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Weekly Option Trader
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Weekly Option Trader

  #21 (permalink)
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A couple of questions

1) Do you trade the expiring contract on Fridays, or do you already start trading next week's contract on Fridays? Or do you just look at where the volume is?
2) Do you ever use synthetics? IE, if you want to be long, buy a call and sell a put. Greatly increases leverage and risk.

Have you ever considered the lottery ticket approach with strangles? Look at AAPL today (Friday). The 14-day ATR is 13.3, so I'd look for strikes at +/- 13.3. AAPL It opened at 624. The expiring contract's 610 put opened at 0.29 and the 640 call opened at 0.13 for a total outlay of $42 for 1 contract each. Over an hour later, with the underlying at 604 now, the call is 7.8 and the put is 0.03 for a total position of $783 for a total 1,764% 1-hour gain. You make +2,589% gain on the put and lose 77% on the put, but your gain is still huge. This only works well when a) range expands and b) you're paying for little theta since it's expiration day.

The nice thing about options is gamma is on your side when a trade, or a leg of your trade, goes in your favor, so your losers lose more slowly when things move against you and your winners gain more rapidly when they move in your favor when trading ATM or OTM. With almost no theta left on opex day, the options are heavily underpriced if it is a volatile day.

Attached Thumbnails
Weekly Option Trader-aapl.png  

Last edited by shodson; April 13th, 2012 at 12:11 PM.
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  #22 (permalink)
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My favorite day of the week, FRIDAY!

Today was another fun day and my favorite day of the week to play “Weeklies”.

4 for 4 today.

Trades:
AAPL $615 Puts @ $ 1.63 they went they got to $ 6.65, and unfortunately they ended up running to S3 and a high price of $ 11.85. That said I am happy as I had 50 of these.
Nice Win

AMZN $190 Puts @ $ 1.40-$ 1.45 sold them at $ 3.20 when it finally got to S1 (Took a chance on this as it had already been a short before open, but market was weak and I was already short the EUR/USD).
Nice Win

SPY $138 Puts @ 1.06 sold them @ $ 1.50 when it too got to S1.
Nice Win

EURO In @ $ 1.3137 sold them finally @ $ 1.3077 for 60 PIPS.
Nice Win

No plays in GOOG (already running, didn’t let me in), NFLX (missed the short entry @ 9:45 CST as I was having too much fun with everything else I was in; my mistake as the $ 105 puts went from $ 1.80 to $ 2.50), PCLN (no entry ever given), BIDU (no entry given until 10:30 by then I was done for the day), ES (could have traded it, but I was too busy getting ready for the weeklies; but I should have been it though as I was already short the EURO).

Take care and have a great weekend.

Tip of the day: Have a trading plan and do NOT deviate from it. Your set-ups say buy then buy!

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  #23 (permalink)
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shodson View Post
1) Do you trade the expiring contract on Fridays, or do you already start trading next week's contract on Fridays? Or do you just look at where the volume is?
2) Do you ever use synthetics? IE, if you want to be long, buy a call and sell a put. Greatly increases leverage and risk.

Have you ever considered the lottery ticket approach with strangles? Look at AAPL today (Friday). The 14-day ATR is 13.3, so I'd look for strikes at +/- 13.3. AAPL It opened at 624. The expiring contract's 610 put opened at 0.29 and the 640 call opened at 0.13 for a total outlay of $42 for 1 contract each. Over an hour later, with the underlying at 604 now, the call is 7.8 and the put is 0.03 for a total position of $783 for a total 1,764% 1-hour gain. You make +2,589% gain on the put and lose 77% on the put, but your gain is still huge. This only works well when a) range expands and b) you're paying for little theta since it's expiration day.

The nice thing about options is gamma is on your side when a trade, or a leg of your trade, goes in your favor, so your losers lose more slowly when things move against you and your winners gain more rapidly when they move in your favor when trading ATM or OTM. With almost no theta left on opex day, the options are heavily underpriced if it is a volatile day.


Very nice post and I fully agree with everything you stated above. I just posted my plays today, my favorite day to trade weeklies. But again I like to keep it "simple enough that my teenage son can trade them" and thus stick mainly to simple buys of Calls and Puts with very little swing trading. I do not really need to swing trade.

As you will see in my post I obviously trade the expiring contracts on Friday, love too to trade them. That said, trading them is NOT for the beginners as they are VERY risky and move like VERY quick, so your set-ups and trading rules better be damm good/great!

Have a great weekend!

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  #24 (permalink)
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timmyb View Post
I know a method i like on SPY weeklies is to wait until the spy is inbetween strikes. IF the spy is at 130.50 id either be going long for the 131 calls or going short buying 130 puts. I am not sure why I wait for a split. Its going to be fun to converse with some options traders on this thread.

and just for fun here is the 138 calls synced to the spy. Mainly for those who may not know how options correlate to underlying ect. along with the volume for some puts and calls

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On Fridays there are times where these BIG boys will actually fall exactly between two strikes and it make sense from the stand point you have two large groups of people not wanting to give ground.

As of 12:31 CST AAPL sits at 608.32, AMZN 188.32, NFLX 102.62, QQQ 66.43, SPY 137.74.....so there is a push pull thing going on and all of these might very well end up here at days end....

Though I am done for the day, the last 45 minutes on Friday can be an exciting time for the gambler in weeklies...simple "little" stock prive moves can be explosive price wise on the weeklies options.

Take care.

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  #25 (permalink)
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Here is what happens were you are fat and happy (lazy)...

Though I had a very good day, I missed a very nice trade in AMZN after all the early morning fireworks.

The $ 185 weekly Calls went from a buy of $ 2.25 around 11:45 am CST to $ 4.00.

Oh well.

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  #26 (permalink)
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Weekly Option Trader

My least favorite day of the week and the market for the most part left without me today. That said I still found a few good trades.

Trades:

PCLN $700 Puts @ $ 6.60 they went to $ 14.00, but I sold them at $ 12.60 after the moved quickly failed.
Nice Win

AAPL $575 Puts @ $ 6.00 still in them with a potential target of $ 555.64 (55 EMA, plus a past month FIB @ $ 556.42)
Nice Win. so far

NFLX $ 100 Puts @ $ 1.60 sold them at $ 2.00 when it hit S2. NFLX $ 105 Calls @ $ 1.00 went to $ 1.24, sold them at $ 1.00
Small Win & a Small Loss


BIDU $145 Puts @ $ 1.40 sold them at $ 1.85 when it hit S3. BIDU $ 150 Calls @ $ 1.63 went only to $ 1.79, sold them at $ 1.60
Small Win & a Small Loss


EUR/USD In @ $ 1.3044 out at $ 1.3124 (80 pips)
Nice Win

No plays, or didn't pay any attention to, in GOOG, AMZN, QQQ, SPY, IWM (they took off before open)


The following are obviously in full blown short mode, IMO, (If AAPL breaks $580.13 tomorrow it could fall to Support @ $ 542), (AMZN with Support @ $ 180.30), (GOOG with Support @ $ 599.26), (NFLX if it breaks $ 99.79 it could fall to Support @ $ 94.64)

Take care and have a great night.
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  #27 (permalink)
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Nice trading! I was in those AAPL puts today too. However, sadly, only Sim as I just switched to tradestation, and am still learning my way around the platform. Of course, the one day I trade sim, I bank +88% on the AAPL puts, sigh. Anyways tradestation has this great feature called "the matrix" which has price by vol. The 620 puts were not getting bought much at the higher prices towards the end of the day. But the peeps who bought in the middle of the range weren't selling, either. Curious what made you decide to keep some puts overnight. That flag did keep drifting down.

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  #28 (permalink)
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Weekly Option Trader

Wow, now that was a turn around Tuesday!! In an effort to avoid some run away plays I have gone back to a 10 min time frame, I still find the 5 min to busy for me to trade off of and the 15 min (though one of my favorites, a little slow when market gets choppy like this).

Trades:

AAPL $ 595 Calls @ $ 6.25 they went to $ 17.80, sold them at $ 16.25 near close of day.
Also sold my previous day’s $ 575 Puts @ $ 10.00 they went all the way to $ 12.00 after the open for a profit of $ 4.00 on those options I bought at $ 6.00. Those same options are now only worth $ .55. (the power and potential pain of the weekly options).
Nice Win

AMZN $ 190 Calls @ $ 1.40 they went to $ 2.35, sold them at $ 2.20 when AMZN got to S1.
AMZN $ 185 Puts @ $ 0.80 they went only to $ 0.99, sold them at $ 0.83.
Small Win, and nearly a Breakeven

NFLX $ 105 Calls @ $ 1.42 they went to $ 2.98 before I sold them at $ 2.55 after which they went up afterwards to $ 3.71. (oh well)
Nice Win

GOOG $620 Calls @ $ 2.75 they went to $ 5.40, sold them at $ 4.40, reversed and took $ 610 Puts @ $ 4.10 they went to $ 6.10 sold them @ $ 5.30 when GOOG went back to pivot.
Two Nice Wins

SPY $138 Calls @ $ 0.85 they went to $ 1.80, sold them at $ 1.70 after they got to my target of $ 139.34.
Nice Win

No plays, or didn't pay any attention to, ES, EUR/USD (Choppy), BIDU, PCLN, QQQ, IWM (too busy with what I already had)

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  #29 (permalink)
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Maisie View Post
Nice trading! I was in those AAPL puts today too. However, sadly, only Sim as I just switched to tradestation, and am still learning my way around the platform. Of course, the one day I trade sim, I bank +88% on the AAPL puts, sigh. Anyways tradestation has this great feature called "the matrix" which has price by vol. The 620 puts were not getting bought much at the higher prices towards the end of the day. But the peeps who bought in the middle of the range weren't selling, either. Curious what made you decide to keep some puts overnight. That flag did keep drifting down.

Hi Massie,

My daily chart is what kept me in AAPL puts over night and it worked out, but had to reverse quickly on them and went long for a very nice play afterwards.

As far as volume goes, I really do not pay a whole lot of attention to it, I let my charts tell me when they are getting exhausted. I can see where the potential resistance levels are going to be on them, like all the big targets (pivots, major fibs, like last month Fibs (my favorite), and big ROUND numbers where strike prices sit).

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  #30 (permalink)
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Vikings1 View Post
Hi Massie,

My daily chart is what kept me in AAPL puts over night and it worked out, but had to reverse quickly on them and went long for a very nice play afterwards.

As far as volume goes, I really do not pay a whole lot of attention to it, I let my charts tell me when they are getting exhausted. I can see where the potential resistance levels are going to be on them, like all the big targets (pivots, major fibs, like last month Fibs (my favorite), and big ROUND numbers where strike prices sit).

Thanks for posting your trades....I followed weeklies for some time and if traded well they are very rewarding.

Can u share how u manage size and risk regarding your total account? This is each trade is a fix % of your account? do u go for specific r:r ratios? I think this is key when daytrading options, we all know why....thanks.

GT

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