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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

  #81 (permalink)
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Chubbly View Post
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

It has, I couldn't get filled on Monday after several attempts. SPY no problem. We discussed this on the other thread and the response was "no problem, the market makers are there" Yeah for a 10-20% haircut I'm sure

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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  #82 (permalink)
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Chubbly View Post
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

hahaha That would have been nice and the beers would have been on you!

Maybe buy a few everytime VIX dips below 12 and see what happens.

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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  #83 (permalink)
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Dead cat bounce?


Maybe, or a push to ATH. Who knows but I do think there is more upside potential right now. I've got long way to go to recover on the previous positions.



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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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  #84 (permalink)
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blb014 View Post
It has, I couldn't get filled on Monday after several attempts. SPY no problem. We discussed this on the other thread and the response was "no problem, the market makers are there" Yeah for a 10-20% haircut I'm sure

I think there are different rules for Market Makers for Options on Equities and Futures Options. I believe that MM's are obligated to step in and make the market in equities. Is this how other people interpret this as well? If anyone knows if a similar rule in futures exist please post

Short version
CBOE - Options Quick Facts - Beyond the Basics- Marketplace

"Many option classes traded at CBOE, including all equities and certain index products traded on CBOE Hybrid trading system, have a Designated Primary Market-Maker (DPM). The DPM is a market-maker who is obligated to make continuous bid and ask prices in all option series in his appointed option classes. In return, the DPM is guaranteed certain rights to participate in each trade, either electronic or in open-outcry. In addition to, or in the absence of a DPM (e.g., those classes not traded on the Hybrid system) many option classes at CBOE also have independent market-makers who make bid and ask prices from either the trading floor or remotely. Ultimately, however, your orders are executed with the CBOE's current best available bid or offer. This party may be an option professional or an individual investor via an option order"

Long version
CBOE Bylaws and Rules

Rule 8.7. Obligations of Market-Makers
(a) General. Transactions of a Market-Maker should constitute a course of dealings reasonably calculated to contribute to the maintenance of a fair and orderly market, and no Market-Maker should enter into transactions or make bids or offers that are inconsistent with such a course of dealings.

(b) Appointment. With respect to each class of option contracts for which a Market-Maker holds an Appointment under Rule 8.3, a Market-Maker has a continuous obligation to engage, to a reasonable degree under the existing circumstances, in dealings for the Market-Maker's own account when there exists, or it is reasonably anticipated that there will exist, a lack of price continuity, a temporary disparity between the supply of and demand for a particular option contract, or a temporary distortion of the price relationships between option contracts of the same class. Without limiting the foregoing, a Market-Maker is expected to perform the following activities in the course of maintaining a fair and orderly market:

(i) To compete with other Market-Makers to improve markets in all series of options classes comprising the Market-Maker's appointment at the trading station where a Market-Maker is physically present or into which a Market-Maker is quoting electronically .

(ii) To make markets which, absent changed market conditions, will be honored in accordance with Rule 8.51, in all series of options classes in which the Market-Maker quotes. Each Market-Maker will communicate to the Exchange its bid and offers in accordance with the requirements of Rule 602 of Regulation NMS under the Exchange Act and the rules of the Exchange.

(iii) To update market quotations in response to changed market conditions in the Market-Maker's appointed options classes at the trading station where a Market-Maker is present or at the trading station into which a Market-Maker quotes electronically and to assure that any market quote it causes to be disseminated is accurate.


Last edited by Chubbly; August 27th, 2015 at 08:53 AM.
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  #85 (permalink)
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BOT +20 VIX 100 SEP 15 15 PUT @.10 CBOEMARK=26.10 IMPL

Worst case is i lose $200

I went in small because i have never traded VIX before


Last edited by Chubbly; August 28th, 2015 at 11:39 AM.
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  #86 (permalink)
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Chubbly View Post
BOT +20 VIX 100 SEP 15 15 PUT @.10 CBOEMARK=26.10 IMPL

Worst case is i lose $200

I went in small because i have never traded VIX before


I see that at 8:30:04 Let me know how it goes. What is your plan for exiting?

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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  #87 (permalink)
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Update

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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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  #88 (permalink)
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blb014 View Post
I see that at 8:30:04 Let me know how it goes. What is your plan for exiting?

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

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  #89 (permalink)
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Black Swan

Black Swan Theory:

Identifying a black swan event
Based on the author's criteria:
The event is a surprise (to the observer).
The event has a major effect.

After the first recorded instance of the event, it is rationalized by hindsight, as if it could have been expected; that is, the relevant data were available but unaccounted for in risk mitigation programs. The same is true for the personal perception by individuals

Rationalized hindsight trading at it's best:
https://futures.io/options-cfd-trading/12309-selling-options-futures-463.html#post508313

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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  #90 (permalink)
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Interesting Article


http://dealbook.nytimes.com/2015/02/13/the-myth-of-black-swan-market-events/?_r=0

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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