SPI 200 and Futures Options

[cutz]

I mean 1000 points away from the market usually 20-40 lots.
Wait until the market has had a big correction and panic sets in then sell puts.
Like this week I sold some 3600 puts 1 month until expiry and 16 points.

You mean you sold the SPI June 3600 puts at 16 points 40 times.

 

[Pit Trader]

....and if you can't?

Don't play in a game you can't afford to.

 

[Pit Trader]

You mean you sold the SPI June 3600 puts at 16 points 40 times.

20 times.

 

[wayneL]

Don't play in a game you can't afford to.

So how much cash reserve per contract to you keep? There is an issue of risk, reward and capital return here.

If you have to keep so much cash in reserve, returns look puny.

 

[Pit Trader]

So how much cash reserve per contract to you keep? There is an issue of risk, reward and capital return here.

If you have to keep so much cash in reserve, returns look puny.

They are not my only positions I also have 5200 and 5300 calls and
3700 puts.
They were put on when we were up around the 4800-5000 level.
I have 200K in my account and look to make 20K per expiry which there are 4 per year.

 

[cutz]

If the market gets close to my options I hedge position in the futures market.

How close do you let the underlying get to the short strikes ?

 

[wayneL]

Supposing your 16 point puts blow out to 200 points or more... that's 20 x 184 x $25 = $92,000 extra margin plus additional risk margin to win the initial $8k.

Well in excess of 100k margin call.

Ya up for it?

 

[Pit Trader]

Supposing your 16 point puts blow out to 200 points or more... that's 20 x 184 x $25 = $92,000 extra margin plus additional risk margin to win the initial $8k.

Well in excess of 100k margin call.

Ya up for it?

The price would have to go through my strike to be 200 points premium.
This is why I wait for a sell off to put the positions on.
Like now...The market has dropped 800 points.
Very low risk of it dropping another 600 points in the next 4 weeks.
If it gets to my strike I will hedge in thre futures market.

 

[cutz]

If it gets to my strike I will hedge in thre futures market.

So you wait till delta has ballooned out the wrong way, how much opposite delta do you then put on.

 

[Pit Trader]

So you wait till delta has ballooned out the wrong way, how much opposite delta do you then put on.

I Hedge the whole position and have to sit on it until it moves away from my strike.Means getting in and out many times.This has only happened to me once in 8 years.

 

[wayneL]

The price would have to go through my strike to be 200 points premium.
This is why I wait for a sell off to put the positions on.
Like now...The market has dropped 800 points.
Very low risk of it dropping another 600 points in the next 4 weeks.
If it gets to my strike I will hedge in thre futures market.

How long did you say you've been doing this?

I have no problems with your basic premise, but your risk control has me seriously alarmed.

You have probability and risk confused IMO.

If it gets to your strike it's probably all over for you, too late to hedge as margin calls may have gobbled up your entire capital.

 

[mazzatelli]

Spreads are not great but you need to be patient and you usually get hit.
If you get a good broker they ring around the banks and they will quote you.
Be careful they wait for silly prices and hit you if you dont know what you are doing.You also find fund managers look to hedge in the options market so they look for volume.There are also Hedge Funds that sell options for a living they look to push 500 at a time.

lol at short otm gamma/+dgamma...what a load of ****...well maybe not if they're from Nigeria trading OPM

 

[Pit Trader]

How long did you say you've been doing this?

I have no problems with your basic premise, but your risk control has me seriously alarmed.

You have probability and risk confused IMO.

If it gets to your strike it's probably all over for you, too late to hedge as margin calls may have gobbled up your entire capital.

This is why you need patience and only enter when the market has move a good deal.Go check your charts and see if the market moves 1800 points down in 3 months or 1200 points upward in 3 months.I'm usually in for only 2 months or less.

 

[Pit Trader]

lol at short otm gamma/+dgamma...what a load of ****...well maybe not if they're from Nigeria trading OPM

I have seen statements from my broker that showed accounts from
overseas that do this all the time.

 

[wayneL]

This is why you need patience and only enter when the market has move a good deal.Go check your charts and see if the market moves 1800 points down in 3 months or 1200 points upward in 3 months.I'm usually in for only 2 months or less.

LOL

Dude, you haven't been around ASF long, so I'll forgive your ignorance of how I trade options.

It's the @ss covering protocol I have a problem with... but it's your money.

 

[Pit Trader]

LOL

Dude, you haven't been around ASF long, so I'll forgive your ignorance of how I trade options.

It's the @ss covering protocol I have a problem with... but it's your money.

Dude, I actually dont care how you trade anything.I make money so that's all that matters.

 

[wayneL]

Dude, I actually dont care how you trade anything.I make money so that's all that matters.

Why are you trying to "educate" us then

 

[mazzatelli]

I have seen statements from my broker that showed accounts from overseas that do this all the time.

Confidentiality issues aside --- HF's execute thru PB with the iBanks - are you that big a player - i.e. millions in AUM?

It's an insult to HFunders to suggest that they're selling into upside curvature PLUS not hedging into the event - not to mention the alternative products available to them to take these price bets with < risk [relative to convexity]

 

[nunthewiser]

Dude, I actually dont care how you trade anything.I make money so that's all that matters.

Now all we need is " tech/a" to come in with his $500 smackeroonies and say " put up or shut up"...

I would do it but i spent the last of my cash on a nigerian options course.

 

[Pit Trader]

Why are you trying to "educate" us then

Look you want to insult me,you don't like my methods then move on.
You don't want to be educated you just want to tell everyone how much you know and how 6 years on a forum makes you a great trader.