BullCall buy-to-close - Options on Futures | futures io social day trading
futures io futures trading


BullCall buy-to-close
Updated: Views / Replies:432 / 4
Created: by mdsvtr Attachments:2

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 
Thread Tools Search this Thread
 

BullCall buy-to-close

  #1 (permalink)
Membership Temporarily Revoked
Memphis,TN
 
Futures Experience: Advanced
Platform: ThinkorSwim,FXCM, Ensign Software
Broker/Data: ThinkorSwim, FXCM
Favorite Futures: Futures, Forex, Options
 
mdsvtr's Avatar
 
Posts: 232 since Sep 2010
Thanks: 853 given, 28 received

BullCall buy-to-close

I plan to run the following question I am asking through TorS OnDemand feature, to see how much price has to move on the stock with X amount of time passing, in order to buy to close the short call for " BreakEven " and thus be Long just a regular Call ( which is my sole intention for looking to employ a BullCall / BearPut spread )


I have attached 2 screenshots, showing an example BullCall trade on YHOO

The stock was trading at $49.97
Buy the JAN $48.00 call
Sell the JAN $50 call ( ATM )
about 30 days to expiration
Debit = $1.17


My questions please are....

1. The Grid shows that after 2 days and the stock going up .36 cents in price to $50.33
It shows a profit of $6
So would this mean, that I could buy to close the short call of $1.17 at this point , and still be up $5.83 on the trade AND..... Long the $48 call " Free and clear " ?

Maybe my interpretation of knowing the " WHEN " I could close out the short side of these spreads is misunderstood

Would an Options calculator let me know , almost to a T , the point of which during a BullCall spread that I can close out the short side ?
The amount the stock moves in price and the time that has passed and how far out to Expiration are key factors in answering my question I'm sure

Thank you for the help and input , really appreciate it

Attached Thumbnails
BullCall buy-to-close-2014-12-15-bullcall-spread-yhoo-example-1.png   BullCall buy-to-close-2014-12-15-bullcall-spread-yhoo-example-2.png  
Reply With Quote
 
  #2 (permalink)
Quick Summary
Quick Summary Post

Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.

 
  #3 (permalink)
Trading Apprentice
Nashville TN/USA
 
Futures Experience: Intermediate
Platform: Thinkorswim
Favorite Futures: Derivatives
 
Posts: 35 since Nov 2014
Thanks: 0 given, 32 received


The P/L is for the whole spread. Generally for me if I put it on as a spread I take it off as a spread. Just taking one side off completely changes your risk profile.

I will occasionally buy back the short side if it gets down to a nickle or less just to free up the position. If I do that it is because I basically conceded the loss and just leave the long to expire worthless or maybe it has a 3-5% chance of gaining in value on some drastic move of the underlying.

Reply With Quote
 
  #4 (permalink)
Membership Temporarily Revoked
Memphis,TN
 
Futures Experience: Advanced
Platform: ThinkorSwim,FXCM, Ensign Software
Broker/Data: ThinkorSwim, FXCM
Favorite Futures: Futures, Forex, Options
 
mdsvtr's Avatar
 
Posts: 232 since Sep 2010
Thanks: 853 given, 28 received

Thanks ACstudio

Let me ask you this please....

Lets take a high priced stock like AMZN , trading for around $525

To buy a regular Long call of say the $525 ATM or even the 1 strike OTM , say the $530 call with 45 days to expiration,
would likely cost around $20 or so
Quite a bit of money to buy 1 lot ( $2,000 )

My thinking is , trying to find a way, to still play the Long Call side of the higher priced stocks ( AMZN in this example ) , but do so for " cheaper " by placing a debit spread trade , to where you buy the ITM call and sell the ATM or even buy the ATM and sell the just slightly OTM strike

I know that by placing a Debit spread trade, that we'd be giving up some of the profits.... i.e. the stock moves in are favor by X amount of dollars, and we weren't able to capture any of that move because we're in a spread, BUT..... if the stock makes a nice move within the first 5 days after we place the BullCall spread AND it goes above the sold strike, could we then buy to close the sold portion of the trade " quickly " , while yes, giving up some of the move in the stock if we had just bought the Calls out right , but now we got into the trade " cheaper " since we placed a BullCall spread, and are thinking before we ever put on the trade, was that the stock was going to make a nice move upwards ( 10% or move is are projection for the stock )

I'll have to get on TorS and run backtest through the OnDemand feature,
and see the point at which the sold call could have been bought back for " breakeven " and how many days had passed and how much the stock moved up in price, for this buying to close out the short side of the spread, could have taken place

Reply With Quote
 
  #5 (permalink)
Trading Apprentice
Nashville TN/USA
 
Futures Experience: Intermediate
Platform: Thinkorswim
Favorite Futures: Derivatives
 
Posts: 35 since Nov 2014
Thanks: 0 given, 32 received


mdsvtr View Post
Let me ask you this please....

Lets take a high priced stock like AMZN , trading for around $525

To buy a regular Long call of say the $525 ATM or even the 1 strike OTM , say the $530 call with 45 days to expiration,
would likely cost around $20 or so
Quite a bit of money to buy 1 lot ( $2,000 )

My thinking is , trying to find a way, to still play the Long Call side of the higher priced stocks ( AMZN in this example ) , but do so for " cheaper " by placing a debit spread trade , to where you buy the ITM call and sell the ATM or even buy the ATM and sell the just slightly OTM strike

I know that by placing a Debit spread trade, that we'd be giving up some of the profits.... i.e. the stock moves in are favor by X amount of dollars, and we weren't able to capture any of that move because we're in a spread, BUT..... if the stock makes a nice move within the first 5 days after we place the BullCall spread AND it goes above the sold strike, could we then buy to close the sold portion of the trade " quickly " , while yes, giving up some of the move in the stock if we had just bought the Calls out right , but now we got into the trade " cheaper " since we placed a BullCall spread, and are thinking before we ever put on the trade, was that the stock was going to make a nice move upwards ( 10% or move is are projection for the stock )

I'll have to get on TorS and run backtest through the OnDemand feature,
and see the point at which the sold call could have been bought back for " breakeven " and how many days had passed and how much the stock moved up in price, for this buying to close out the short side of the spread, could have taken place

Ye spreads work well to reduce capital requirements for trading options. When I look to create an ATM spread I will first consider the Implied volatility. If the IV rank seems high I will prefer to sell a put spread if I am bullish...and if it seems low Then I might consider buying a call spread. Directionally they are the same but when IV rank is high you usually can collect more premium and also will gain from any contraction in volatility and allows you to take both strikes further OTM and still collect enough premium to make the trade worthwhile. I usually look for 1/3 the width of the strikes at a minimum. Where an ATM spread will have a probability of profit around 50% going OTM where you collect 1/3 the width of the strikes generally increases your probability of profit to around 70%.

Then by doing as you suggest...take profits early when given the opportunity...you further increase you probability of profit over all....I generally look for cashing out at 50% max profit.

Always remember...when you buy a spread your total risk is what you paid and your max profit is = to the width of the spread minus what you paid. And when you sell a spread your max profit is the credit you received and your max loss is the width of the spread minus the credit received.

Reply With Quote

Reply



futures io > > > > BullCall buy-to-close

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Linda Bradford Raschke: Reading The Tape

Elite only

Adam Grimes: TBA

Elite only

NinjaTrader: TBA

January

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
The imbalance is the net of all the stocks to buy and sell on the cash close (MOC) Danny Riley Traders Hideout 1 November 25th, 2013 02:51 PM
automated buy order on specific size bar close ncsutrader Elite Automated NinjaTrader Trading 3 May 27th, 2013 11:24 AM
Ninja Close Position / Close Button / ChartTrader vantojo NinjaTrader Programming 1 October 15th, 2012 06:51 PM
New Guy Question => Difference between Buy Ask and Buy Bid? Cisco NinjaTrader 8 March 20th, 2012 11:42 PM
Buy on Close(Today) Mondrakete NinjaTrader Programming 4 March 2nd, 2011 09:19 PM


All times are GMT -4. The time now is 07:51 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-12 in 0.11 seconds with 20 queries on phoenix via your IP 54.234.255.29