Any option writers out there?

[sails]

hear ya there.. very difficult to leg in, too much left to chance. Much prefer to spread it as a whole, minimizing the chance of mess ups.

Yeah, this was quite a few years ago (before NCP became NWS) and I was trading with AOT. All the trading had to be done online using Iress - so I had no choice but to leg in. Certainly had some scary moments trading this way!

And yet, at the time, any sort of online option trading was a huge improvement to having to phone every order through.

 

[long88]

Hi all (sails and cutz)

just wondering how you all go on this volatile market.

gaining ahead ? making some nice $$$ ?

cheers

 

[cutz]

Hi all (sails and cutz)

just wondering how you all go on this volatile market.

gaining ahead ? making some nice $$$ ?

cheers

G'Day

Yeah the options biz has being going well apart for a few fat finger errors, i reckon being on L Plates during the market turmoil has really kicked the learning curve along, although I’m not sure how I’ll handle things when volatility drops off next year (or the year after) as I mainly put on short premium positions.

How are you going Long88, are you in the game or are you waiting for things to settle down?

 

[long88]

Hi cutz,

i am still on the game, shifting away from aussie to us now, i dont hold any more aussie.

Trying to stay on the market, and catch the big wave that could happen (either up or down), i am long premium but got hurt a bit by vix coming down, and have been putting on call spread since then.

I am learning as well, but have grasp the subject a lot more better now.

G'Day

Yeah the options biz has being going well apart for a few fat finger errors, i reckon being on L Plates during the market turmoil has really kicked the learning curve along, although I’m not sure how I’ll handle things when volatility drops off next year (or the year after) as I mainly put on short premium positions.

How are you going Long88, are you in the game or are you waiting for things to settle down?

 

[cutz]

Hi Long88,

How are you handling the nightshift, I’ve had a crack on the US and my method was initially as mazza suggested to get up early and catch the last couple of hours but since daylight saving ended I’ve stayed up to catch the open. Anyhow my US positions are tiny (so are the profits) as I don’t like the idea of being short unattended and there seems to be big moves between the open and close so I think I’ll stick to the aussie market when the May calls expire.

 

[sails]

...i am still on the game, shifting away from aussie to us now, i dont hold any more aussie..

I'm not trading much at all in options at the moment. My preferred delta neutral strategies are simply way too expensive as Oz fees eat heavily into profits - and then there can be pretty big slippage - as Cutz experienced on Thursday. Also, sending emails to TD for spread orders is cumbersome. I could use IB, but I'm not comfortable with their stringent assignment policy. IB also only have one level of market depth for options (or at least the last time I checked) so it means still having Iress running to get decent market depth information.

I would trade US options, however the night shift is no good for me at this point in time. So, my alternatives are limited for daytime trading in Oz. One is to hone up on directional skills so that I can trade directionally with options rather than the Oz fee and slippage heavy, multi level strategies that I otherwise prefer. The other alternative is to do some day trading on the SPI. Then if I get interruptions (happens regularly), I can close the trade and not be concerned about leaving open positions unattended.

At this point in time, I have no option positions. Spending time brushing up on directional skills and some work on the SPI. Maybe one day the Oz market will become more options friendly, but until then, I need to work with different strategies.

 

[long88]

Hi sail,

I reckon the aussie market bid-ask spread is still not good enough, and always got killed on entering and exiting (buy too expensive, sell too cheap), at the end of the day, it dont think it is worth it (unless there is really big move happening on BHP,RIO,Big 4 banks)

I am with IB, and i never look at the market depth (you can always check Open interest position ?) but the advice is never follow the crowd, they always got slaugtered.

what happen with cutz ?

I'm not trading much at all in options at the moment. My preferred delta neutral strategies are simply way too expensive as Oz fees eat heavily into profits - and then there can be pretty big slippage - as Cutz experienced on Thursday. Also, sending emails to TD for spread orders is cumbersome. I could use IB, but I'm not comfortable with their stringent assignment policy. IB also only have one level of market depth for options (or at least the last time I checked) so it means still having Iress running to get decent market depth information.

I would trade US options, however the night shift is no good for me at this point in time. So, my alternatives are limited for daytime trading in Oz. One is to hone up on directional skills so that I can trade directionally with options rather than the Oz fee and slippage heavy, multi level strategies that I otherwise prefer. The other alternative is to do some day trading on the SPI. Then if I get interruptions (happens regularly), I can close the trade and not be concerned about leaving open positions unattended.

At this point in time, I have no option positions. Spending time brushing up on directional skills and some work on the SPI. Maybe one day the Oz market will become more options friendly, but until then, I need to work with different strategies.

 

[cutz]

what happen with cutz ?

Hi Long88,

Refer to above post #175, orderpad fat finger incident.

 

[emilov]

Hey Guys,

Just wanted to add myself to this thread . I trade exclusively (stock) options on the ASX. Have been doing this for over a year now.

Last year after having had a phenomenal success (made 50k in 1.5 months) I lost it all 1 month later (cocky beginner).

I've been trading paper since September (started a blog) last year and live for 2 months now. I am profitable on a small scale (700$ last month, 800$ this month). Sure, I can do better on a 7k trading bank but then I'd be risking a lot. And we all know what that can lead to. I like consistent profits much better now and I had to learn that the hard way.

My main strategies for this market are not selling naked options (too risky) but selling credit spreads (bear call spread and bull put spread) and letting these expire worthless. This is more costly than naked options to be sure. But there is that extra protection from the bought leg in case the trade goes against you. It's been working well for me so far. I'm waiting for the market to start trending (breakout of 3800) to consider more aggressive strategies such as synthetics. That is when the bigger bucks will come.

Still, my last trade is on STO and I bought a straight in the money call. That should experience less time decay and give me good result as Santos rises (oil).

What I like about options is their flexibility (different strategies for different market conditions). What I don't like is that they are expensive to trade (brokerage). Time decay can be great if you sell or horrible if you buy, you just need to know how to utilize it.

Cheers, Emil

 

[sails]

...I am with IB, and i never look at the market depth (you can always check Open interest position ?) but the advice is never follow the crowd, they always got slaugtered...

Long88, not sure what you mean by never looking at market depth? That would might work OK in the US as there is so much liquidity, but in Oz you have to try and get the mid point of MM prices and then give a bit (aka slippage) as it is most likely the MM who will take the other side of your order anyway. No point in taking the straight mid price in case there is a retail order in between the MMs bid/asks which could put you at a disadvantage when pricing your order.

Also, what do you mean about not following the crowd? How can you tell what the crowd is doing due to synthetics? IOW we don't know what stock positions are being taken concurrently with the option orders which can completely reverse the perceived direction of the option trade.

 

[jackson8]

hi all
thought i would pop this one

having sold a few naked puts it has occurred to me that instead of closing the position when they come into profit and then looking for another position to open

what if i went long the same strike put therefore locking in profit but also that a downward retracement could bring a profit into the long position

as long as my veiw on the longer term sp to stay above the sold strike holds true there may be a bit of extra profit from the long put on short term reversal .

if long position closed at a profit then back to naked again

make sense ?
gary

 

[sails]

hi all
thought i would pop this one

having sold a few naked puts it has occurred to me that instead of closing the position when they come into profit and then looking for another position to open

what if i went long the same strike put therefore locking in profit but also that a downward retracement could bring a profit into the long position

as long as my veiw on the longer term sp to stay above the sold strike holds true there may be a bit of extra profit from the long put on short term reversal .

if long position closed at a profit then back to naked again

make sense ?
gary

Nothing wrong with using options to swing trade, IMO! Puts often get cheaper, not only due to the market rising, but also with falling IV. So it can be a good time for long puts anyway if you expect a fall. As I suggested in another post today, if it is almost as cheap to purchase a closer OTM strike that has a higher probability of making some money, you could buy that one instead and leave the short alone.

The other advantage of your suggestion if trading smaller quantities is that it may not actually cost any more in brokerage to buy the double quantity (half to close and half to open the new long position).

However, if it is very close to expiry, you want to make sure the long put has some probability of being reached with little time left.

 

[long88]

any of you guys want to share what indicator are you guys using ?

i am with using %r, efficiency ratio and ADX, for the trend. and for identify sideways, i dont have a general rule for it, still defining it (any one want to share that with me ?)

how about you people (sails, cutz, or even wayne if he is here ) ?

Emil : first credit spread that i put on BHP, i earn 3k, then later on i put on christmas three on bhp, and lost about 7k, that should have been a profitable trade if i stay with my plan, but i got scared and adjust the position (and got killed on those bid/ask, along with bhp price movement). now i trade small positions only on USD market, and testing my %R system, and i almost give up on taming BHP until recently that i understand the ADX system and about to test calendar spread on bhp.

emil: also with credit spread, i think it is very slow to realise the profit (depends on the position, but theta is seems to be very small all the time), and you have to hang on to it very long (35 days or more), better if you go where there is speed and momentum in market, and market can give you faster profit realization (like in the us).

I managed to catch BAC gap up wave (150% profit in 3 days), and got greedy and bought some more call after that (now i got killed, and give up those profits, not following my plan).

now i realise how important is the indicator (technical analysis), and will let it do the talking, instead of following the crowd.

cheers

 

[cutz]

Hi gary,

Personally i prefer to close out a short and re-enter the short position after a retracement has happened if it's worth it.
Normally i may do this with the short portion of a credit spread sometimes loading up with more wings, i guess it all depends on pricing on the day.

I've never felt comfortable with straight long positions as directional plays.

 

[cutz]

Hi Long88,

The only indicators i use are MACD, 20/60 period EMA and support/resistance(not really an indicator).

Saying that i'm not really a directional trader, just use basic indicators as a guide for determining strikes. I am researching charting and trading as it's something i may want to do in the future (trade pure directional instruments), i do have a stubborn streak so i'm not sure how i'll go.

 

[jackson8]

Hi gary,

Personally i prefer to close out a short and re-enter the short position after a retracement has happened if it's worth it.
Normally i may do this with the short portion of a credit spread sometimes loading up with more wings, i guess it all depends on pricing on the day.

I've never felt comfortable with straight long positions as directional plays.

thanks sails and cutz

i think that in the past when i have closed a position obviouslly my bias towards the sp has changed, i then want to enter another position straight away as i dont want to be out of the market .

i have only traded over 3 stocks osh, sto and lgl (current position) i choose these as they are fairly liquid and sp is in my risk range if i face assignment or excercise

instead of waiting for a retracement if i open a long against the original short i am still in the market, also as the profit is locked in and the short is covered i have confidence to open new position elsewhere if i see fit.

gary

note: i havent actually tried this yet but am thinking of using with my current position in lgl if the opportunity arises.

would be quite happy to have feedback on flaws of this strategy

 

[cutz]

Hi Gary,

I don't think there are flaws in your strategy, if you are fairly confident in picking short term trends it sound OK.

In my situation i mainly trade XJO options, i'm not confident in predicting direction so i now prefer to start off gamma/delta neutral (or close to it), how it ends that's anyones guess but i do constantly adjust to play it safe.

So i have to say that it all depends on the style of the individual, what works for some may not work for others, trade the method that delivers higher success rates.

 

[jackson8]

Hi Gary,

I don't think there are flaws in your strategy, if you are fairly confident in picking short term trends it sound OK.

In my situation i mainly trade XJO options, i'm not confident in predicting direction so i now prefer to start off gamma/delta neutral (or close to it), how it ends that's anyones guess but i do constantly adjust to play it safe.

So i have to say that it all depends on the style of the individual, what works for some may not work for others, trade the method that delivers higher success rates.

hi cutz
would be interested in how you adjust these positions

are you talking rolling out or up , buying extra deltas or adjusting with stock

myself have only put on a bear call spread once on xjo started out as a naked call but then when the margin requirement came in i quickly hedged with further otm as insurance and also reduced margin.

my direction skills are not that great so have stuck with the gold and oilers as i find them a bit easier to predict but am continually following the index as i wish to start trading it once i have a bit more cash in the kitty

gary

 

[cutz]

No hard and fast rules gary,

For XJO options I may roll up the short calls (also adding contracts ) and also load on more long contracts (wings) if the market is moving up, often you will find that even if the market has made a modest move over a few weeks the long contracts (hedges) have become a lot cheaper anyhow. I may also roll up short puts as well if the market has moved up but keep the wings in place and possibly buy longs into the next month. It all depends on market conditions, recently i've traded in and out of short puts due to the rally, i'm actually expecting a fizzle so i've got more protection on the downside ATM.

Hope it makes sense gary, i can't really pin adjustments down to a couple of rules, just whatever works on the day and ends up looking good on hoadleys, for me the only way its gonna look good is in the event of an extreme move either way the heavy wings will propel me out of danger, (i now prefer to have heavier protection with a minor reduction in income).

 

[Grinder]

Heya fellow options traders, seems theres been quite a bit of discussion goin on here in our little derivatives corner. Think I'll jump right in & talk adjustments.

for me the only way its gonna look good is in the event of an extreme move either way the heavy wings will propel me out of danger, (i now prefer to have heavier protection with a minor reduction in income).

Hear ya on that one Cutz. You might like this one also, not as dynamic as the slingshot but embedded protection all the same at the expense of some premium. Put on your ICs like usual & around the same time put on a few front month debit spreads alittle closer to the money, your not sacrificing much premium & can serve well when gamma starts to play up.

Gary, theres all sorts of fun that can be had with a good ol pay off diagram & a basic excel speady. Model different strikes with varied sized cons to get an idea of the funnny pics you can make. Rolling up & out with some size as you go is a fav, as is adding on extra wings or picking up some calls/puts atm or near enough can do wonders for protection. You might even want to switch direction if your view of the current market has changed, like buying in your short & writing another on the other side of your long to create an opposing spread or going from a credit spread to a long condor buy adjusting a leg & opening another new spread. What I'm getting at is there is a copious amount of position adjusting that can be done, it all just pushing around delta to move your risk around.

Hint: Look at where your being hurt & make the adjustment before the bleeding can't be stopped with a bandaid. Adjust in stages or take the whole thing off if need be. Adjusting is a personal thing, what I like you, you might not.