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I have been mulling over the prospect of a weekly strategy with the mini500 since there are weekly options available. I am just throwing this out there for anyone and everyone to rip apart, make suggestions, and to entertain any criticisms as well. I am thinking of a put ratio spread with a few curve balls. This could be a buy one sell two (1:2) or 1:3, 2:4, 2:6.....whatever ratio as long as the net from the sell side of the short options is greater than the options purchased and it has a worthy ROI.
Puts only due to the fact that the premium is there for the further OTM puts vs the further OTM calls...the market can fall further quicker vs. the market rising further quicker.
Curve ball #1: The put(s) bought would not be ITM like a 'usual' spread making this a weak ratio spread? Call it what you will. The reason for this is because if you buy the put too close to the underlying then your net sell premium is lowered unless you sell a greater number of puts or sell closer to the underlying. But, that would add more risk and required margin.
Curve ball #2: This would have to be put on every Friday when the weeklies are listed to bank the max time premium from the options sold. However, Fridays can be large economic news so some Fridays might have to be avoided due to the volatility spikes.
Curve ball #3: How far away to buy the put and how far away to sell the puts? They would have to be closer because of the shorter time frame (vs. the 56 DTE per the videos) for the sold options to have the premium unless you sell a lot of them like 1:5??? That might be a change up. Anyway, If you are selling a week away then this is where the probabilities come into play. If the market does start to drop your bought put(s) will gain value as long as this happens in the first 1 to 3 days(?) and by what percentage? If your sold puts are still 5 to 10% away with a few days left there would have to be some dramatic news for the markets to drop that far that fast if you sold the long put(s) for a profit and held the short puts until expiration.
Curve ball #4: If the market does drop but you are 'certain' that your sold puts will not got ITM because of your expert moon phase biorhythm analysis indicator and your long put(s) are gaining value, at what point (% or $) do you sell the long put for a profit and let the short puts expire worthless?
The long puts are there for a little insurance and to lower the margin requirement. But, I am thinking that if the long puts expire worthless...who cares? The main objective is to make money from the short puts per the initial trade.
Why even buy a put(s)? Because of the possibility of make a little on that also along with some insurance and reduced margin. BUT: Be prepared for you margin requirement to increase if you sell the long put for profit and still hold the short puts.
I don't have any historical option data to look at so I'm waiting on Friday to see the actual weekly premiums....
For your example you make $100 if the price is over 1500. Your profit peaks at $1350 at ES price 1475 (actually one tick above 1475). Break even is 1468.25. Losses start below that.
Does the ES move down more than 90 in 7 days? Yes but not too often. Late 2008 and Aug 2011 are a couple of recent examples.
Margin is 8361. With 2X excess and no fees you are getting 0.4% ROI in 10 days if the price is above 1500. Or 1.2% for 30 days.
I.
Have anybody experience with ACATS process between IB and OX accounts? (After ACATs inception I receive in OX account only small part of my assets. OX service people said that I need to wait for all cash and open positions transfer, IB -that they was complete full ACAT).
II.
On 8th Apr I open some position in OX:
sell 4 LHM13 102 C at 0.25, IM=1009$
sell strangle 1 CLN13 78 P/107 C at 0.41, IM = 1433$
On 9th Apr I open some position in OX:
sell 5 SBN13 21 C at 0.05, IM = 924$
Total margin = 3366$, but on OX Balances Summary page under Futures Requirements I sow another IM=4565.9$ (10th April 3:32 a.m. CST).
Does it mean that OX calculate margin in another way than I can show using OX Margin Calculator?
The bolded text and chart is wrong. If the final price is 1475 or lower the short puts are ITM and you get long futures. Which could mean large losses.
I received an email about an Optons Webinar today at 7:00 EST and thought I would pass it on to anyone interested.
It is by so-called Option Professor, Jim Kenny. I have not had anything to do with him before so I can not recommend or not but he does cover option selling for income and commodities so it could be relevent to us.
Here is a copy of the email..........
Free On-Line Evening Of Options Education
All Attendees Get Details from VectorVest & Traders Library, Moneypaper Interviews
Plus, Receive a Free Offer from Jim Cramer's TheStreet.Com, Traders' Library VectoVest & DirectInvesting.Com & More!
In Addition... You Can Educate Yourself More About...
OPTION STRATEGIES FOR Stock Market, Gold-Silver, Oil-Gas, Euro & Grains
HOW PUTS Can Protect Against Declines, Cash Flow & Limited Risk Call & Put Strategies
PLUS Short & Longer Term OPTION STRATEGIES & ALTERNATIVES
Date:
Thursday April 11th, 2013
Time:
4:00 p.m. Pacific 5:00 Mountain 6:00 Central 7:00 Eastern Time
Topics:
1. Just Starting out?... Learn the Basics (Beginners)... Some Experience? Intermediate & Advanced Option Strategies
2. LEARN... How Options (CALLS-PUTS & COLLARS) Can PROTECT Against Market Volatility
3. LEARN... Uses & Risks of How Options Can Be Used to CREATE INCOME & CASH FLOW (Option Writing)
4. EDUCATE YOURSELF... ALTERNATIVES To Stocks & Bonds... Options Can Be Used on STOCK MARKET, GOLD, CRUDE OIL & UNLEADED Or NATURAL GAS, AGRICULTURE (Soybeans, Corn, Wheat, Cotton, Sugar), and FOREX (Euro, Yen, Canadian $ or Aussie $)
5. ASK QUESTIONS... Interested of LEARNING About Selling SHORT TERM Out Of The Money Options On The S&P 500 Index??... Want To LEARN About Commodity Options??...
Are You UNSATISFIED With Your Current WEALTH MANAGEMENT??... Want To LEARN About ALTERNATIVE Investments??
STOCKS... Stock Market Rally Sustainable or Sell By May & Go Away??... Will EARNINGS & CONSUMER SPENDING Support Valuations??... Debt Ceilings/Q-Easing??... Italy-China-Japan...?
COULD OPTIONS HELP LIMIT RISK OR PROTECT AGAINST DECLINES?
METALS... GOLD/SILVER/COPPER... Price Slide Continues or Oversold ?... Policies and CENTRAL BANK Q-EASING Worldwide Lead To better prices or Will Stronger Dollar Pressure Prices??
How Do The CALL & PUT OPTIONS WORK FOR GOLD-SILVER-COPPER?
ENERGY... Can CRUDE OIL Break $100?... Has U-Gas Turnaround Begun or slide back down??... IS NAT GAS Cheap??... Geo-Political Risks/Eurozone?... Economic Recovery OR Malaise?
WHAT ARE THE USES & RISKS ON OPTIONS FOR CRUDE OIL... U-GASOLINE... NATURAL GAS?
US DOLLAR... Firm or Fade? Will The EURO Fade or Rally?... FED/WORLDWIDE Q-EASING?... Debt Ceilings/Sequestration?... Aussie/Canadian Dollar Slides to Continue??
WHAT ABOUT CALL OR PUT OPTIONS on CURRENCIES VS US DOLLAR??
AGRICULTURE... Will Grain Prices Rally this year or Will South American/US yields hurt prices?...
New Crops & Current INVENTORIES?... What About CHINA DEMAND?... Overseas WEATHER?
DO YOU Want to LEARN About... Soybeans... Corn..Wheat OPTIONS... Cattle/Hogs Affected??
Event Provider:
The Option Professor Inc.
Webinar Fee:
Free Attendance
ABOUT THE PRESENTER:
The OPTION PROFESSOR CONTENT PROVIDER IS Long-Time Option Educator Mr. JIM KENNEY For over 25 years; Jim has helped thousands upon thousands of investors worldwide better understand options at his Learn About Options Seminars. Jim is a graduate of Boston College with a degree in Management and attended the Executive Management Program at the University of California -Los Angeles (UCLA). He has passed examinations for Series 7 (Stocks), Series 4 (Registered Option Principal), Series 3 (Commodities) among others and received Option Training at some of the World's Largest Investment Firms plus Advanced Options Training at The Options Institute at the Chicago Board Options Exchange (CBOE).
This means he is qualified to explain the uses & risks of option trading with you.
Jim will be happy to share his Options Knowledge
at the Free Meeting Thursday April 11th, 2013
THIS FREE OPTION SEMINAR IS OFFERED TO NEW & SEASONED OPTION TRADERS, AND ANY OTHERS INTERESTED IN LEARNING MORE ABOUT OPTIONS. THIS SEMINAR IS ALWAYS WELL ATTENDED, SO TO HELP US BE PREPARED TO PROVIDE YOU WITH QUALITY OPTION EDUCATION.
RESERVE YOUR SPOT BY GOING TO THE WEBSITE RIGHT NOW!
