Sunday, March 16, 2014
Hi all, Wow some new names and option players. Been off line for a couple of weeks while my wife and I went on a golfing trip to Palm springs and the Phoenix area. (SUNSHINE !!)I kept up with my options while away. What did I ever do without an I-phone???
Lots of you using index plays. I haven't used them much lately but they are a great way to do options.
For me I am still using quite a few CC's with FSLR and FB. All expired on Friday and tomorrow I will decide on which strike to open new coved calls by the plays at the opening or after an hour or so. If the stock is moving up I let it ride until it seems to level off for an hour or two. If down I will open at the next higher strike above the current stocks price. For covered calls I open just the opposite of IC's or puts etc. I open them quickly for the current weeks to capture all the TV I can get. For IC's I like to wait until maybe Wednesday.
Lets hope the Russians behave and the news settles down.
Good luck all
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47 comments:
Jerry,
So happy to see you back. The unusual miserable snowy winter is almost over!! Couldn't wait.
Still picking crumbs doing the boring index spread with almost zero worry in this upbeat markets (with almost zero interest rate and ongoing QE). While choosing partial naked put and partial index spread, I decided to go for 100% index trades with much wider spread.
Good day.
Jerry
Since FB & FSLR are so volatile, do you ever sell a CC BELOW your original cost basis???
I used to do lots of CC's until I found that the stock price would drop below my cost and call premiums would dry up. Then I would have to wait for the price to rebound or go out a couple months to a decent premium.
I will do ITM CC's on 3x etf for the current week and get my 1-1.5%
roi
Instead of CC, if you have the permissions, just sell a naked put at the same strike as the call. Its the same risk/reward profile for less margin.
The only downsides are that if you are holding the stock for dividend appreciation then you miss out. Also, can't do it in an IRA.
Feel I need to clarify when I said almost zero worry (after reading Sai's post).
From my lesson learned in 2010 credit downgrade, I have been using huge cushion OTM index weekly spread, 4-10%cushion depends on number of days left before expiration. With low volatility in the mostly upbeat market, I almost couldn't get any worthy crumbs with 1000-2500 spread with far out of money option. So I've been using minimum spread of 5000 to get mostly 20C to 35C. (Sounds nut? It's just me, one who hates trade adjustment, and it meets my objective) No loss from index trades last year or this year yet(still early).
Other options/Futures adventures haven't been consistent enough to be mentioned here.
Hannah
Sounds OK to me. I do approx. same thing with index spreads. Stick mostly with puts in this uptredn market, but look for deltas ~5-6. That gives me
cushions of 175-200 points on NDX, 30-40 on RUT & 60-70 on SPX in most cases while trying to get my 1% weekly roi.
Currently doing CC on TNA & NUGT.
Giving ~2% on the weeklies. Will roll them to next week today.
Just rolled
NUGT to Mar4 for 1.56 3.3%
TNA to Mar4 for 1.24 1.5%
NDX Mar4 3475/3450 for .35 202 points cushion.
Waiting till next week for the rest
Good job Taxman.
Thanks much for all of your posts if I have not already told you it's always great to read them.
I admit I don't have the gut for NUGT or TNA :) For NDX I will be looking more at 3400/3350 or 3400/3325.
Hi everyone. How many contracts are you trading in a given trade? I dont have a large account so I'm only trading 1 contract at a time for the time being. My strikes are closer to the trade price then most of yours I'm sure. Like taxman I use the deltas to pick and usually go one strike out from delta 10. This week I opened an IC on SPX after Yellen spoke and took advantage of the increased volatility. I opened at 1835/1895 for .45 when it looked like the dip was calming down. I'm doing well using this strategy. Hope you all did well this week.
Hey Johnny C,
Just a little history about a novice trader here. It's uncomfortable to tell, I'll give it a try. Five years ago when I first traded with the group here at this blog, many of us would go for 10cents or even 5 cents Credit Spread trades with 30-50 or more contracts and 10-20 naked puts. As for the naked put trades, it was a blast for a year or two trading NFLX and AMZN. I knew very little fear then. I remembered reaping YTD 28% in my account by July.
But POOF! I had 30X SPX bullish put spread going into the credit downgrade weekend. At open SPX was down 26 points and dipped more than 60points before reversing strong and fast. I believed all of us (or most of us) got out as fast as we could at open. It barely hit my strike price at the low before reversing. One among us lost more than $400K. Much heartache we felt.
1. My inherent fear grows with the number of contracts.
2. I am careful about holding any options in the weekend unless they're far OTM with huge cushion.
Personal goals and characters traits determine what kind of trader one is. As one who trades as a hobby or passion, my personal arbitrary number of contracts is no more than 20X in a trade. My annual goal is just 10-15% which beats one year CD rate.
Many smart big guys here have a lot more going on. They can tell you a lot more.
Hi all,
Hannah, would have to agree with you about the # of contracts. When the market 1st tanked on jan 24th fri to 1800, I had an 1800/1780 put spread on with 10 contracts, so total size of 20k. That unfortunately cost me ~7k in losses b/c due to certain unforeseen circumstances, I couldnt really get in front of a computer to make any changes. If I'd had 20 contracts instead with say, an 1800/1790 PS, I'd have lost 14k. So that was a major lesson for me in terms of restricting contracts as much as possible. However, there is a big ROI difference when you purchase more contracts vs widening the width of the strikes where obviously you get a lot more premium for selling more contracts. So it all depends on the kind of trader you are.
My style these days have been to leg in wherever possible and try to get into PS or CS on the RUT and SPX. every now and then, I'll try to get bold and do some day-trading/scalping on the SPX or RUT by going long directionally. I've had mixed results with the latter strategy. After taking my big loss earlier in the year, I now take profits wherever I can. I'm still a little ways away from recouping my losses and its going a little slow, since I'm so gun shy now of getting into positions, with this wacky market.
I'm waiting for the market to turn over and so far its showing signs of fatigue, depending on which analyst you subscribe to. at least the RUT's starting to show signs of fatigue...let's see.
Hey Folks
So I stumbled across Jerry's method about a year ago, and have been trading for the last few months, with varying degrees of success. I love reading the comments here, but its a real PITA to get participation. There was some talk previously of setting up a private FB group to better facilitate discussion. Was that ever done? I'm happy to do that if there's still interest?
K
I'm also totally up for the FB idea. Would love to see more participation and ideas getting floated around. I wanted to throw something out there - do you folks do any day-trading or scalping (as the TT folks call it)? I've been doing it on the major indices, mainly RUT and SPX - either buying calls or puts depending on the direction of the price. What are your criteria for entering? Do you use any indicators? I havent found a good consistent indicator. Mainly just price action...like today, made some good scalps on the RUT and SPX (looks like the markets may be starting to roll over...finally!). If any of you have any good books on the matter, pls share.
I wrote to slim on TT asking him about which indicators he uses. let's see if he responds.
Guys, I created a FB group -- you can find it here:
https://www.facebook.com/groups/233510776856194/
The group name is: SellingOptionsMyWay
My name is Tyler Martin --
https://www.facebook.com/tyler.r.martin
if you have problems finding or joining group -- please message me on FB and I will add you.
Actually an easier link to the group is this:
https://www.facebook.com/groups/sellingoptionsmyway/
Hi Tyler, I put in a request to join your FB group. See you folks there!
Think I;ll just check in here occasionally. Don't know what a FB group could do that we can't do here. Wish Jerry was a little more active tho.
Hi guys,
anyone is able to get any decent return using the original put selling strategy of Jerry these days ? I am not being greedy, just aiming at about 1% return per month but its really difficult to find if we want to respect the rules!
Thank you
Fran
Hi Fran:
It is possible to do 1%/mo. I'd like to brag...not sure if I'm following the original principals though.
I read Jerry's book a while ago and have forgotten some. What percentage of portfolio is used in positions to generate the 1%? I have been watching TastyTrade, after someone posted about them on this board. Since Sep13, I'm up on ave 1.5%/mo. I am fairly confident it isn't an anomaly because I've done thousands of trades. many small trades.
A few things i've learned. Take profits early @ 50% or less. You can redeploy that capital. W/ Iron condors you can sometimes take one side off and when the stock cycles back you can take the other side off. W/ Iron condors, vertical spreads, if you make them too wide the credits are too small. Keep your amount risked per trade constant if it is a defined risk trade.
The Risk Doctor guy he wrote a book. said in his book that it is possible to make 2 to 6 % a month consistently...
Lots of the guys on this board are shooting for 1% or more a week. But for me, I think too much Gamma risk? or price risk (isthat the right greek?) so I'm out of the trade way before then.
Thank You Jerry! for writing Your Book which started it all for me. And thanks everyone for sharing.
KW
Sai:
I've started scalping Johnny 1lots in NQ when Case on TT started. so far so good. I take um off +1.5, 2 or 3. I only scalp before 11am. I only short, I short on various entries: high ticks, near or little past prior high, if large up bars on 1 min and bars getting smaller and near a prior level, 1000 tick up, 1000 tick down and then ticks go to zero and NQ moved up3 or 4 points, then I'd short, I recently been studying that point of control stuff w/ the? market profile methodology to guess at the mkt. Does anyone use market profile?
There's this other guy futurestrader71 that I believe uses it. He has lots of stuff on web.
Thanks,
KW
It has been absolutely very difficult to try get eek out weekly gains. I think its only possible in a certain kind of market, ie a bull market like last year. This year has been waaay too choppy. Even while the vix has been a little higher (although not very much at all, looking at today's action), this is not the market for weekly index strategies, at least not IMO. I've just been playing equities for the last few weeks, especially the earnings. Got all wins on PCLN, AMZN, GOOG, AAPL, FB, LNKD, but absolutely lost on indexes. Everytime I think the RUT's headed for a fall, it bounces back (like today). I think when market's this choppy, you have to go back to equities.
KW, I do agree with somme of the things the TT folks say and do. Managing 50% winners is definitely one of them. But their strikes on ICs (1/3rd width of strikes) are faaar too close for me. How do you do that on ICs and how far out do you go to reliably hang in there long enough to collect 50% decay? certainly not weekly and I'm not even sure you can do it on a monthly basis (5 weeks out).
yeah, I've found that ICs they don't start to get profitable until time comes way out of them. if you take off one side and then the other works better to me....if it comes back....one side will go to or through the strike and you can take the other side off. when I resell it closer I often get whipsawed. So I take it off and wait, hopefully the other side will come back to scratch or profit. if the stock doesnt move it takes a really long time before you can take IC off for profit. I think you need to get atleast 1/3 of strikes to make it a better profit scenario.
far too close is because the volatility in the underlying is too low, need to find the ones with vol and you can get farther. but if you go too far and if get too little credit the credit won't make up for the losses. I used to sell too far away, like 1 std dev. been going closer and I think doing better.
oh and I hold that loser side til or tru expiration if blown tru. because on rare occasion it has come back for a profit like couple days before expiration unbelievable. I usually go to 45 days out sometimes a few more. most get taken off at somepoint before exp. I am starting to like wider and skewed ICs if you have a bias....can go wider and take a bigger credit yeah, bigger possible loss but less contracts.
the options on NG, CL and GC have been pretty good for me....naked and if they move alot in a few days i take them off, but the plan is for the duration to come out and I do these far away like 20 deltas and like 60 days but have never stayed in for 30 days.
The adjustments in cases of disaster are important.
oh Chicken Iron condors receiving credit approx 50% of width of strikes has a Market measures study showing them to be pretty good. Jenny or Liz said that they've noticed that when they lose on earnings plays its usually a case of a big blow tru...so even if they were farther away they would still get hurt....so with chickens you get a bigger credit when things don't move....and I think that market measures study confirmed that.
hey KW you should check out Shadow Trader they talk POC every day.
Hey myet and other folks,
So I'm going to do a little trial of the TT way of doing ICs. Gonna do it on the SPX, deltas of 0.6 to 0.7 and 50 days out (July expiration). The strikes I looked at were the 1850/1845 (-0.23 delta with 38% probability of touch) on the put side for a credit of 0.97 and 1950/1955 (0.28 delta with 56% probability of touch) on the call side for a credit of 1.00. So that's a total of $197, on a risk of $500 per contract, which is
~40% of the width of the strikes. Will exit out when 50% premium is captured, which should be on ~6/27 if I enter tomorrow. Will experiment with just 1 contract and not manipulate any side if tested which is sure to happen (esp. on the call side). Of course the big problem now is that vol sucks. Any thoughts?
Thanks Raging BW. been watching them. They have a youtube channel and on their weekly newsletter they mentioned their channel and at the bottom of their page there are intro videos that I need to watch.
Sai how ya doing with the SPX trial? adjustments enough to keep ya in the black?
I'm getting stepped on in GC and CL...
but my scalping has been fair...ZN and NQ....
VOL is shot to hell right now...argh....how are you guys playing long VOL?
I tried shorting a call in SVXY...ouch ouch and i'm not adjusting that by selling the put side...for fear of a monster fall....w/ spike in VOL....
Just finished reading Jerry's book for the 2nd time. 1st time was in 2010 when the strategy wasn't something I could do. I am looking forward to participating from here on out.
Anyone still out there ? Tax - you posting anywhere now ?
I took the last 6 months off from trading due to moving, changing jobs. Started up again this week, kind of eased into it with just one IC on RUT. Good fills, 2.3% return for the week.
Eric
I'm on the facebook blog under Rich Raffaelli. Saw your post this AM. Not much happening there either. Still doing IC on indexes PUT SIDE ONLY.
Still getting burned on the call side
Like to hear it from the horses mouth so to speak. Or at least a howdy do.
Been a year Jerry since last we heard from you. What are you trading these days? I'm using AAPL and SPX spreads, sometimes as ICs. Surviving but not thriving. You?
is Jerry alive?
Here is trading idea for tomorrow: R : Sell $65 Put May 20 @$2.40
Why I like it??
1) low put/call ratio (bullish)
2) most of the short term charts bullish
3) most of the analyst "buy"
4) Cramer says no :-)
Here is trading idea for tomorrow: R : Sell $65 Put May 20 @$2.40
Why I like it??
1) low put/call ratio (bullish)
2) most of the short term charts bullish
3) most of the analyst "buy"
4) Cramer says no :-)
what the fuck happened to jerry? is he still living?
Has anyone heard if Jerry is okay? Last I heard he was in Phoenix, but that was several years ago.
Thinking through income strategies--place a monthly Iron Condor making $.50 with a $10 spread. I would think that would keep the strike prices WAY out from the current stock price. For every $10,000 risked it would only be $500 of income, crumbs as Jerry Lee says. What dividend-paying companies would you use?
AMZN would work, AAPL and SPY and IBM all seem a little close to the current stock price. Thoughts?
And where has everyone gone?
There will likely be no fluctuations or even sudden price upsurge if your specific asset instantly becomes sought after or loses its popularity.
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Jerry,
Are you still trading? Would to hear from you.
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Jerry, Is this site still active
Hannah, Taxman, Sai I, are still trading? Would love to hear what you’re up to and get this blog up and running again.
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