In need of some Insights

[Option_Noob]

Hello All,

I'm working on transitioning from Equity Options strategies to Futures Options strategies.

I have done my homework and understand the risk management, etc.

There are a few things that I plan on doing here that is worth noting, and i'd like some insight.

Liquidity, data sources, research, etc. These are just some of the things that i'm looking for that can provide me insights to my trading.

I know CME and CBOT have calendars out there, and understand there are data streams out there that I don't have access to.

I currently use ThinkorSwim platform and am thinking of transitioning to Interactive Brokers and buying their data.

Any subscriptions, data plans, E-magazines, etc you all could advise me on?


My strategies for starting out:

(>90%) OTM
(30-55 DTE)
Short Strangle, Credit Spread, and DITM Debit Spreads

I am starting this with the the most liquid and the also some of the medium volume traded.

I know this post is all over the place, but I just have a lot of questions and I hope to have some insight on some of these topics.

Thnx

 

[Option_Noob]

An example of a trade that I am currently setting up is the Feb /CL 45.00/65.00 Short Strangle. This is collecting premium and I want to keep up with the OPEC-related news, so I was hoping someone could advise me to what literature or streams of it are out there so I can do my due diligence.

Thnx

 

[econbizer]

Only answering a small part of your question on platform - Install the IB demo. 10min delayed data for free. then fund after u r satisfied with it.

Why trade options as retail? most professional option traders trade via market making & then laying off risk. 1 instance I can think of why trade options is when u have insider info.. and trade non-plain vanilla to avoid detection thru buying calls. Can you enlighten me on potential gd e(v) options strategies?

I used to do credit spreads on spx, but was lucky to be bulldozed very early on by a natural disaster. Found the expected(value) of such options strategies to be veryvery low. The win rate is also veryvery misleading.. it can even be 99%, but the 1% can wipe u out. There is little point tracking news.. once it hits, it is probably too late to hedge or close out your pos. Its value would have crashed. That being said, as long as you know your max risk, I guess it is okay trading such strategies.

I get that option strats allow you to be less accurate in your prediction of the market direction. But if you r already doing some TA to execute such strats, u may be better off trading the outright (futures/underlying) in the long run.

 

[Option_Noob]

Only answering a small part of your question on platform - Install the IB demo. 10min delayed data for free. then fund after u r satisfied with it.

Why trade options as retail? most professional option traders trade via market making & then laying off risk. 1 instance I can think of why trade options is when u have insider info.. and trade non-plain vanilla to avoid detection thru buying calls. Can you enlighten me on potential gd e(v) options strategies?

I used to do credit spreads on spx, but was lucky to be bulldozed very early on by a natural disaster. Found the expected(value) of such options strategies to be veryvery low. The win rate is also veryvery misleading.. it can even be 99%, but the 1% can wipe u out. There is little point tracking news.. once it hits, it is probably too late to hedge or close out your pos. Its value would have crashed. That being said, as long as you know your max risk, I guess it is okay trading such strategies.

I get that option strats allow you to be less accurate in your prediction of the market direction. But if you r already doing some TA to execute such strats, u may be better off trading the outright (futures/underlying) in the long run.

Basically, I'm collecting premiums and capturing time decay as a result of the Out of the Money direction-less trade.

Basically, Short Strangles...you can't lose both ways...its impossible. To sell a PUT and a CALL simulataneously, it's double dipping into the same current situation.

As for trading SPX, I'd stick with the /ES contracts, as the NET LIQ is much less for the amount of premium I would try to collect. I'm a good 10 points out either way on CRUDE OIL with 30 days to trade...that to me is less risky than say being 10 points either way on the NASDAQ or SP500. These things are all scalable to the underlying. As for trading the underlying...eventually I would tap into covered calls, but I want to increase portfolio size and eventually diversify accordingly.

"Playing keep away with the market" is my mindset.

Your thoughts?

Ryan

 

[econbizer]

Basically, I'm collecting premiums and capturing time decay as a result of the Out of the Money direction-less trade.
...

Hi Ryan,

I am not qualified to give you options trading advice, as I only briefly traded bear call/bull put spreads. I scalp futures intraday when enough people r trapped long/short. incredibly boring having no trades at all some nights. and abit of fx on a higher tf.

It was just my personal thought that options writing is not good e(v), bcos if you r using TA to write a bull put spread when you think the direction is down, you might as well look for patterns to go short on the underlying. The premium I would receive writing the spread would likely be very little, given that TA points down & so is priced into the spreads. But hey, this is just my finding.. I m sure there r successful retail option traders out there. I found myself veered towards trading outright, as I found options to be overly complex for my simple mind.

Please share your personal experiences though. Such as, your observation of premiums as a % of your max risk you collect (pay) for each far OTM / 30-55DTE credit (debit) spread. have you experienced trades where price moved rapidly against you.. was is still worthwhile to box out your pos for what x% loss? I understand it is more complicated with options with IV, time decay eg.. for specifics, but an idea of such a scenario for better understanding of risks associated with options trading would be great.

 

[Option_Noob]

Hi Ryan,

I am not qualified to give you options trading advice, as I only briefly traded bear call/bull put spreads. I scalp futures intraday when enough people r trapped long/short. incredibly boring having no trades at all some nights. and abit of fx on a higher tf.

It was just my personal thought that options writing is not good e(v), bcos if you r using TA to write a bull put spread when you think the direction is down, you might as well look for patterns to go short on the underlying. The premium I would receive writing the spread would likely be very little, given that TA points down & so is priced into the spreads. But hey, this is just my finding.. I m sure there r successful retail option traders out there. I found myself veered towards trading outright, as I found options to be overly complex for my simple mind.

Please share your personal experiences though. Such as, your observation of premiums as a % of your max risk you collect (pay) for each far OTM / 30-55DTE credit (debit) spread. have you experienced trades where price moved rapidly against you.. was is still worthwhile to box out your pos for what x% loss? I understand it is more complicated with options with IV, time decay eg.. for specifics, but an idea of such a scenario for better understanding of risks associated with options trading would be great.

I agree that credit spreads are small potatoes and 1 direction winners. Id trade iron condors(wide) or the more efficient strangle to capture a lot more premium.

Ive read that 45 due is the most efficient use with respect to time decay.

As for the premiums, I can't quote a %, bc its contingent upon several factors such as IV, how close to at the money(gamma), etc

I stick with 90% OTM and as close to 45 days as possible.....futures contract scalping has me intrigued though....what do you find is the easiest symbol to scalp? how do you predict the direction, or recognize the pattern, etc?

Ryan

 

[econbizer]

I agree that credit spreads are small potatoes and 1 direction winners. Id trade iron condors(wide) or the more efficient strangle to capture a lot more premium.

Ive read that 45 due is the most efficient use with respect to time decay.

As for the premiums, I can't quote a %, bc its contingent upon several factors such as IV, how close to at the money(gamma), etc

I stick with 90% OTM and as close to 45 days as possible.....futures contract scalping has me intrigued though....what do you find is the easiest symbol to scalp? how do you predict the direction, or recognize the pattern, etc?

Ryan

Good info there, which you can only uncover from experience.

I think u can pretty much trade everything. What I trade right now is purely due to timing convenience & pocket size. ym & fx.

For futures, my timezone convenience points me to kospi (v little trades) & dow jones mini. using a tick chart, lower & higher tf. basically just drawing alot of lines & trading bounces off them when I feel enough traders a trapped. standard double top/bot, h&s structures. I understand this well bcos I have been on the trapped side so many times, seeing price take off from my SL. now I trade the loser in me.

Ideally, trade what u have an edge in. I haven't gotten this good yet, but if possible, crunch numbers on the instrument u trade & know the average daily range, how much the average upswing vs downswing pays. These factors can help u gauge whether a move still has legs, & which direction holds the better trade.

If you r comfortable with options, continue trading options. there r so many ways to trade. trade what u can find an edge in. everything else is a distraction.

 

[Option_Noob]

I haven't done much with market timing as I have with the upside or downside volatilities. I tend to look for heavily traded situations, rather than news catalysts. I want the premium more than the quick kill, so scalping, albeit appealing, can lose your bankroll faster than being patient.

You sound like a pure chartist. I'm more about tidal moves and fundamentals. Might just be a difference in trading styles, but I welcome the education of how the other guys are doing it. what are your hard stops on profit with your scalping??? I traded some ZC ZT ZF ZW ZS on the train rides into the city...that was good for a few hundred every trip.

 

[econbizer]

I haven't done much with market timing as I have with the upside or downside volatilities. ...

You r right on patience. I killed myself taking bordem trades & realised it stupid+expensive. Now I keep an eye on the chart while doing other things like learning or relaxing via dramas. I wouldnt trade futures on a phone connection. wouldnt want to be caught long or short when the connection breaks. always have 2 brokers & 2 connections for insurance.

How do you measure volatility? via current iv vs historic x days iv of the instrument traded? I imagine last night's us equities move would have killed alot of call writers. I didnt take a 20042 long setup cos I didnt like that the setup looked suboptimal. but trading is like that. I was watching dramas n fx charts after I missed that.

Technical intraday traders have SLs that r no different grom long term traders. typically at a swing high or low.

 

[Option_Noob]

You r right on patience. I killed myself taking bordem trades & realised it stupid+expensive. Now I keep an eye on the chart while doing other things like learning or relaxing via dramas. I wouldnt trade futures on a phone connection. wouldnt want to be caught long or short when the connection breaks. always have 2 brokers & 2 connections for insurance.

How do you measure volatility? via current iv vs historic x days iv of the instrument traded? I imagine last night's us equities move would have killed alot of call writers. I didnt take a 20042 long setup cos I didnt like that the setup looked suboptimal. but trading is like that. I was watching dramas n fx charts after I missed that.

Technical intraday traders have SLs that r no different grom long term traders. typically at a swing high or low.

I measure Historical IV, Current IV, and thinkorswim has a means of measuring IV RANK with a macro that's out there. I go on tasty trades and look at some of the IV RANKs just as a barometer.

My current focuses are 3 symbols..../CL(between 45 and 62.50), /ES(monthly bt 2150 and 2375), and /YM(45 days or closest...+/- 350 points from current)

 

[econbizer]

I measure Historical IV, Current IV, and thinkorswim has a means of measuring IV RANK with a macro that's out there. I go on tasty trades and look at some of the IV RANKs just as a barometer.

My current focuses are 3 symbols..../CL(between 45 and 62.50), /ES(monthly bt 2150 and 2375), and /YM(45 days or closest...+/- 350 points from current)

Good luck! ES & YM big caps were leading yesterday. Noticed NQ, which was leading the charge up before, lagged. Implies bullishness across the board after Trump's tax news to be announced in coming weeks. This gives time + space for the drive up to 2.0fib. Nice double bott bounce off a weekly line & 1.618fib. Trade safe!

 

[Windlesham1]

http://optionsinvesting.co.uk/category/weekly-trade-idea/
have a look I only only trade the FTSE as I'm British and like the hours and the familiarity. I trade a number of strategies, but I'm super cautious with that clown in the White House-he's great for the banksters,but toxic for humanity