Options Strategy (Archive)

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    Posted: 07 September 2011 01:01 PM #46

    JDSoCal - 07 September 2011 04:43 AM
    Apple II+ - 06 September 2011 03:52 PM

    But September monthly has one weird aspect to it—max pain is $390 which is below both the 80% and 95% ranges. Although Travis doesn’t post the actual max pain number, it’s usually within the range. FWIW.

    Is there any evidence a singular max pain number (vs range) has any veracity?

    I don’t see it as max pain vs. a range. The range between highest OI put and call strikes approximates a range around max pain. But when max pain falls outside that range, it makes me wonder if this difference makes a difference.

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    Posted: 07 September 2011 01:42 PM #47

    JDSoCal - 07 September 2011 04:36 AM
    calebcar - 07 September 2011 04:03 AM

    I have no idea how interest rates have stayed so low while they print so much money.

    Ha ha, that’s the first question someone asks when they start uncovering a Ponzi scheme, “how is this even possible?”. Today the yield of a 2-year US Treasury dropped to 1.90 at one point, the lowest ever. The only question is when interest rates go up, not if. Hence the 2014 LEAPS.

    The amazing thing is, all the fearful dummies who were worried about a US default ran to…US Treasuries…like lemmings jumping off a cliff. Fear doesn’t always lead to the best decisions.

    All I can say is, US Treasury buyers are going to shed some serious tears one of these days. And for what? These piddly yields?

    I looked at TBT options. My first reaction was
    a) they looked very inexpensive. Jan 13 2’s @2-3 means if interest rates skyrocket there is enormous upside.
    b) the ask call spread is very high
    27.0 Call     2.33     3.60     —    0.00     0     0  
    28.0 Call     2.13     3.30     —    0.00     0     0  
    29.0 Call     1.94     3.05     —    0.00     0     0  
    30.0 Call     2.15     2.45  

    Trading AAPL I am used to much narrower range. I am surprised as I would think that Treasury related instruments would have much more liquidity.
    c) as much as this strategy seems obvious, i would have lost my shirt if I invested in this any time in the past 5 years. I sweated thru the spring and summer waiting for APPL January options to act “rationally.” I don’t think I would have had the patience or liquidity to wait on treasuries.

    In any event, this is new territory for me. If others have perspective on how to compensate for inflation risk I’d appreciate it. I don’tlike Gold, maybe its a tempermentalthing, maybe because I’m having a hard time wrapping my head around commodities as well as financial instruments. But I’m open to other ideas.

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    Posted: 07 September 2011 03:39 PM #48

    From Mav’s Believe It or Don’t(tm)! Trading Desk:

    YOKU…whew!  Something told me yesterday not to get too greedy, looking at futures trends.  So I placed an order prior to the open for approx. 15% gain (which was still pretty aggressive, but possible based on my price predictions and trusty CBOE semi-accurate options calculator), and apparently I sold my calls just before YOKU went south immediately after the open.

    A sprig of parsley for a 10-quart pot of tomato soup (all my AAPL calls).  So Parsley Hunter’s won a battle and losing the war.  Friggin’ Unicorn iPhone 5 mumble grumble.

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    Posted: 08 September 2011 08:47 PM #49

    From Mav’s Believe or Don’t(tm)! Trading Desk, Stardate…uh, September 8:

    Two put side bets made today.  ARMH, which didn’t seem to have any particular reason for today’s spike, and YHOO (end of day buy-in, so I basically got today’s best price) because, well, they just don’t have any idea what’s going on over there and the post-CEO-firing sugar rush should wear off, particularly if the market has a down day tomorrow.

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
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    Thanks, Steve.

         
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    Posted: 08 September 2011 09:11 PM #50

    Mav - 08 September 2011 11:47 PM

    From Mav’s Believe or Don’t(tm)! Trading Desk, Stardate…uh, September 8:

    Two put side bets made today.  ARMH, which didn’t seem to have any particular reason for today’s spike, and YHOO (end of day buy-in, so I basically got today’s best price) because, well, they just don’t have any idea what’s going on over there and the post-CEO-firing sugar rush should wear off, particularly if the market has a down day tomorrow.

    Mav, you’ve been hanging out with our red-shirted Ensign haven’t you? Good bet on YeaHoo. Thinking about placing a crackpot bet on RIMM as well for their 9/15 earnings.

         
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    Posted: 08 September 2011 09:36 PM #51

    Mav - 07 September 2011 06:39 PM

    From Mav’s Believe It or Don’t(tm)! Trading Desk:

    Love it!!

         
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    Posted: 08 September 2011 09:37 PM #52

    iPad - I’m anonymous, so I’m not to be taken seriously.  DT told me so.  wink  So, riff on Ripley, and there you go.

    Chas - I did kinda like Star Trek and its remixes back in the day.  We’ll see about YHOO…it’s pure speculation whether it goes up or down tomorrow.  I’m not completely insane, so I bought Oct puts.

    [ Edited: 08 September 2011 09:40 PM by Mav ]

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    Posted: 08 September 2011 09:49 PM #53

    Mav - 09 September 2011 12:37 AM

    iPad - I’m anonymous, so I’m not to be taken seriously.

    It’s okay, Mav.  I like having imaginary friends. smile

         
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    Posted: 08 September 2011 09:50 PM #54

    I legged into more bull GLD spreads today.  And I corrupted others.  I like GLD. smile

         
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    Posted: 08 September 2011 09:59 PM #55

    ChasMac77 - 09 September 2011 12:11 AM
    Mav - 08 September 2011 11:47 PM

    From Mav’s Believe or Don’t(tm)! Trading Desk, Stardate…uh, September 8:

    Two put side bets made today.  ARMH, which didn’t seem to have any particular reason for today’s spike, and YHOO (end of day buy-in, so I basically got today’s best price) because, well, they just don’t have any idea what’s going on over there and the post-CEO-firing sugar rush should wear off, particularly if the market has a down day tomorrow.

    Mav, you’ve been hanging out with our red-shirted Ensign haven’t you? Good bet on YeaHoo. Thinking about placing a crackpot bet on RIMM as well for their 9/15 earnings.

    Mav is always welcome in Ten Forward, hanging with the Enterprise crew….we like Alien life forms.

    Took a bit of a flyer today with purchase of a few 390/400 Oct. Bull spreads. Really, we have to pop here in the next few weeks, and if early October is shipping date for the fabulous IPhone 5, this should work out fine.

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    Posted: 08 September 2011 09:59 PM #56

    Anonymous, not imaginary!

    I think, therefore I am… *repeats*

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
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    Posted: 08 September 2011 10:09 PM #57

    Mav - 09 September 2011 12:59 AM

    Anonymous, not imaginary!

    I think, therefore I am… *repeats*

    Yeah, that’s what they all tell me. smile


    Oh, on another options note, I have OTM strangles on SPY for tomorrow/next week…  Will report back on how effective (or not)...

         
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    Posted: 08 September 2011 10:14 PM #58

    Tom Cruise is an alien?  Food for thought, actually.

    Ensign, what are looking to get out of the Oct 390/400 position?  Max gain?  When and at what price range are you green?  And what crazy things do you need to do with your trading platform to establish the position?  (Can you just place all the necessary orders on one screen?)

    iPad, same general question about your…violent-sounding options play.

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
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    Posted: 08 September 2011 10:30 PM #59

    Mav - 09 September 2011 01:14 AM

    Ensign, what are looking to get out of the Oct 390/400 position?  Max gain?  When and at what price range are you green?  And what crazy things do you need to do with your trading platform to establish the position?  (Can you just place all the necessary orders on one screen?)

    iPad, same general question about your…violent-sounding options play.

    Mav, looking to get a .10 move for one side or the other, perhaps even both sides with this tug-of-war whipsaw nonsense that we see all too often lately intraday.  I didn’t place the trades simultaneously as the best spot to buy puts (resistance) wasn’t the best spot to buy calls (support).  But yes, multi-leg option orders (spreads, strangles, etc.) CAN be placed on one screen.

         
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    Posted: 08 September 2011 10:31 PM #60

    So if it’s a whipsaw, you watch for it and try to sell both at a gain, then.

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.