Options Trading Thread

gooseman

Experienced member
1,776 219
are you pricing your options or just trading the numbers on the screen? options trading is HUGELY different to trading cash/futures as it has so many inputs to give you the option price. fundamentally volatility and the greeks. if you have any aspirations of trading optiosn i suggest you familiarise yourself with these things.

if you're trading deep ITM stuff you're effectively trading the underlying as it will have a delta close to 1.
 

one2watch

Junior member
16 0
are you pricing your options or just trading the numbers on the screen? options trading is HUGELY different to trading cash/futures as it has so many inputs to give you the option price. fundamentally volatility and the greeks. if you have any aspirations of trading optiosn i suggest you familiarise yourself with these things.

if you're trading deep ITM stuff you're effectively trading the underlying as it will have a delta close to 1.
You're right but I've just started trading july puts on the ftse index and all the deep itm options not moving enough to cheer me up since yesterday so it's definetly not close to 1 at the moment. For example ftse was down 48 points yesterday and I bought the puts when down 8 points but my put option only went up by 20p bid. i thought it would go up by at least 30. Is this because july options have longer to run and more expensive? Another question; is it wise to take the profit quickly and get out if you've taken a position like the one above cause you might start suffering from time erosion in the second week of option.(trading 2 5850 july puts on ft index) thanks for your time to reply
 

gooseman

Experienced member
1,776 219
so you're trading OTM puts? with a remarkably low delta.....i.e the price isn't going to change much with a movement in the underlying.

if you're trading OTM stuff miles away from the money then you're buying yourself protection and unlikely to make money unless there is a large move in the underlying.

june expires today. yes, your theta (or decay) begins to kick in closer to expiry.
 

one2watch

Junior member
16 0
so you're trading OTM puts? with a remarkably low delta.....i.e the price isn't going to change much with a movement in the underlying.

if you're trading OTM stuff miles away from the money then you're buying yourself protection and unlikely to make money unless there is a large move in the underlying.

june expires today. yes, your theta (or decay) begins to kick in closer to expiry.

No what I traded yesterday was 5850 july put when index was 5748 so I am well in the money but only added 20p on a 40 point drop. Do you think this would be almost penny for every point if it was say last week of the cycle?
 

gooseman

Experienced member
1,776 219
ok I see. that's not deep in the money. for example 100 ticks away form the money is a 60 delta still.
 

one2watch

Junior member
16 0
ok I see. that's not deep in the money. for example 100 ticks away form the money is a 60 delta still.
ooo ok thanks for enlightning me there perhaps I should be studying my greeks more so in this case what level would give me delta of 100? 5900 5950?
 

gooseman

Experienced member
1,776 219
no probs-and learn your greeks!
 

RPEX

Active member
162 7
re you pricing your options or just trading the numbers on the screen? options trading is HUGELY different to trading cash/futures as it has so many inputs to give you the option price. fundamentally volatility and the greeks

I've been trading Z options for about a month and a bit now, spreads. I understand the greeks and a simplistic version of volatility (not smiles), and see that you can price options differently from the next guy. But trading on this basis i don't understand how you can get orders filled at those prices when the spreads on autoquote are so tight, in fact the only way i get any of my orders filled at limit is by sitting right in the middle of the spread and hope some clever Conversion/Reversal algo sees my opportunity.

ii) Isn't it gutless the way autoquote shuts down during news events?
iii) So is ESX strictly a Futures Option? Liffe paperwork never seems to say that.
iv) Is it realistic for an individual investor with IB's DMA to be able to spot arbitrage or mis-pricing opportunities?
v) What is the most efficient spread strategy in terms of minimising margin requirements? Because my initial club footed steps into this market meant i only earnt what i could've got in interest on the margined cash.

Cheers if you can answer any of these!
 

niiAmoo

Newbie
7 0
Option Pricing calculator

Try this website

Naotia Cool Option Pricing

As someone who is fairly new to the world of options trading, I'd appreciate any imput from more experienced options traders.

Specifically:

Which brokers offer decent options fees/online trading software.

Any thoughts on more sophisticated options spreads - butterflies, condors etc.

Any good options pricing software available.

Other options trading strategies anyone here employs.

What people trade - Index options, share options, currencies, bonds, commodities ?


Maybe worth adding to this thread, you never know, some may find it useful...

Thanks in advance.

Mo
 

amtrader1

Junior member
16 0
Hello,

I'm a FTSE day trader. My strategy is to trade on both sides of the open for a reversion to the mean or retest of initial balance highs and lows and lately I've been getting stopped out a lot using futures only to see the trade move back into my direction. The other problem I have is that employing my strategy, I have to wait for a price signal and cannot just buy or sell at resistance. What I'm looking for is a tool where risk doesn't need to be defined and I can still make a short-term bet on market direction.
Can I use call/put options to do that? Should I use options very close to expiry? What is the cost of buying and selling a FTSE call or put option? My average profit target is 20-30 points, would I make money using options for such small profit targets?
Any replies to above questions, much appreciated.
 

one2watch

Junior member
16 0
one word of advice from me, get out of ftse alltogether. It's not liquid enough another words too choppy. I was trading options my self till 2 weeks ago. The reason I left it because it's so hard to make money because option prices stack the odds well against you, spreads too wide and very high commision charges(i was paying £6 per lot per side minimum £15) now I am trading bobl and mini dow futures with an american broker I pay £2.2 per round turn and spreads are so tight what you see what you deal to buy and sell. with good money management it's a gold mine
regards and good luck
 

forexpilgrim

Newbie
4 2
Symbols for currency pairs for options

I am researching options and would like to know the symbols used for Eur/Usd and other forex currency pair options. Can anyone help me with a list or some good links so I can look them up?
Thanks
 
 
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