Option strategies

This is a discussion on Option strategies within the Futures & Options forums, part of the Markets category; Bull I agree with you. Not mumbo Jumbo at all. His recent position was opened maybe 6 wks ago, when ...

Reply
 
LinkBack Thread Tools Search this Thread
Old Jun 18, 2005, 9:47pm   #17
 
Glenn's Avatar
Joined Mar 2003
Bull
I agree with you. Not mumbo Jumbo at all.
His recent position was opened maybe 6 wks ago, when he was maybe 100pts or more OTM.
But the premiums have been poor of late (Hedge Funds activity possibly) and that was a lot closer to the market than he is used to.

Perhaps one thing against the far-dated posns is that theta takes a lot longer to have a decent effect, so you may be sitting on a posn and suffering the marg longer than you would with near dated to get the same reduction in premium.

Glenn

Quote:
Originally Posted by bulldozer
Glenn,

Good questions m8.
I would hang on to them if they still had time value with intrinsic. If theres no time value left or very little i would roll them with a dffrt strike.
If my marg can hold position theres no need for me to hedge at that point.

I agree with you on the next question. I dont agree with ur friend to hold till xpiry and make a saving on comms+Spread. In fact he is losing money by holding till xpiry and let position finish worthless!
I'll try to xplain why: I would buy them back at 2-3 pts and happy to pay the MM to take them off me, this action will realease my marg and can be shifted to the new strgl position and take in HEAVY prems. While ur friend is waiting for his position to finish worthless just to make those 2-3pts, i've made 5-12 pts in the same time period with the theta working in my favor. I'm sure you understand my point. Ur mate is not so bright. And more contracts than ur friend with the same amount of marg.

Now to ur last point [near dated position] he is obviously writing very near the mrkt level/action for him to get hit. He is also paying heavy marg on near dated ATM/ITM which he may not know.
Its all about making the most use of the margin paid. I trade away from mrkt action OTM and a few mths out and with less marg and more contracts for the same amount of marg ur friend is paying and the added benifits> no stress and more free time to enjoy life.

I hope this is not all mumbo jumbo

Bull
Milk theta and strangle the MM
Glenn is offline   Reply With Quote
Old Jun 18, 2005, 10:30pm   #18
Joined Jan 2005
Glen,

A few free tips 4 u.
Do half strangle first when volty is pushing prems higher and also making sure u chose the right strike. Then do the other half a few days later when volty is in ur favor. inother words wait for entry points that suits you.
Ur friend is on a 7-10 weeks position from what i can gather. My 3-4 mths OTM will have a better advantage when the 7-10 [ur friend] wks are up. The theta will show up better at that point but u CANT keep checking the theta effects on the daily basis on the far out position like u can on the near month. Inother words i will make more prems at the end of ur friends xpiry date [7-10wks] with my long dated position now reduced by 10wks. Get the picture? This is because his prems are a lot lower than mine at the outset.

Lets say he took in 12 pts and i took in 30 pts and in 10 wks his are worthless and keeps all 12 pts prems and mine are now worth 13 i have made 17 pts compared to his 12 pts. He cant make 17pts. 5pts difference = £50 >>times 10 contracts= £500 and STILL with LESS margin.
Plus he is trading close to mrkt action with the Delta breathing down his neck and I'm still away from the mrkt action with NO threats of the Delta hitting me in the face cause I'm OTM. He needs to hedge if it goes ITM , i dont. Even if my position is showing ONLY 10 pts profits at the xpiry date of ur friend, I'm still better off than his position because with the SAME amount of marg as ur friend i'm able to do 2-4 more contracts.

word of warning to others who read my posts: DONT do strangles if you cant come up with any margin calls! or if u dont know how to hedge!, or if you dont know how to convert positions! or if it makes you feel nervous and keeps u awake at night. or if you have heart/blood presure problems. Options can HARM your health and ur happiness if done wrongly
If you suffer with any of the above problems you need to visit my site> www.jc53.com


Bull

Last edited by bulldozer; Jun 18, 2005 at 10:52pm.
bulldozer is offline   Reply With Quote
Old Jun 19, 2005, 7:48pm   #19
Joined May 2001
Bull - I'd be interested in a walk through example of the sort of trade you're talking about. As it happens I've tried starting several threads on options but the response has been very muted.

In the interest of not hi-jacking FC's thread can you start one in the options section and just maybe post the link here.

Hope everyone's having a great weekend (Wasn't the cricket great!)
Steve.
stevespray is offline   Reply With Quote
Old Jun 19, 2005, 10:40pm   #20
Joined Jan 2005
Quote:
Originally Posted by stevespray
Bull - I'd be interested in a walk through example of the sort of trade you're talking about. As it happens I've tried starting several threads on options but the response has been very muted.

In the interest of not hi-jacking FC's thread can you start one in the options section and just maybe post the link here.

Hope everyone's having a great weekend (Wasn't the cricket great!)
Steve.
Steve,

Its been done many times before [option threads]

It does not work on this forum. It all becomes hostile with lots of insults and lots of mud slinggin it normally ends up with the thread getting stopped by admin. Ask FC he has seen it all.
Go on the search engine for good option forum. Yu'll not find it here.
I will try to PM some links later.
Have a good trading week.

Bull
In all things give thanx
bulldozer is offline   Reply With Quote
Old Jun 19, 2005, 11:19pm   #21
 
frugi's Avatar
Joined Mar 2003
I've moved these posts here from Fettered's Live or Die by the Sword to avoid muddling two interesting strands of discussion.

Quote:
Its been done many times before [option threads]

It does not work on this forum. It all becomes hostile with lots of insults and lots of mud slinggin it normally ends up with the thread getting stopped by admin. Ask FC he has seen it all.
I don't think there's anything specific about the options forum that encourages hostility. Unfortunately a glasshouse of insulting posts can appear anywhere on the site, but we try to nip them in the bud, or at least when the poison flower is clearly visible, and this particular forum is no exception.

I hope that we may witness further uninterrupted, intelligent discussion. Anyone who chooses to disrupt this thread with abuse or prolonged pointless off topic-ery will find their posts swiftly dissolved, as usual. Over to you, option warriors .. please keep this one going ...
frugi is offline   Reply With Quote
Old Jun 20, 2005, 11:46am   #22
 
osho67's Avatar
Joined Nov 2002
Thanks for starting this thread.

Normally I sell naked put options. This morning I have sold put at 4625 july expiry for net premium of £28.3 per contract. Margin used was about £270.

I would welcome comments to improve my trades. Thanks
__________________
A CANDLE LOSES NOTHING BY LIGHTING ANOTHER CANDLE
osho67 is offline   Reply With Quote
Old Jun 20, 2005, 12:33pm   #23
Joined Nov 2004
Quote:
Originally Posted by stevespray
I'd make two points here....

1) If you get into writing options then it is very important that you are well margined. I generally do just a few contracts at a time. Doing it this way you get a good balanced feel for the market. If things dont quite go your way then there is plenty of scope for adjustments / hedging etc. The key is to remain relaxed and not under pressure.

2) I find that my trading personality is hugely bias towards psychology. On that basis I like to look at things as simply as possible. This is why I am drawn to writing strangles. Firstly you have the protection of the range and then you have the further protection of any scalping / hedging you can pull off. When I manage to scalp a few points I psychologically add these to my premium and thus my profitable expiry range generally gets bigger and bigger.

Bulldozer - You are correct, I am using the futures to hedge the exposure on the At The Money Calls. What you have stated isn't entirely correct. A loss on the Futures positions does not wipe away ALL profits, it erodes profits as far as the future moves against me (if we are inside the expiry range) and it 'locks' my position if we are outside the expiry range. This is another benefit of trading the way that I do - as my profitable expiry range grows, the point at which I will need to be hedged will move further and further away from the strike price of the Call / Put. This means that there is far less chance of getting a nasty whip.
In reality, and based on experience, I am always prepared to lose as much as I stand to gain. So, given the example of a strangle on FTSE which has paid me 40, I am prepared to drop 40 before I get any kind of desire to hedge the whole position out - again this prevents whip. At the end of the day it's all down to personal psychology and how you decide to look at your trading / positions. Obviously, at present, the strangle writers will technically be showing a loss simply because the volatility is rising and therefore there is a blanket increase on the value of all the short (written positions).

Steve.
What do you guys make of last Fridays LTOM EURO FTSE EDSP at 5138 when:
a) the cash market never traded above 5090 between 10.10 - 10.30
b) the market didn't trade above 5090 for the next two hours after the unmatched orders were executed
c) the market high for the day was 5098.5 at 2.45pm and the market failed to trade above 5100 all day.
__________________
"What goes up must come down...What must rise must fall"
Alan Parsons Project ( from Pyramid )
kriesau is offline   Reply With Quote
Old Jun 20, 2005, 1:10pm   #24
Joined Jan 2005
Quote:
Originally Posted by osho67
Thanks for starting this thread.

Normally I sell naked put options. This morning I have sold put at 4625 july expiry for net premium of £28.3 per contract. Margin used was about £270.

I would welcome comments to improve my trades. Thanks
================================================== ========

SNAP! 4625 strike
Is that £270 per contract? I cant work out how uve got £28? When i trade OTM near month Puts the last digit is either 0 or 5 with my uk based broker.

I sold/wrote some 4625 Puts on the Dec's contracts. Took in £380 per contract.

Warning! to the readers: pls dont copy my trades unless you know what ur doin!

Bull

Last edited by bulldozer; Jun 20, 2005 at 2:16pm.
bulldozer is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Similar Threads
Thread Thread Starter Forum Replies Last Post
US option volumes grantx Futures & Options 7 Nov 1, 2006 5:04pm
Any option traders here use IB? LordGekko Brokerages 1 Feb 14, 2006 1:32pm
option trading ? alen Home Trader 18 Nov 9, 2005 9:43pm
option trading ? alen Discretionary Trading 0 Aug 16, 2005 12:37am
new to option davidlye18 First Steps 13 Feb 16, 2005 1:46am

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)