How to trade SPY options? Need some help! - Options on Futures | futures io social day trading
futures io futures trading


How to trade SPY options? Need some help!
Updated: Views / Replies:3,865 / 27
Created: by SPYtrader Attachments:1

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
 1  
 
Thread Tools Search this Thread
 

How to trade SPY options? Need some help!

  #1 (permalink)
Trading Apprentice
Brussels, Belgium
 
Futures Experience: Advanced
Platform: IB
Favorite Futures: ES, SPY, AAPL
 
Posts: 6 since Jan 2015
Thanks: 0 given, 1 received

How to trade SPY options? Need some help!

I'm used trading SPY but I want to use some leverage on some trades by using options.

Here's a sample situation:

SPY trades 205.
I want to take a LONG trade.
I think it SPY will go to 210 in the coming days/weeks.
I will keep it max 30 days.
How do I choose which call option I want to buy (which expiration which strike)?
What will get my the best return?
I'm willing to loose my entire stake I put in this option trade if it trades below 205 in 30 days.

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)
Administrator: Retired Backtester
 Vendor: speedytradingservers.com 
Rennes France
 
Futures Experience: Advanced
Platform: NinjaTrader
Broker/Data: IB/Kinetick
Favorite Futures: Futures
 
sam028's Avatar
 
Posts: 3,366 since Jun 2009
Thanks: 3,574 given, 3,983 received


There are a lot of different choices, just don't buy an option which will expire soon.
The Feb 20th 205 (or 210) Call for example:

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).

Success requires no deodorant! (Sun Tzu)
Reply With Quote
 
  #4 (permalink)
Trading Apprentice
Sydney, New South Wales, Australia
 
Futures Experience: Intermediate
Platform: optionsxpress
Favorite Futures: options
 
Posts: 2 since Feb 2015
Thanks: 11 given, 0 received

I am new to options as well, I have traded shares & CFD's for quite a while (and been caught with a lot of useless and expensive advice over the years). I am researching as much info as I can about options and learning how to determine the "best" strike and expiry to sell. Firstly determining the direction and then the strike taking into consideration my risk as well as how much I am prepared to own those shares or not.

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

Taking a shot at both questions here. As for "best" anything whether it be returns or strike selection it is important to understand that options are priced around probabilities.

When you are trading something like SPY options you are trading in probably one of the most liquid and efficiently priced markets in the world. The prices are perfectly priced. Given time the probabilities play out exactly as they should.

The computations used to calculate these probabilities involve time and volatility. There will be no inherent edge for one strike over another if the liquidity is the same.

Strike selection really comes down to whatever you want to do since you can take profits anytime you want. You can select strike based on how much you are willing to risk. How long you want to be in the trade. Are you buying premium or selling it, is Implied Volatility Rank high or low? Are you collecting Theta decay or looking for Volatility contraction or expansion? Do you want more Gamma risk...or less? etc....

It's a big question but once you understand the mechanics you will have an answer for whichever environment or goal.

Reply With Quote
The following user says Thank You to ACstudio for this post:
 
  #6 (permalink)
 Vendor: www.optionsplay.com 
New York City, NY
 
Futures Experience: Advanced
Platform: OptionsPlay
Favorite Futures: Options
 
Posts: 3 since Mar 2015
Thanks: 0 given, 1 received

In your scenario, you're best return will be buying a 30 day option and trading a vertical spread.
Buy the 205 Call's to get the upside, but at the same time sell the 210 Call's against it to create a vertical spread.
This will give you upside ONLY up to 210, but for doing so, you receive premium to offset the cost of your 205 Call's and your only downside to this is if SPY goes above 210 before the 30 days are up, your gains will be capped.
Net Net, you lower your initial cost which lower's your max risk, lower's your breakeven price and increases your probability of profit.







SPYtrader View Post
I'm used trading SPY but I want to use some leverage on some trades by using options.

Here's a sample situation:

SPY trades 205.
I want to take a LONG trade.
I think it SPY will go to 210 in the coming days/weeks.
I will keep it max 30 days.
How do I choose which call option I want to buy (which expiration which strike)?
What will get my the best return?
I'm willing to loose my entire stake I put in this option trade if it trades below 205 in 30 days.


Reply With Quote
The following 2 users say Thank You to tzhang042 for this post:
 
  #7 (permalink)
Trading Apprentice
Salt Lake City, Utah
 
Futures Experience: Beginner
Platform: TradeStation
Favorite Futures: Piano
 
Posts: 11 since Mar 2015
Thanks: 2 given, 0 received

Determining which expiry to sell is really tough for me. I've been given a lot of advice, but usually found it coming off a little skeptical misguided, even. I'm going to go out on a limb here and say that there really is no best for very long and with all the fluctuation, you just have to be able to have a certain insight.

Reply With Quote
 
  #8 (permalink)
 Vendor: www.optionsplay.com 
New York City, NY
 
Futures Experience: Advanced
Platform: OptionsPlay
Favorite Futures: Options
 
Posts: 3 since Mar 2015
Thanks: 0 given, 1 received

Expiration Selection

Well, actually there is a fairly simple math solution to all this.
I'm not familiar with TradeStation, but I'm sure they have tools to help you achieve a similar thing.
It's all about Probabilities. If your target is 210 on SPY, and it's currently at 205. Most platforms have a way for you to calculate probability of hitting 210 by a certain date. You can pick your expiry based on that statistic alone.
If you pick an expiry where there is a 10% probability of hitting 210, that's probably too soon. If you go out a few expires and notice the probability is 35%, you may have gone out too far.

The idea is to stay consistent by using the probabilities to always find an expiry that suits your time frame.

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


Jaymes Porter View Post
Determining which expiry to sell is really tough for me. I've been given a lot of advice, but usually found it coming off a little skeptical misguided, even. I'm going to go out on a limb here and say that there really is no best for very long and with all the fluctuation, you just have to be able to have a certain insight.

The period between 45 and 15 days to expiration has the most rapid Theta decay in the Theta Decay Curve. And therefore will yield the highest return on the capital you are tying up when selling premium.



Google it....no special insight needed.

Reply With Quote
The following user says Thank You to ACstudio for this post:
 
  #10 (permalink)
Trading Apprentice
Salt Lake City, Utah
 
Futures Experience: Beginner
Platform: TradeStation
Favorite Futures: Piano
 
Posts: 11 since Mar 2015
Thanks: 2 given, 0 received



ACstudio View Post
The period between 45 and 15 days to expiration has the most rapid Theta decay in the Theta Decay Curve. And therefore will yield the highest return on the capital you are tying up when selling premium.

Google it....no special insight needed.

Yeah, fair enough.

Reply With Quote

Reply



futures io > > > > How to trade SPY options? Need some help!

Thread Tools Search this Thread
Search this Thread:

Advanced Search



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

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Scalping SPY options Werd Options on Futures 7 July 5th, 2015 12:06 PM
When an Options trade goes against you ? mdsvtr Options on Futures 5 May 3rd, 2014 02:20 PM
How to trade SPY by putting orders on ES? (MultiInstrument trading) zokirb The Elite Circle 10 January 29th, 2012 11:09 AM
Trading SPY options or ES? blockschip Traders Hideout 8 September 11th, 2011 07:06 PM
How to trade Options Delta_Panther Traders Hideout 4 December 13th, 2009 04:34 PM


All times are GMT -4. The time now is 03:13 AM.

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 2017-12-18 in 0.12 seconds with 20 queries on phoenix via your IP 54.163.209.109