Options Mentoring

[cutz]

Thanks Mazza,

These moves couldn't come soon enough, i can relax a bit now.

 

[jackson8]

Hi Gary,

Yeah it looks like I may get out of this one unscathed ; we’ll see how things pan out over the next few days.

I may even have a play and see if I can turn it into something else before expiry, maybe a short fly or a 3700/3900 backspread or perhaps close the position entirely and start afresh for June.

I tell you what, I learnt some good lessons over the past couple of weeks, I actually thought I had ICs stitched up.

hi cutz

how did things pan out today . were you able to make any adjustments to your advantage

tempting fate to wait to see what happens over the next few days

this is probably where it is valuable to have good technical analysis skills, i myself have never been much good at t/a. never been able to predict the next move.

gary

 

[cutz]

Hi Gary,

Yeah i made some major adjustments to the positions to get me back into the sleeping zone.

 

[mazzatelli1000]

Hi Gary,

Yeah i made some major adjustments to the positions to get me back into the sleeping zone.

LOL
I forgot Oz has different expiry to US
Expiration tonight

 

[jackson8]

Hi Gary,

Yeah i made some major adjustments to the positions to get me back into the sleeping zone.

hi cutz

i would be interested to know what adjustments you have made as i am quite uneducated when it comes to that sort of thing

i have done a lot of work with spreadsheets and excel charts looking at different scenarios but have not had to put them into practice as yet

do you have the fully paid version of hoadleys to utilise as a tool for your trades

gary

 

[cutz]

hi cutz

i would be interested to know what adjustments you have made as i am quite uneducated when it comes to that sort of thing

i have done a lot of work with spreadsheets and excel charts looking at different scenarios but have not had to put them into practice as yet

do you have the fully paid version of hoadleys to utilise as a tool for your trades

gary

Hi Gary,


With the May 3700/4200 i purchased 8 3900 calls to lighten up the load, i also had a 3600/4100 backspread sitting in my other account ( i didn't want to talk about those) at the same ratio which i closed out completely and set up a May 3700/3900 2 to 4 and a 3800/4300 into June at a ratio of 6 to 12. I also placed some put spreads and had a play with some stock options.

I seem to be exhibiting some end of year recklessness.

BTW, regarding hoadleys I’ve only got the free version as I’m not sure if it’s able to download XJO price history off yahoo, I say this because ninja trader doesn’t do it.

Can anyone confirm if hoadleys can actually retrieve data for XJO off yahoo.

 

[cutz]

BTW, anyone reading the previous post please don't follow my trades, they're now destined to go wrong.

 

[jackson8]

BTW, anyone reading the previous post please don't follow my trades, they're now destined to go wrong.

thanks for that cutz


i know that some people are hesitant to post their trades as it is supposed to invite doom , but im not superstitious

always open to the experiences of the more sophisticated traders as i find it a good way to learn more about the game

you obviously see value in having wide spreads of 500
have those longs ever come to fruition or do you utilise soley to limit margin requirments

 

[cutz]

Hi Gary.

LOL, I’m far from sophisticated and you’re right I am slightly superstitious so I was hesitant posting up my position but the reason why I have a backspreads (put and call) going on is because if the index explodes through the outer strike I feel I can save the position, something you can’t do with an IC , if the price ends up between the strikes I have half a chance saving the position by doing a diagonal roll, so the intent of heavy outer wings is predominately defensive in my case.

The 500 between the strikes is the max risk on the position I’m comfortable with, it’s all a matter of personal preference.

BTW, Grinder,Mazza,Sails, or anyone else i am open to criticism or helpful hints.

 

[mazzatelli1000]

Hi Gary.

LOL, I’m far from sophisticated and you’re right I am slightly superstitious so I was hesitant posting up my position but the reason why I have a backspreads (put and call) going on is because if the index explodes through the outer strike I feel I can save the position, something you can’t do with an IC , if the price ends up between the strikes I have half a chance saving the position by doing a diagonal roll, so the intent of heavy outer wings is predominately defensive in my case.

The 500 between the strikes is the max risk on the position I’m comfortable with, it’s all a matter of personal preference.

BTW, Grinder,Mazza,Sails, or anyone else i am open to criticism or helpful hints.

Where is the confidence man???

Maybe if you summarise your intent with the trade, dissection would be clearer

 

[cutz]

Where is the confidence man???

Maybe if you summarise your intent with the trade, dissection would be clearer

Good evening mazza,

Here's the intent of my trades,>> effectively neutralized all May positions, still feeling particularly bearish so that’s why I started with a new 3800/4300 call backspread into June, still got room to maneuver on this one if I’m wrong, (I can compress the spread ), I also initiated a new June put backspread but still a little gun shy on this side, I haven’t got the full amount on yet, 3400/3000 4 to 8, I’ll finish it off if this correction steps up a notch.

The new May 3700/3900 2 to 4 was to help sort out today’s credit shortfall for the above, bit of a gamble but the additional risk doesn’t worry me.

Reflecting back I feel i may have set the put strikes to low but I’ll guess we’ll see how things pan out.

Hope it makes sense.

 

[mazzatelli1000]

Good evening mazza,

Here's the intent of my trades,>> effectively neutralized all May positions, still feeling particularly bearish so that’s why I started with a new 3800/4300 call backspread into June, still got room to maneuver on this one if I’m wrong, (I can compress the spread ), I also initiated a new June put backspread but still a little gun shy on this side, I haven’t got the full amount on yet, 3400/3000 4 to 8, I’ll finish it off if this correction steps up a notch.

The new May 3700/3900 2 to 4 was to help sort out today’s credit shortfall for the above, bit of a gamble but the additional risk doesn’t worry me.

Reflecting back I feel i may have set the put strikes to low but I’ll guess we’ll see how things pan out.

Hope it makes sense.

Good Morning cutz,
Apologies if I came across as "disclose your trade!!!", was multi-tasking at the time and typed without thought

Assuming 3800/4300 backspread done for a credit.

Prognosis:
Backspreads are 1) long vol, 2) Ideal for -/+ signficant sigma moves

Absent an analysis of vol skew and current IV range, your bias is short deltas. With that an increase in vol line is expected.

For the short call, weighing delta gains versus DvegaDspot losses needs to be considered. I assume in Hoadley, vol is constant over all strikes, so model manually.

The long call 4300, may be too far OTM for any sensitivity to IV - Vega gains may be minimal despite higher ratio.

There is nothing wrong with the position, just additional considerations to size up whether risk:reward is desirable.

With regards to the diagonal roll, is this simply rolling the short strike to the back month at a higher strike with no long hedges? (NB no need to disclose)

My thoughts at his stage of my development, are that I rather consider adjustments that reduce risk and reward slightly or increases/locks reward, rather than play the defensive adjustments.

Sometimes defensive adjustments create more headaches via increased risk, less reward and new undesirable exposures of the Greeks, when it is better to offset and move on to a new trade.

All IMHO and please DYOR.

 

[cutz]

Hi Mazza,

Thanks again for your comments,

You’re correct, this position is a credit spread, using yesterday’s prices IV is running at 29.5 on the short and 26.8 on the long so that looks OK, yep the call side of the position is short delta to about 4200 but I may bring another long into the spread at strike lower than 4300 still undecided. (I’ve left the put side out of the equation as it’s not finished, i don't really like it, may bring it up)

By the way when I’m refer to a diagonal roll that’s with hedging.

 

[mazzatelli1000]

using yesterday’s prices IV is running at 29.5 on the short and 26.8 on the long so that looks OK,

I have quickly inputted this so may not be accurate
Plot of vega of the backspread - assumption constant vol
Maybe reconcile to Hoadley

PS: Good luck!!!

 

[cutz]

Hi Mazza, thanks.

3D looks nice,

I’m not sure if I’ll be able to use long vega to my advantage on the call spread, I reckon if the index continues making gains IV may continue dropping away, it has picked up this week but I dunno if it’s temp or not.

How about a put backspread to initiate a volatility play, sound attractive?, I’m having trouble reading the market, I didn’t like the finish on the US last night but i'm still feeling bearish.

How are you playing things ATM ?

Geez, I wish I had crystal balls.

 

[mazzatelli1000]

Hi Mazza, thanks.

3D looks nice,

I’m not sure if I’ll be able to use long vega to my advantage on the call spread, I reckon if the index continues making gains IV may continue dropping away, it has picked up this week but I dunno if it’s temp or not.

How about a put backspread to initiate a volatility play, sound attractive?, I’m having trouble reading the market, I didn’t like the finish on the US last night but i'm still feeling bearish.

How are you playing things ATM ?

Geez, I wish I had crystal balls.

Yes, profits will come from directional/deltas

Put backspread is good, OTM put calendar hedged with spot based on discrete intervals.

I liked the finish last night, hit the sweet spot of many of my flys..pity I had scaled out the majority of them by then. LOL

Was short vol but now long vol bias. Currently assessing POT 105 Jun/Sep Put Calendar.

 

[cutz]

Hi guys,

On the subject of backspreads, I’ve been playing around with a MQG call backspread on hoadleys, seeing I’m bearish on this stock I was looking strikes of 32/40, ratio of 1 to 2, if the stock keeps running up from today’s price of $34.60 instead of reversing i'll neutralize delta at $35/36 and buy a couple cheap puts, profits will then come in from the upside and downside is still protected, if the stock collapses the initial credit is kept. A rough description but I hope you know what I’m getting at. I chose MQG because it’s capable of making big moves and it's IV have settled down somewhat.

Any flaws in this strategy, everything about it looks good but am I looking at it the wrong way round? It’s the best I can get considering I can’t do the opposite side because of the short selling ban. (Shame because going long volatility/short delta on this via a put backspread also looks attractive)

 

[jackson8]

Hi guys,

On the subject of backspreads, I’ve been playing around with a MQG call backspread on hoadleys, seeing I’m bearish on this stock I was looking strikes of 32/40, ratio of 1 to 2, if the stock keeps running up from today’s price of $34.60 instead of reversing i'll neutralize delta at $35/36 and buy a couple cheap puts, profits will then come in from the upside and downside is still protected, if the stock collapses the initial credit is kept. A rough description but I hope you know what I’m getting at. I chose MQG because it’s capable of making big moves and it's IV have settled down somewhat.

Any flaws in this strategy, everything about it looks good but am I looking at it the wrong way round? It’s the best I can get considering I can’t do the opposite side because of the short selling ban. (Shame because going long volatility/short delta on this via a put backspread also looks attractive)

hi cutz

how many months out are you thinking of placing the trade

looking at a risk chart it would have to make a pretty hefty move upwards to come into profit if june contract looking to $46 + with such wide strikes

obviously if sp slumps not a problem

how will you defend if starts entering the valley of death

gary

 

[cutz]

hi cutz

how many months out are you thinking of placing the trade

looking at a risk chart it would have to make a pretty hefty move upwards to come into profit if june contract looking to $46 + with such wide strikes

obviously if sp slumps not a problem

how will you defend if starts entering the valley of death

gary

Hi Gary,

Assuming a ratio of 4 to 8, buy 1000 shares at 35 and a 26 put if I’m wrong and the stock creeps up, the loss zone then exits at about $42.5. If the stock keeps marching on the long calls will start doing their thing, but I’m skeptical on this sort of thing happening.

I was looking at Jun expiry because I’m bearish on MQG so I’m relying on the stock to tank within the next couple of weeks then I’ll buy back my short calls ASAP.

 

[jackson8]

Hi Gary,

Assuming a ratio of 4 to 8, buy 1000 shares at 35 and a 26 put if I’m wrong and the stock creeps up, the loss zone then exits at about $42.5. If the stock keeps marching on the long calls will start doing their thing, but I’m skeptical on this sort of thing happening.

I was looking at Jun expiry because I’m bearish on MQG so I’m relying on the stock to tank within the next couple of weeks then I’ll buy back my short calls ASAP.

hi cutz
just out of interest can you acheive the same results by purchasing deep itm calls and buying puts to cover instead of purchasing the stock