Jerry
Jerry,
Are you rolling down the weekly or monthlies or both.H
Ray
Hi Jerry. I am dutch and live in the Netherlands.
STO TTWO May $13 Puts for .15, 78 May put contracts open on TTWO, don't let me down TTWO!
I know it is painful now, but I don't buy the move down in aapl. It is going back up. I don't know when, but I do believe it is going back up. It is going down on low volume just from a lack of buying interest right now. I'm hanging on.
Dave
So last Friday I sold AAPL 570/575 weekly PUTs expiring today (5/4). After the jobs report this a.m. the stock tanked, sailing right through both my upper and lower strike.
I figured I would just roll out to next week for the same premium at the same strike or maybe one lower. I guess once the position is fully ITM, the next week still has some uncertainty and doesn't pay any premium at all, by comparison. It makes sense though, since I rolled out of it when the premium was almost $5, which is the max profit/loss on a $5 spread.
I ended up rolling out to next week but had to go up to 600/605 to avoid any net debit on the roll.
I know I broke several rules here, by not waiting until later in the week to get in, by picking a strike price that was too close, and by not closing when the premium doubled.
In my defense, the premium more than doubled overnight, so I didn't have the chance to get out. Then it just hung there all week at about the 582 level. I should have taken the hit when I had the chance.
Next week I will have to hope that either the stock recovers above 605 or else hope I can roll it again at a similar strike, which is unlikely... Lesson learned!
Wish I had rolled my short AAPL 605's into next week when the new options came out Thurs. My open orders are not filling now with 'the tank' today. We can only hope for an up day next week to get something decent. Still, it feels better than Kauai's situation where the stock blows right past your strikes. Good luck to ya! Maybe next week?
Meanwhile the longs Oct and Jan 570's wane away. I hate to watch it!
Ugly Ugly day. Glad I waited for the jobs reaction before placing more put credit spreads. Just placed two. Had to close an AAPL May1 565/560 put spread, to close for comfort. AAPL leaps are hurting but I think this is an overreaction to things. Wonder what Mon will be if Sarkosy loses on Sun. A socialist back in power and not to happy about all the EU bailouts.
My worst day of trading ever. I sold the 1375/1370 SPX weekly on wednesday. I thought I had enough buffer but I was wrong. It will take me more than a year I estimate to recover.
Wow what a day! Bought a put weekly on the AEX and sold one daily two and BAM!
bad numbers from the US -1.7% on the AEX. Result, a nice profit. although i already hit my target on the first day i'm going to let i ride till monday and see what happens. What do you guys think for the coming monday? Up or down?
I think while selling put or call spreads for a certain stock or index, I would advise everyone to limit the number of contracts to no more than 10% of the value of their portfolio. (No more than $10,000 maintenance for a portfolio of $100K).
I have been bitten by these put and call spreads just like you Andy and Kuaui; I still use them but bulk of my trading is in seling naked puts.
Now if market starts trending down, I will have to change my strategy for the time being. Although one day does not make a trend, the job numbers have already made a downward trend.
One more sneeze from Europe and we will see another leg down.
Jerry,
I also got caught in the AAPL Friday "Wash". I had opened the I-C on Wed. with 565/570 600/605 and thought I was safe when AAPL closed Thursday at 580. In the pre-Market trading it started going down and within 15 minutes, the 570 Put premium had TRIPLED. Not good, so I got out. A little later in the day, it looked like it had stabilized at 570 so I got back in at 560/565. It actually looked good for a while but then the price started going down toward 565 so I got out. All in all, it was an interesting day. Once I figured everything out, I was down $600 so that was a relatively cheap lesson.
I REALLY like the Iron Condor trade because, as long as you keep it to 20 Contracts and there is 5 points of Spread in the Wings, the MAXIMUM loss is $10,000. I know that is nothing to sneeze at but in a worst-case scenario, where the Stock gaps up or down by 50 or 100 points, you are still protected. To me, those bought Puts/Calls are cheap insurance. I also like it because the Margin Maintenance on each Iron Condor is known (10,000) and doesn't change.
I will probably try 3 I-C Trades this week.
AAPL 530/535 600/605
AMZN 200/205 235/240
GOOG 570/575 625/630
But that could change since I won't open them until Tuesday.
Thanks for your addendum to the book. It really explains the I-C Trade pretty good. Thanks also to the other contributors to this Blog. It is helpful to see what others are doing.
Jim
If you like Iron Condors, perhaps you should sign up for this trade advisory "Uncle Bob's Money".
I signed up with them just 2 weeks ago and so far pretty good. They dont do weekly IC's but will put trades for a monthly iron condor or just a call spread and will close it in a timely manner.
On their advice, I sold a NDX call spread 2875/2900 for 45 cents credit on Tuesday and very happy with the trade.
I dont get any comission for referring you nor do I work for them, they got some pretty good reviews on amazon.com too.
The strikes you picked for amazon, google and apple are very close to my liking but I wish you the best of luck.
I did my first Iron Condor this week. I started out when the price had bumped up to 595 on Tuesday, so my puts were 560/565. It was a good teaching week for me, and I can see that I need to work on my exit strategy and nerve management. Should I have a rule about initiating one of these soon after a stock price spike? I did it 10:30 Tuesday, 12 points above Monday's close. Those 12 points were all gone by the end of the day. Certainly I can make a case for having 30 points of cushion.
Hi all,
Bought some Jan13 AAPL calls last week, which are already down from where I bought them but I'm holding out for a pop later this year.
I hate to ask again, but I'd really appreciate if someone could share with me their way of downloading Yahoo Finance options data to help with the stock screening process.
Thanks,
Tony
I'm down about 33% on my LEAPS for AAPL in Jan 13. Wish I didn't have 'em but I had some for july last summer that recovered their full value (but not much more). So will probably hold on tho am nervous about Europe and the general market as well. Don't think anything fundamental has changed with Apple but don't understand this market. Well, nobody said it would be easy....
Been away this weekend,lots of posts. My take on spreads. I usually only place spreads on indeces(sp?). Altho I am playing AAPL. Single stocks can be moved by to much news. An index is buffered by the # of stocks in it. So I use SPX RUT NDX VIX. I place them with deltas areound 5 and for weeklies get out when delta reached 35-40 depending on the day of the week. I had to close AAPL 465/460 last week. Everything else was fine.
As for APPL leaps, my trade plan is that the leaps WILL expire worthless, so plan to make my $ on the weekly short calls. Looks like the beginning of a bad week. France was no help. Have to see what Hollande will support Germany on the EU bailouts. Not looking good tho.
Jerry, Are you holding on to your Jan 13's. Seems expensive to bail don't it? Question is, will there be premium at 570 this week?
Tony. I can help you. Send me an email (my email in the profile. Click the picture)
Alex
Just closed my long put weekly AEX and the daily schort put AEX for this week. 9,2% ROI. i know its monday but but i am happy whit the profit.
Anybody find Pascals spreads in the US? I could use some 9.2% for the week, every week for that matter.
@ihaveoptions what broker are you yousing?
I find it hard to believe that it's not possible for Americans to trade on the Dutch exchange I really hope it's possible though because I want you guys ideas on the daily options and how to improve the trades
you can find more info of the exchange here:
https://europeanequities.nyx.com/markets/nyse-euronext/amsterdam
here is the info on the site from interactive brokers
http://individuals.interactivebrokers.com/en/trading/exchanges.php?exch=fta&showcategories=&ib_entity=llc
Maybe the ticker name for the AEX in the US is FTI? let me know
Now AAPL has filled the earnings gap, is it ready to move forward again. I'm still holding off opening my short position, but I can't wait much longer.
Dave
@ Pascal FTI = FMC Technologies
@Pascal I'm on Schwab and Tradeking but just can't get the symbols search engines to find em. Will call Schwab international desk when I get a chance.
@Nicky Lol thats not it, did you check the info via the link?
@ihaveoptions let me know what they say.
Now i know why you guys only trade US options. ;-)
Nice posts, everyone. I am breathing a little easier today, as AAPL bumps up a little.
I've rolled to this weeks 600/605 puts. Made my decision in the heat of the moment on Friday, I think that was a good call. I'm not out anything yet, and am operating on the assumption that the $10k I have in this position is gone. Anything I can do to mitigate the loss is gravy.
I will wait until later in the week to see what happens. Hopefully AAPL will trend up more before then, and I can roll out to next week or even June without much of a loss.
Some things I have learned from this turn: spreads have positives and negatives. If I had had naked puts rather than spreads, I could have rolled out and down no problem, and probably little or no loss.
Spreads really limit your potential losses, and they limit your maintenance required to enter a position, but they also limit what you can do when things turn on you.
As this situation evolves, I will keep posting.
Can someone with an IB account in the US check to see if AEX is available with options? Thanks
I trade spreads all the time. The name of the game is cushion, cushion, cushion. To that add "know when to hold 'em, know when to fold 'em". But hey, that is why they make chocolate and vanilla ice cream. Some feel comfortable with one vs the other.
The end game is to make money. I am placing SPX, NDX & VIX spreads like crazy right now. RUT doesn't have enough strikes open. Good thing about RUT & NDX is that they stop trading at Thurs close. One less day to worry.
How close are you comfortable getting with RUT? Looks like fun! Love the Thursclose. Hate those white knuckle Friday afternoons....
IHO
This AM they opened up RUT 740/750
& 750/760 but as of last Fri it was only down to 760/770. I took a flier with 3 760/770 for .86 but have 900 TZA to back me up. Today I did the following:
SPX puts 1300/1280,1290/1270 w/spx at 1368-1369. calls of 1410/1430 at 1370. Bring in .20 - .25
NDX puts 2475/2450 at 2635 and calls 2725/2750 at 2643 for .30-.40
I first look at deltas near 5-7 for the weekly then check my cushion to visually see what the possibility of the index moving that much in the # of days. I trade 7 accts, place a dozen spreads per week and since FINDING Jery have only closed maybe 6-8 at a loss since last Nov. I closed more AAPL losses than indexes.
NDX example.
I waited to see what the market was going to do. This AM I placed a 2475/2450 @ 2635 160pts cushion for .40, then after a rally placed a 2725/2750 @ 2643 82pts cushion for .50. I figure the odds R good that NDX won't move -160 or +82 by Thurs close. If so, I have .90 to play with in closing one side or the other before showing a loss. Now the call spread is closer than I like to be but figured the market has a downward bias right now. So I am happy with the position. Take a look at 5pt VIX spreaads. The R monthly but seem to close Tue or Wed of opex week. I will only place them within two weeks or less. Placed a May 25/30 today for .21 @ 18.42. Vix has toppes at 21 the last few drops.
I think I have made some progress in finding Pascal's secret. I entered EOE in Trader Workstation (IB's platform) and it found "AMS EOE Index - FTA". Under that heading were all the normal choices: "Index, Futures, Options, Structured Products, Combinations" Problem being all those choices were greyed out. I then went to the Data Subscription page and the cheapest available package was: Euronext Basic (NP,L1) (OPTIONS & FUTURES) NonPro Provides Market
Data for the 10 best bids for securities and equity derivative products in Belgium, France, Netherlands, and United Kingdom. Cost is 5 EUR a month.
I suspect that if I sign up for that data package, all the previously greyed out choices will become available. I'm in the US so the cost would be about $6.50 to find out.
Might be worth it for 9% per week...would need an IB account for starters.
Thanks Dirk
I have been looking at trading RUT and SPX for a little while and I think it is worth to mention that since Dec 2010, SPX Weekly options are Friday PM settled, which means they do trade on Friday and price is settled at close of the day. This is not the case for SPX non-weekly options. These do not trade on Fridays and are settled based on prices at Friday open. Same case for NDX and RUT (I believe both for weeklies and monthlies). So, while it is nice that there is one less day of trading, the downside is that if there is a gap down on Friday open (as we had last Friday with the jobs report)then you might find that your options that were perfectly fine Thursday night are all of sudden well ITM. To make it even worse, you won't be able to do anything about it since the last day of trading is Thursday!!
Taxman,
Do you have twitter?? Can you tweet these trades as you put them on or post them on mytrade.com
I will like to follow them and see what the outcome is for the next 4-6 months.
Maybe you are my next guru.
Hi all lets start a new posting
sharpCocoa said "I think it is worth to mention that since Dec 2010, SPX Weekly options are Friday PM settled, which means they do trade on Friday and price is settled at close of the day. This is not the case for SPX non-weekly options. These do not trade on Fridays and are settled based on prices at Friday open."
To avoid any confusion that statement is not exactly accurate. The reference to weeklys options is true, but the sentence "This is not the case for SPX non-weekly options" is not. The Quarterlys (which are SPX non-weeklys options) trade just like the weeklys (they trade on Fridays and are PM settled). Only the monthlies are AM settled and thus do not trade on Fridays.
@Dirk, ihaveoptions and Nicky
AMS EOE Index - FTA Bingo!!!!! thats it.
@Dave G. I stand corrected. Completely forgot about the Quarterlies...
Hi Alex. I tried to send you an email but it bounced. Please email me at anausied *at* gmail.com. Thanks much, Tony
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