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Selling Options on /ES
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Created: by blb014 Attachments:5

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Selling Options on /ES

  #91 (permalink)
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Chubbly View Post
This was a purely speculative trade. I was hoping for opposite of last weekend and seeing VIX drop drop dramatically. I may pull 1/2 the trade when it is enough to cover the expense of the trade and let other 1/2 run and close before expiry

I think in the future I will hedge with buying VIX calls. Just not sure how many calls per put I sell and which month I will buy them in because I could buy cheap calls 6 months out and just let them sit or keep buying every 30 days

That's usually the case for VIX after a spike except in 2011 after S&P downgrade and 2008. That's a low risk & fairly high probability trade, the best kind.

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp
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  #92 (permalink)
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blb014 View Post
That's usually the case for VIX after a spike except in 2011 after S&P downgrade and 2008. That's a low risk & fairly high probability trade, the best kind.


I just need it it to go from where it is now at 26 to maybe around 20. If it does that premiums will hopefully go from where I bought them at 0.10 to around 1.00
As long as there are no major surprises this week as I think the VIX spike had nothing to do with the fundamentals in the US and was an over reaction which was different than 2008 and 2011 (although no 2 crashes are ever the same)

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  #93 (permalink)
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Position is still alive after todays madness.. but barely. I opened this around August 18. It is about $75 from the SL being hit though

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Selling Options on /ES-es.bmp  
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  #94 (permalink)
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Chubbly View Post
I just need it it to go from where it is now at 26 to maybe around 20. If it does that premiums will hopefully go from where I bought them at 0.10 to around 1.00
As long as there are no major surprises this week as I think the VIX spike had nothing to do with the fundamentals in the US and was an over reaction which was different than 2008 and 2011 (although no 2 crashes are ever the same)

I didn't think the VIX would spike again. There are only a handful of days it was above 20 in the past 2 years so I still think it is a high probability trade. VIX can drop almost as fast as it rises if some good economic data comes out this friday.

I am at -$150 on this trade. The good news is that with buying Options I can only lose a max of $200. So hopefully things settle down. I have 2 weeks left till expiry


Last edited by Chubbly; September 1st, 2015 at 10:18 PM.
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  #95 (permalink)
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options selling

hi guys, many greetings from germay...i came accross this interesting forum. I trade options for many years. May be i can give some valuable input in this forum.

i was reading this discussion.

Look at the Vix and VXV levels...if vix crosses vxv and settles under vxv for some days, three-four...we have a good chance to see lower volatility..if it vix comes back over vxv we will see the oposite. use the ratio..it is powerfull and not so know..the pros a looking at it....today we crossed but the bullish movement was not so well..

BIP players buy the way showed a bearish pattern in the COT report...look at the aggregated report..the largest group of open interest holders dropped net long...two or three weeks ago...(coincidence?)

the "corrections" came after the settlement of the vix options (it was Tuesday last week) and just on monthly expiry of SPX and ES..I saw many puts OPen interest in the money....SPX was pushed to the lower end of range in order to force sellers of optiolns to hedge..thus knowing many stop orders will follow...it has to come from china..bec in US too many smart traders already..but overnight,..majority (small traders) can not act or too late....that china is not doing well we know for some time.

for serious trader i can recommend to look at the aggregated COT report..look who has majority of open interest...look and open interest movements in the options market..even the OPen interest Delta (difference from day before) can give good clues about big movements (or small)) ...soon quarterly expiration.....on vix options expiration vix never spiked (please back check)..sometimes settled above 15 but normally always came back when spike to expiration....look it up..vix chart..and look for expirations on vix options...you will find a pattern...))....look now the OI in the quartlerys....may be big players will wait after expiration of vix and SPX options in september to make new positions...but observe what the managed money, swap dealers and others are doing in the COT report...we options-trader do have a bigger advantage than other traders...so we damm have to use it))..trade well

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  #96 (permalink)
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MHlousek View Post
hi guys, many greetings from germay...i came accross this interesting forum. I trade options for many years. May be i can give some valuable input in this forum.

i was reading this discussion.

Look at the Vix and VXV levels...if vix crosses vxv and settles under vxv for some days, three-four...we have a good chance to see lower volatility..if it vix comes back over vxv we will see the oposite. use the ratio..it is powerfull and not so know..the pros a looking at it....today we crossed but the bullish movement was not so well..

BIP players buy the way showed a bearish pattern in the COT report...look at the aggregated report..the largest group of open interest holders dropped net long...two or three weeks ago...(coincidence?)

the "corrections" came after the settlement of the vix options (it was Tuesday last week) and just on monthly expiry of SPX and ES..I saw many puts OPen interest in the money....SPX was pushed to the lower end of range in order to force sellers of optiolns to hedge..thus knowing many stop orders will follow...it has to come from china..bec in US too many smart traders already..but overnight,..majority (small traders) can not act or too late....that china is not doing well we know for some time.

for serious trader i can recommend to look at the aggregated COT report..look who has majority of open interest...look and open interest movements in the options market..even the OPen interest Delta (difference from day before) can give good clues about big movements (or small)) ...soon quarterly expiration.....on vix options expiration vix never spiked (please back check)..sometimes settled above 15 but normally always came back when spike to expiration....look it up..vix chart..and look for expirations on vix options...you will find a pattern...))....look now the OI in the quartlerys....may be big players will wait after expiration of vix and SPX options in september to make new positions...but observe what the managed money, swap dealers and others are doing in the COT report...we options-trader do have a bigger advantage than other traders...so we damm have to use it))..trade well


Thanks for that information. Yes, I have no doubt the Big players knew the crash was coming and set it up. I do remember reading about the COT report to get a feeling of what the future market move will be. I will study how to use the report and see if it helps me in trading volatility.

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  #97 (permalink)
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This is a decent explanation of the difference between VIX and /VX

https://www.tastytrade.com/tt/shows/market-measures/episodes/expectations-vix-productsshort-09-04-2015?locale=en-US

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  #98 (permalink)
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Hi Chubbly....thanks for the link....if you want I have some better explanations..i will post some infos in the next one or two days...

it is an interesting ratio

now the vix is still under vxv..at a higher level...One might guess why.. we soon have vix options expiry...15 of sep...normally vix does not settle too high..even in spiking mode...the reason is that many traders buy vix calls as protection against volatility..so the seller side of the calls is Big money...Big money is greedy..look at the open interest of the calls from strike 12...if you count all tuogether and vix would settle at 30-40 they would pay out huge amounts....so i exect at least at the end of the week the vix to come down...tuesday and wednesday 15-16 sept should be a quite trading at sp500, however...quarterlie expiration is near after vix options expirc...so it can get quite nasty after vix option expiry......and the Aggregaten COT report still showing a bear...

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  #99 (permalink)
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hi...here the last vix options expirations...look at vix and expiration..interesting pattern..)

the chart is from july and did not include settlement in july))

just look it up...july was 12,82 and august 14,78

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Selling Options on /ES-vix-expiration.jpg  

Last edited by MHlousek; September 6th, 2015 at 11:14 AM.
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  #100 (permalink)
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Here is an interesting article about buying VIX calls as a hedge and the ticker VXTH which buys VIX calls based on the level of the VIX


Buying VIX Calls as a Portfolio Hedge | Benzinga

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