ANZ Call Option

Student of Gann · 29 July 2020

looks like 27th July turned out to be Cycle Low so I picked up some out of the money three month call options with a strike price of 19.00 . i expect price to move past 20.00 and minor top is indicated around the 17th August so if price spikes up around this point will look to exit and re enter once pullback date is calculated . what would be an approx payoff if the price was to move back to 20.50 or 21.50 thanks

Student of Gann · 29 July 2020

average entry price .68 three month out of the money calls with 19.00 strike expiry 15th October

cutz · 29 July 2020

Student of Gann said:
looks like 27th July turned out to be Cycle Low so I picked up some out of the money three month call options with a strike price of 19.00 . i expect price to move past 20.00 and minor top is indicated around the 17th August so if price spikes up around this point will look to exit and re enter once pullback date is calculated . what would be an approx payoff if the price was to move back to 20.50 or 21.50 thanks

So you've added to your original position ? How many contracts are you long so we can work it out. Payoff at expiration for an in the money call would be underlying price - strike x multiplier x number of contracts - premium already paid..Something like that.. In the real world it's not so clearcut...

Student of Gann · 29 July 2020

108 contracts . so let's say underlying rises to a hypothetical figure of 20.50 minus strike price which was 19.00 leaves 1.50 which is approx 7.89% on strike price but not sure how this percentage is calibrated against option price

cutz · 29 July 2020

Student of Gann said:
108 contracts . so let's say underlying rises to a hypothetical figure of 20.50 minus strike price which was 19.00 leaves 1.50 which is approx 7.89% on strike price but not sure how this percentage is calibrated against option price

So assuming ANZ looks like it going to close at around 20.50 on expiry day and you unload your contracts just before the close, profits should be around $8856 less commissions, does that sort of answer your question ?

Please note, all this needs to be fact checked !!

Sharkman · 29 July 2020

one thing to keep in the back of your mind when exiting a long gamma position early. generally when the stock price rises, implied vol tends to drop which, combined with theta, can partially counteract what the position has made on gamma.

of course these are unusual times and the options market has been behaving somewhat erratically vs what it typically does during "normal" times, so who knows what could happen if the banking sector suddenly rallies 5-10%, maybe we might even see a return of the mythical vol smile instead of endless vol smirks!

one other thought - if you have high conviction that the Jul 20 lows of around 18.20 won't be broken - which seems a reasonable proposition as it's bounced off there a few times over the last couple of months - you could (collateral permitting) consider selling near dated 18.00 puts to recoup some of the premium.

Student of Gann · 30 July 2020

thanks for the information , might ask some more questions over the weekend and extend discussion . thanks

makteb · 31 July 2020

Hi Gann,
I have an options modeller and can give you a graph of your position. If you provide your buy in prices, buys/sells of the calls i can graph and paste it here. change the contract sizes for privacy if you need to.

makteb · 31 July 2020

unless you using hoadleys

cutz · 31 July 2020

makteb said:
Hi Gann,
I have an options modeller and can give you a graph of your position. If you provide your buy in prices, buys/sells of the calls i can graph and paste it here. change the contract sizes for privacy if you need to.

Watcha using mate ?

Been following this trade myself..

makteb · 31 July 2020

G'day Cutz

Been using optiongear for a while now. They all plot graphs and calculates what you need to know. fancy calculator with an interface really

cutz · 31 July 2020

makteb said:
G'day Cutz

Been using optiongear for a while now. They all plot graphs and calculates what you need to know. fancy calculator with an interface really

Looks like a nice bit of kit, I'm still struggling with manual methods

makteb · 31 July 2020

cutz said:
Looks like a nice bit of kit, I'm still struggling with manual methods

you dont use hoadley's . Thats why your a pro, doing it the hard yakka way

cutz · 31 July 2020

makteb said:
you dont use hoadley's . Thats why your a pro, doing it the hard yakka way

Haha , far from being a pro, I never graduated from amateur status.

Actually I do use hoadley's for visuals, keep track of my total deltas on a spreadsheet.

Student of Gann · 1 August 2020

convergence of two time cycles of equal magnitude within a period of a week both indicating low made entry a bit difficult hence my two purchase points . will look to open another three month call option on Monday morning as price should move higher up till the 19th August where first top is indicated and at this point if the technical position of the market aligns with my forecast model I may look to close my call positions and buy put options but will fine-tune and revise this strategy once that point approaches and the market position becomes clearer . may have a look at three month calls with an 18.50 strike to open on Monday morning but they seem pretty illiquid or alternatively might stick with the three month 19.00 strike .

cutz · 1 August 2020

Student of Gann said:
convergence of two time cycles of equal magnitude within a period of a week both indicating low made entry a bit difficult hence my two purchase points . will look to open another three month call option on Monday morning as price should move higher up till the 19th August where first top is indicated and at this point if the technical position of the market aligns with my forecast model I may look to close my call positions and buy put options but will fine-tune and revise this strategy once that point approaches and the market position becomes clearer . may have a look at three month calls with an 18.50 strike to open on Monday morning but they seem pretty illiquid or alternatively might stick with the three month 19.00 strike .

Hi Mate,

Trying to follow you here,

You thinking of doubling down on the calls or flipping the delta into long puts and going short ANZ ?

I was hoping you were going to pull this trade off but Friday wasn't pretty, don't want to tell you how to do your job, I don't have a grasp of advanced charting but if you are going to continue using options to trade delta you're going to have to try and neutralize some of that negative theta, gamma scaping isn't really an option, have you considered what Sharkman suggested ? or even ratio's with more on the short option ?

Student of Gann · 1 August 2020

the cycle wasn't as clearly defined as I'd hoped with bottom indicated for either 27th July or 31st July which made entry a little bit tricky however past cycles indicate main trend up till about 21st October so the three month option will hopefully give me some time for this scenario to play out but looking at the minor cycle Top is indicated for the 19th August so if price moves up into this point and market structure indicates top I will sell the call position and wait for a pullback to the 25th August where counter trend low is indicated . as the expected pullback is of only short duration I won't buy put options at the top as the primary trend should is up and it would be more prudent to take the cards off the table and look to re enter if angles and harmonic timing ratios are met on this date and volume sequences match .

makteb · 1 August 2020

Hi Gann

I would like to follow and chart your trade if thats ok.
Can you tell me what you bought/sold and price.

Student of Gann · 1 August 2020

ANZ 15th October expiry 19.00 calls at average price .665c

Student of Gann · 12 August 2020

Counter Trend High indicated for 11th - 12th August before possible resumption of downtrend into late August so extremely lucky to exit this position yesterday on strength for a small gain of 9%. Now short BHP

ANZ Call Option

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