Using Options for Swing Trading - futures io
futures io futures trading



Using Options for Swing Trading


Discussion in Trading Journals

Updated by Bermudan Option
      Top Posters
    1. looks_one Bermudan Option with 181 posts (104 thanks)
    2. looks_two dynoweb with 3 posts (2 thanks)
    3. looks_3 mwtzzz with 3 posts (3 thanks)
    4. looks_4 Cogito ergo sum with 2 posts (1 thanks)
      Best Posters
    1. looks_one optiontrader767 with 4.0 thanks per post
    2. looks_two SMCJB with 2.5 thanks per post
    3. looks_3 mwtzzz with 1.0 thanks per post
    4. looks_4 Bermudan Option with 0.6 thanks per post
    1. trending_up 20,220 views
    2. thumb_up 128 thanks given
    3. group 29 followers
    1. forum 203 replies
    2. attach_file 37 attachments




Welcome to futures io: the largest futures trading community on the planet, with well over 100,000 members
  • Genuine reviews from real traders, not fake reviews from stealth vendors
  • Quality education from leading professional traders
  • We are a friendly, helpful, and positive community
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts
  • We are here to help, just let us know what you need
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

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

 
Search this Thread
 

Using Options for Swing Trading

(login for full post details)
  #191 (permalink)
Market Wizard
Chicago, Illinois
 
Experience: Intermediate
Platform: Tradingview
Broker: ThinkOrSwim
Trading: Forex, Stock & Options
 
Bermudan Option's Avatar
 
Posts: 539 since May 2011
Thanks: 544 given, 318 received

Zoomed out and redrew a more relevant channel with more touches. Anxiously looking for a reason to go short now




Visit my futures io Trade Journal Reply With Quote

Can you help answer these questions
from other members on futures io?
3x Fangdango
Traders Hideout
Degiro Negative Balance Advice
Traders Hideout
Macros for flatten and reverse
TradeStation
QDEL
Stocks and ETFs
The Journey
Traders Hideout
 
Best Threads (Most Thanked)
in the last 7 days on futures io
Lost & losing hope
25 thanks
VWAP for stock index futures trading?
19 thanks
Coronavirus COVID-19
17 thanks
Emini 4 Tick Scalp still valid?
17 thanks
Price Action Kewltech Style
15 thanks
 
(login for full post details)
  #192 (permalink)
Market Wizard
Chicago, Illinois
 
Experience: Intermediate
Platform: Tradingview
Broker: ThinkOrSwim
Trading: Forex, Stock & Options
 
Bermudan Option's Avatar
 
Posts: 539 since May 2011
Thanks: 544 given, 318 received

Alright I feel like I'm spamming at this point lol. This'll be my last post for a while and I'll put the rest in my Google Docs trading journal. I will be risking a full 1R with this trade since I am liking the set up so much. Depending on the close, I may keep it open overnight.

Visit my futures io Trade Journal Reply With Quote
The following user says Thank You to Bermudan Option for this post:
 
(login for full post details)
  #193 (permalink)
Market Wizard
Chicago, Illinois
 
Experience: Intermediate
Platform: Tradingview
Broker: ThinkOrSwim
Trading: Forex, Stock & Options
 
Bermudan Option's Avatar
 
Posts: 539 since May 2011
Thanks: 544 given, 318 received


^^^ Ended up getting shaken out of my position before the selling at the close.

I got caught up picking a top. That isn't my bread and butter. I can eat just fine if I miss the first and last percentage points of a move and only capture 8% of 10% move. The biggest takeaway for me is to institutional players (aka volume) to enter the picture like they did in the final 30m of trading.

With that said, I am proud of how I sat on my hands for most of my day. Patiently waiting for the markets is a strength that I want to take advantage of as much as possible. I will work on the execution aspect but at the same time, I just have to regroup and play the next hand. This analogy reminds me that I should revisit my copy of 'Zen and The Art Of Poker' so that I get even more indifferent to folding when the markets deal hands that are probably better unplayed.


Bermudan Option View Post
I've missed a few opportunities today and had some minor losses (my stops are razor tight right now). I was working on fading SPY's rally as well as TSLA's but I was a tad early on both. They both would've been 3R trades but ya live and ya learn.

For what it's worth, OXY is down ~9% on the day. For some reason though, my profits are not where I'd expect them to be. Price has decreased for a cumulative 3R but my option price has increased by approximately 2.6R. Not sure if it is due to a bad fill? Volatility has increased and my option has a delta of 0.75. I'm gonna have to dust of my copy of Options As A Strategic Investment to brush up on my knowledge.

They don't call it the Options Bible for nothing:



I was of the mind that implied volatility spikes when the markets go lower. It is true, but only when the dip in price leads to fear... if not, ITM puts are less efficient than ITM calls because they lose their intrinsic value at a faster clip. Also, the implied volatility has dipped as well. Right now, I am shorting downtrending stock, and so fear is already built in so it's less efficient. I'll take probability over efficiency in this instance though.

Visit my futures io Trade Journal Reply With Quote
The following 2 users say Thank You to Bermudan Option for this post:
 
(login for full post details)
  #194 (permalink)
Market Wizard
Chicago, Illinois
 
Experience: Intermediate
Platform: Tradingview
Broker: ThinkOrSwim
Trading: Forex, Stock & Options
 
Bermudan Option's Avatar
 
Posts: 539 since May 2011
Thanks: 544 given, 318 received

Realized that I was too zoomed in for my trading. Deleted the 5m chart from my quick settings completely. Moving forward, my drill down chart will be the 15m.

I jumped into SPY again this morning. Only 1 put in play since I widened my stops.

I also opened shorts on BAX, GM and GDX.

Contrarian views to my positions
BAX is concerning in terms of price action as it is trending sideways while the markets are heading lower.
GDX is a play on precious metals and I know they are known to to run/gap violently but the trend is telling me to sell.
GM released some news about a partnership with an electric vehicle company earlier this week. I am fading that move but strength could pop up at any moment so I want to be ready.
SPY is bouncing and in the midst of putting in a higher low on the 30m

Attached Thumbnails
Click image for larger version

Name:	image_8.png
Views:	18
Size:	157.6 KB
ID:	304879  
Visit my futures io Trade Journal Reply With Quote
 
(login for full post details)
  #195 (permalink)
Market Wizard
Chicago, Illinois
 
Experience: Intermediate
Platform: Tradingview
Broker: ThinkOrSwim
Trading: Forex, Stock & Options
 
Bermudan Option's Avatar
 
Posts: 539 since May 2011
Thanks: 544 given, 318 received

Hopefully I'm not getting too cute here. Sold a Bear Put Spread on TSLA since my stop would've been two wide to play with outright options.



The volatility is what attracted me to the trade but the allure of trading TSLA is also there.

I need to reread the difference between Bear Put Spreads and Bear Call Spreads. I used a Bear Call Spread but I think because of the high Implied Volatility, I should've used a Bear Call Spread instead? I will dig deeper into this during the week. I'm not sure I'm being compensated well enough for the risk I'm undertaking but then again, the risk is defined through the spread. Maybe i'm just used to uncapped profits and so spreads feel a little limiting.

Either way, it is in my Roth IRA so it won't show up in my EOM stats but it's good to try new things

Visit my futures io Trade Journal Reply With Quote
The following user says Thank You to Bermudan Option for this post:
 
(login for full post details)
  #196 (permalink)
Market Wizard
Chicago, Illinois
 
Experience: Intermediate
Platform: Tradingview
Broker: ThinkOrSwim
Trading: Forex, Stock & Options
 
Bermudan Option's Avatar
 
Posts: 539 since May 2011
Thanks: 544 given, 318 received


Bermudan Option View Post
The volatility is what attracted me to the trade but the allure of trading TSLA is also there.

I need to reread the difference between Bear Put Spreads and Bear Call Spreads. I used a Bear Call Spread but I think because of the high Implied Volatility, I should've used a Bear Call Spread instead? I will dig deeper into this during the week. I'm not sure I'm being compensated well enough for the risk I'm undertaking but then again, the risk is defined through the spread. Maybe i'm just used to uncapped profits and so spreads feel a little limiting.

Either way, it is in my Roth IRA so it won't show up in my EOM stats but it's good to try new things

Looks like Bear Put Spread are the ideal trade to make in spite of the debit:

Visit my futures io Trade Journal Reply With Quote
 
(login for full post details)
  #197 (permalink)
Legendary Market Wizard
Houston, TX
 
Experience: Advanced
Platform: Trading Technologies
Broker: Primary Advantage Futures. Also ED&F and Tradestation
Trading: Primarily Energy but also a little ES, GE, GC, SI & Bitcoin
 
Posts: 3,609 since Dec 2013
Thanks: 2,886 given, 6,795 received

Maybe being overly technical here which also may depend upon your definitions, but I don't think it's really the case of Bear Put vs Bear Call but more specifically location of strikes.

If Tesla is trading 375, a 400/425 Bear Put spread and 400/425 Bear Call spread will behave the same (delta, gamma, theta), in both cases you are short the option closed to the underlying and long the one furthest from the underlying.

Similarly If Tesla is trading 375, a 325/350 Bear Put spread and 325/350 Bear Call spread will behave the same, in both cases you are short the option furthest to the underlying and long the one closest from the underlying.

But If Tesla is trading 375, a 325/350 Bear Put spread is different to 400/425 Bear Call spread. If your correct and prices go down you will make more in the short term on the Bear Put Spread than the Bear Call Spread. If your wrong and prices go up you will lose less on the Bear Put than the Bear Call. So if you are bearish, a spread with strikes below the underlying will perform better than strikes above the underlying - but it doesn't matter whether the spread is made up of Puts or Calls.

Reply With Quote
The following 2 users say Thank You to SMCJB for this post:
 
(login for full post details)
  #198 (permalink)
Market Wizard
Chicago, Illinois
 
Experience: Intermediate
Platform: Tradingview
Broker: ThinkOrSwim
Trading: Forex, Stock & Options
 
Bermudan Option's Avatar
 
Posts: 539 since May 2011
Thanks: 544 given, 318 received


SMCJB View Post
Maybe being overly technical here which also may depend upon your definitions, but I don't think it's really the case of Bear Put vs Bear Call but more specifically location of strikes.

If Tesla is trading 375, a 400/425 Bear Put spread and 400/425 Bear Call spread will behave the same (delta, gamma, theta), in both cases you are short the option closed to the underlying and long the one furthest from the underlying.

Similarly If Tesla is trading 375, a 325/350 Bear Put spread and 325/350 Bear Call spread will behave the same, in both cases you are short the option furthest to the underlying and long the one closest from the underlying.

But If Tesla is trading 375, a 325/350 Bear Put spread is different to 400/425 Bear Call spread. If your correct and prices go down you will make more in the short term on the Bear Put Spread than the Bear Call Spread. If your wrong and prices go up you will lose less on the Bear Put than the Bear Call. So if you are bearish, a spread with strikes below the underlying will perform better than strikes above the underlying - but it doesn't matter whether the spread is made up of Puts or Calls.

Yup you're right. I only highlighted one portion, but McMillan says pretty much the same thing... a Bear Put spread outperforms short-term if stock goes quickly in your favor but the end results are basically the same. He also says that there is a lower chance of your short leg being exercised prior to profitability. The only perceptible advantage to the bear call spread is psychologically you get the money up front instead of when you are closing your position. I suppose that might make things better/worse depending on how the trader reacts to loss aversion.

Visit my futures io Trade Journal Reply With Quote
 
(login for full post details)
  #199 (permalink)
Legendary Market Wizard
Houston, TX
 
Experience: Advanced
Platform: Trading Technologies
Broker: Primary Advantage Futures. Also ED&F and Tradestation
Trading: Primarily Energy but also a little ES, GE, GC, SI & Bitcoin
 
Posts: 3,609 since Dec 2013
Thanks: 2,886 given, 6,795 received


Bermudan Option View Post
Yup you're right. I only highlighted one portion, but McMillan says pretty much the same thing... a Bear Put spread outperforms short-term if stock goes quickly in your favor but the end results are basically the same. He also says that there is a lower chance of your short leg being exercised prior to profitability.

Again. It's all about whether strikes are above or below the underlying. The "Short Leg" has exactly the same probability of being exercised whether it's a bear put spread or a bear call spread as long as the spread has the same strikes. Remember C - P = F

Bermudan Option View Post
The only perceptible advantage to the bear call spread is psychologically you get the money up front instead of when you are closing your position.

Agreed. So the trader who wants to sell the 325/350 call spread rather than buy the 325/350 put spread is probably giving up edge. "EDGE". The Almighy "EDGE" everybody talks about. Unfortunately you as a retail trader are unable to take advantage of this "EDGE" but the market makers do, and they love it! So yes market makers make money from retail's miss conceived psychology!

Also lets get technical - and teleport to a Futures only world. Things may work the same in the equities world but that's not my area of knowledge. In the futures world, the minimum tick decreases as the total premium decreases. So going back to my example of TSLA trading 375 (which obviously isn't options on futures) and the 325/350 bear spread. If we say the put spread is 'worth' approximately 5 then by arbitrage principles the 325/350 call spread has to be worth approximately 20. So in options on futures world (again TSLA isn't in this world), the tick size will probably be less for the 325/350 put spread than it is for the 325/350 call spread. Again this is an "EDGE" that retail traders give up that market makers are happy to take.

Bermudan Option View Post
I suppose that might make things better/worse depending on how the trader reacts to loss aversion.

Yet more market maker "EDGE"

Reply With Quote
The following 3 users say Thank You to SMCJB for this post:
 
(login for full post details)
  #200 (permalink)
Market Wizard
Chicago, Illinois
 
Experience: Intermediate
Platform: Tradingview
Broker: ThinkOrSwim
Trading: Forex, Stock & Options
 
Bermudan Option's Avatar
 
Posts: 539 since May 2011
Thanks: 544 given, 318 received


Going to lose some (paper) profits this morning as the markets are gapping higher. If the markets rally beyond the open, I might have to close out some positions.

I will use SPY as my canary in the coal mine. I have circled the anticipated open and it is flush against a key price area (circle signifies premarket price). If it breaks and holds above the line, I will tighten/exit my short positions.



To avoid being overly bearish, I also have some long trades set to go live depending on price action. I'm still bearish on the markets though, so I will use tight stops so that they don't have them enough rope to hang themselves.

On the other hand, if the markets struggle to move higher, I might add to my SPY position and maybe a select few other spots (fade the Oil bounce?). I'm working on adding to winners. So far it has never worked lol but all it takes is one good trade to give me a bit of confidence in it and figure out how to tweak it.

Visit my futures io Trade Journal Reply With Quote
The following user says Thank You to Bermudan Option for this post:


futures io Trading Community Trading Journals > Using Options for Swing Trading


September 25, 2020


Upcoming Webinars and Events
     



Copyright © 2020 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