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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

  #71 (permalink)
Trading for Fun
Ottawa
 
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PeakGrowth View Post
But you just did something active?

You sure you want to dump the remainder if your account into 1 stock, if you get stuck with the stock and the market doesn't recover for a while you could potentially be inactive for a long time.

Also were you the one who just started selling options recently and got blown up from the recent vol? If 200k is what remains, I feel sorry for what got blown... you need to manage risk... Hope you're ok mate.

I agree with you. If that is the strategy you want to pursue (it is not a bad one) I just would have split it up and picked a stock or ETF from each of the major sectors (mining, financial, emerging markets, service, energy, etc...) and split up in to 10-20 parts. Apple does seem dominant right now but so did Blackberry and Nortel back in the day

I also have a bad feeling things are gonna go lower


Last edited by Chubbly; August 25th, 2015 at 11:57 PM.
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  #72 (permalink)
Market Wizard
Houston, TX
 
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Apple is just over 3.5% of the S&P500. Chances are it will lead the S&P up or down.
Next largest is Microsoft at 2%, next largest is Exxon 1.7%

It's only the 7th largest component of the Dow Jones at 4.4% (Goldman is 7.6%, GE is only 1%)

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  #73 (permalink)
Elite Member
San Francisco, CA
 
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@rsm005

Here's something you could do that might make a lot more sense than what you're doing right now, if you really want to buy and hold: Buy a basket of 20-30 stocks that (A) have cheap valuations with (B) improving financial ratios and (C) positive price momentum relative to the broader market.

In the Options on Futures thread you said you were done with futures. From my limited exposure to the thread, I would respectfully submit that you drew the wrong conclusion: you should be done with options, and, more broadly, highly leveraged products you're not completely 100% adept with.

A - TEV/EBITDA or EV/EBITDA has historically performed the best
B - Piotrowski F Score works well, there are slight improvements I've seen published on it that work better
C - Avg of 6 + 12 month price ROC relative to market

Edit - I know sufficiently little about options that I can get confused pretty easily, wrote the above before thinking sufficiently, possibly should've kept my mouth shut. Will leave the post up for now, but would be glad to delete if it's felt to detract from the discussion. My sincere apologies.


Last edited by Ryland; August 26th, 2015 at 10:05 AM.
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  #74 (permalink)
Elite Member
Dallas, Texas
 
Futures Experience: Intermediate
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Favorite Futures: AAPL, /ES, IWM, SPY Options
 
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Chubbly View Post
This is an interesting link

Options Center - Most Active Options

I couldn't get the price I wanted on my /ES positions on Monday. Bad timing on my part too as the market was turning around 12. I put an order in to buy a few SPY puts as a protective hedge and it was filled within 10 minutes. SPY is more liquid and days like yesterday easier to get in and out positions.

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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  #75 (permalink)
Elite Member
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rsm005 View Post
Hey


I just came across this thread and was hoping you wouldnt mind if I dropped a line and picked your brain a little as I try to rebuild. I'm done with futures for now and have closed my account with decarley...moved back to OX. I put on a trade this evening that is more long term as I formulate a new strategy with paper money.

Sold 20 puts of apple at 98.

I think it's a steal at that price and have no problems getting assigned if I do..he'll I kind of want to. Are you ok with me posting on here also?

/rsm005/

I have been trading AAPL for years 1 or 2 contracts at time. It is my favorite equity and bought some more last Friday. AAPL has had impressive run since the split last year, just kept that in mind. But I wouldn't suggest putting all the remaining funds into an AAPL position. Diversify if possible.

I posted this - Overall diversification- I have a total stock market international etf and bond and treasury fund. My allocation is more US equities 80%, 10% bonds and 5%international 5% treasury. I also have about 7 equities that I have positions in, either stock or options

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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  #76 (permalink)
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Update

Closed these positions this morning:

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


-21,500 on 1920
-23,250 on 1915

Open these positions (bad timing on 1750):

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


34,500 on 1750
10,250 on 1650

I was also able to buy some SPY puts and will just hold these for now.

I might be rolling down for more losses but this is my view for now - What has fundamental changed about the US equities market since last week? nothing really, earnings are solid, unemployment low, recent housing numbers very strong, GDP growth. I could be wrong and definitely can't predict the future but the yuan devaluation, Shanghai index dropping to where it started 2015 at and a possible rate hike to .25 doesn't change my long term view of the market.

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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  #77 (permalink)
Elite Member
vancouver BC/Canada
 
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blb014 View Post
Closed these positions this morning:

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


-21,500 on 1920
-23,250 on 1915

Open these positions (bad timing on 1750):

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


34,500 on 1750
10,250 on 1650

I was also able to buy some SPY puts and will just hold these for now.

I might be rolling down for more losses but this is my view for now - What has fundamental changed about the US equities market since last week? nothing really, earnings are solid, unemployment low, recent housing numbers very strong, GDP growth. I could be wrong and definitely can't predict the future but the yuan devaluation, Shanghai index dropping to where it started 2015 at and a possible rate hike to .25 doesn't change my long term view of the market.


What are the headers to the columns on those positions? Also, do you follow a more mechanical system like chubbly or just do naked puts and roll as needed?

One of the biggest questions I have about your method of trading vs Ron is around leverage. Ron leverages a lot, yes but in the end so do you relative to most accounts. I think of the old adage "in for a penny in for a pound". Is it easier to roll in your positions? Do you find you have less overall margin requirements? Also, what determines your strikes and position size? I'm following up on chubbly's earlier recommendation of reading Al Sherbin's book and looking at a more mechanical process.

/rsm005/


Last edited by rsm005; August 26th, 2015 at 01:27 PM.
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  #78 (permalink)
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Futures Experience: Intermediate
Platform: TOS
Favorite Futures: AAPL, /ES, IWM, SPY Options
 
Posts: 208 since Oct 2012
Thanks: 440 given, 101 received


rsm005 View Post
What are the headers to the columns on those positions? Also, do you follow a more mechanical system like chubbly or just do naked puts and roll as needed?

One of the biggest questions I have about your method of trading vs Ron is around leverage. Ron leverages a lot, yes but in the end so do you relative to most accounts. I think of the old adage "in for a penny in for a pound". Is it easier to roll in your positions? Do you find you have less overall margin requirements? Also, what determines your strikes and position size? I'm following up on chubbly's earlier recommendation of reading Al Sherbin's book and looking at a more mechanical process.

/rsm005/


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I look at strikes that are ~-.20 delta and around 2 months out. I run different scenarios at that strike to figure out what strike and size, I am comfortable selling. Also explore how different strikes and months react to volatility. I posted that the Nov 1650 option value had increase almost 5* while the Oct 1920 put was only 2.5*


I do not based the position size on initial margin but on what risk I am willing take when the option value increases. My advice would be to run a different scenarios on your platform to figure what you are comfortable risking.

A mechanical approach would be best for someone just starting out with options. Definitely look into Chubbly recommendation. My approach is discretionary, I reassess things as the market is moving and it is all predicated on my long term view. I ask myself, do I think it is worth rolling down in the current environment.


It really depends on your risk tolerance. Mine is significantly lower than the IM*3 4 5 crowd, there is huge difference between 2,000 contracts (can't even imagine the losses) and 40 contracts , even your 145 contracts is a big difference. Not only that controlling a high percentage of the contracts at strike is gonna have hell closing those positions (at a decent price) when the market is moving fast. I wouldn't focus on maximizing position size based on margin. The data and studies been touted were in 2 year period when IV was low. The results from the previous 6 years would have been much different. Plus ignoring all the risk involved: see post below


https://futures.io/options-cfd-trading/12309-selling-options-futures-443.html#post501985

https://futures.io/options-cfd-trading/12309-selling-options-futures-444.html#post501996

https://futures.io/options-cfd-trading/12309-selling-options-futures-445.html#post502041

https://futures.io/options-cfd-trading/12309-selling-options-futures-446.html#post502052

https://futures.io/options-cfd-trading/12309-selling-options-futures-445.html#post502049

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

Last edited by blb014; August 27th, 2015 at 01:51 AM.
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  #79 (permalink)
Trading for Fun
Ottawa
 
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Posts: 87 since May 2015
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Still alive.....

I still have one /ES position still open that was opened approx 1.5 weeks ago. Not sure If I will keep using /ES since I noticed that all liquidity has disappeared even after the initial crash. Even up to last night there were no Bids, so if we had crashed again I would have been screwed

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  #80 (permalink)
Trading for Fun
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Chubbly View Post
Is anyone selling more options with the high VIX? I wanted to on Friday but was at work at my day job. I managed to do it a few weeks ago when CL was going crazy after the first big drop and made up enough to cover loses, but I am only trading very small so it is easy to have confidence and make moves like that.

I am regretting not buying VIX calls when they were super cheap. I had read an article somewhere that said to buy them when they hit lows which they were a week ago.


I would have made close to 5000% if I had bought those cheap VIX calls when it was at 10..........

https://futures.io/options-cfd-trading/12309-selling-options-futures-488.html#post516216

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