ajk1 

Agreed - this is a good book and I was pleasantly surprised. She has some interesting concepts around options strategies for swing trading.. If bullish, buy an ATM call for instance and fund it with the sell of a OTM put (lower down) ... and an OTM call futher up. Putting you a position with a very small outlay (maybe even a credit) and big upside if direction is correct. To avoid the risk with the naked put, one could purchase a cheap wing even further out. Essentially a bullish trade which has a bull put spread.. and bull call spread.. Of course, this likely requires some market timing skills... Any thoughts / critisims of this strategy at all ?

You have approximately the same downside risk as with an outright future. The advantage is that you can liquidate the different options at different times. The disadvantage is higher commissions.

Best regards, Myrrdin

myrrdin 

You have approximately the same downside risk as with an outright future. The advantage is that you can liquidate the different options at different times. The disadvantage is higher commissions. Best regards, Myrrdin

Thanks !

Yes indeed, as I dig deeper into the strategy am beginning to better understand the pros and cons.

The advantage is that i buy an ATM by selling other stuff which brings my breakeven much much closer. If the sales cover the cost of purchase... then a little move onside can result in a green PnL. (Like a furtures).

There is also a better ROC here, simply because I don't have the margin used for a futures. I didn't think of that initially.

But yes... you are right... risk is the same as the outright... if the price moves down (in my bullish example)... I start to loose from the long call spread portian instantly ...
So even though..my initial outlay can be small.... I could loose more than small premium paid. (Up to put spread width).

In the example below, I still loose between 115 and 110

Short call at 120
Long Call at 115
Market at 115
Short put at 110
Long long 105

Can you elaborate on how u would leg out ?
Or exit the legs at different times?

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ajk1 

Thanks ! Yes indeed, as I dig deeper into the strategy am beginning to better understand the pros and cons. The advantage is that i buy an ATM by selling other stuff which brings my breakeven much much closer. If the sales cover the cost of purchase... then a little move onside can result in a green PnL. (Like a furtures). There is also a better ROC here, simply because I don't have the margin used for a futures. I didn't think of that initially. But yes... you are right... risk is the same as the outright... if the price moves down (in my bullish example)... I start to loose from the long call spread portian instantly ... So even though..my initial outlay can be small.... I could loose more than small premium paid. (Up to put spread width). In the example below, I still loose between 115 and 110 Short call at 120 Long Call at 115 Market at 115 Short put at 110 Long long 105 Can you elaborate on how u would leg out ? Or exit the legs at different times? Sent using the NexusFi mobile app

You will have approx. the same margin requirement as for the future.

The exit strategy depends on the development of the trade. Normal case would be to liquidate all positions at the same time. But I would liquidate the short option in case it is almost wprthless to reduce downside risk.

Best regards, Myrrdin

Any one doing ES trades. 2(delta .03)short puts 3(delta .01) long. Or 1(delta .05) short put 2(delta .015) long. ?

thanks
Babak

rajab 

Any one doing ES trades. 2(delta .03)short puts 3(delta .01) long. Or 1(delta .05) short put 2(delta .015) long. ? thanks Babak

I'm waiting until Trump out of WH. Too unpredictable.

But I am being ultra conservative with my money because nearing retirement.

rajab 

Any one doing ES trades. 2(delta .03)short puts 3(delta .01) long. Or 1(delta .05) short put 2(delta .015) long. ? thanks Babak

Me: -2xD3 / 3xD1.0 DTE100 and -1xD6 / 2xD1.5 DTE100 . The latter with 300% SL, both exit at 50% TP Survived 2018.

ron99 

I'm waiting until Trump out of WH. Too unpredictable. But I am being ultra conservative with my money because nearing retirement.

so -possibly- further 5 years without options income .......

Forex37 

so -possibly- further 5 years without options income .......

It is important to recognize which kind of trades to enter at certain times.

In recent years, optoin selling was not very promising. On the one hand, Mr. Trump is unpredictable. On the other hand, option premium was low.

But in recent years, stocks moved up significantly. I expect this to continue in 2020, as Mr. Trump will do everything to assist stock prices, as he wants to be elected.

Best regards, Myrrdin

Anyone selling ratio put spreads here into this dip as described in the strategy? I have some strangles sold with this high vol


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Margin on ES goes up tonight from $7,260 to $7,920 as of this evening.

https://www.cmegroup.com/content/dam/cmegroup/notices/clearing/2020/02/Chadv20-067.pdf