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falconview
Registered: Jun 2010
Posts: 1465 |
06-16-11 04:35 PM
Howard
I´m testing a method I had in my notes from 25 years ago. This method trades the Long Straddle and it is not your standard volatility trade. So far, I have no one who has anything to offer other than the standard volatility type advice. I could find nothing about it on the internet. Which might mean it disappeared because it was no good. I shall see in a couple of weeks.
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ForexForex
Registered: Jun 2009
Posts: 888 |
06-16-11 06:13 PM
Quote from ForexForex:
Take a look at GLD: http://finance.yahoo.com/q?s=GLD
- Weekly options offered.
- Consider entering 1 day before expiry, buy Thursday sell Friday.
- Debt will only be about $0.80.
- You don't pay for any time premium.
- I believe a small movement of 1.5% or more will do the trick.
- The trade is over quickly, no spending a few days watching it.
- Try a paper trade this Thursday to see how it works out.
GOOG and QQQ could be considered also.
UPDATE:
OK ..... I just entered a live QQQ 55C/54P straddle trade, this is not a paper trade.
- QQQ @ $54.36.
- Buy 1 contract QQQ Jun 2011 55.00 call @ $0.0702.
- Buy 1 contract QQQ Jun 2011 54.00 put @ $0.2502.
- Commissions included.
- Total debt $32.04.
- Must close position tomorrow, which is the last day of trading for these options.
I would have preferred to enter at about 3:30pm EST, but I'm heading out now and won't be back before market closes.
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falconview
Registered: Jun 2010
Posts: 1465 |
06-16-11 06:57 PM
Yikes! What is happening to my Long Straddle position? Explain it please?
From the time I bought the straddle this morning, both the CALL and the PUTS have increased in value if I want to sell them? I have together a profit of .44 cents and hold 2 contracts of each.
Which in this novices calculation comes to 400 x .44 = +$176. If I close it now, I make money less commissions $12. What the heck do I do? I wasn´t planning on this.
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Dolemite
Registered: Jan 2003
Posts: 77 |
06-16-11 07:01 PM
Quote from falconview:
Howard
I´m testing a method I had in my notes from 25 years ago. This method trades the Long Straddle and it is not your standard volatility trade. So far, I have no one who has anything to offer other than the standard volatility type advice. I could find nothing about it on the internet. Which might mean it disappeared because it was no good. I shall see in a couple of weeks.
Volatility is the only reason to trade straddles. You mentioned using LEAPS. Pull up a straddle with June expiration and then one with Jan13 expiration and compare the gamma. That is the reason people trade straddles in the nearer expiration. I spent 14 years trying to find that one option trade I could put on like a robot and exceed average market returns. Unfortunately, I couldn't find it. The biggest power you have as a retail trader is that you can pick and choose when to trade. If you only want to trade straddles, do it but make sure the market/ stock is set up to give you the best chance. Look for stocks in a tight trading range and ones that have run up where IV is at a 12 month or greater low. Manage them with the expectation that most will stay in that tight range and will be small losers. When you have ones that move, scalp the gamma to take the small profits and at the end you will hopefully come out positive with a few outsized winners giving you a decent return.
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Dolemite
Registered: Jan 2003
Posts: 77 |
06-16-11 07:03 PM
Quote from falconview:
Yikes! What is happening to my Long Straddle position? Explain it please?
From the time I bought the straddle this morning, both the CALL and the PUTS have increased in value if I want to sell them? I have together a profit of .44 cents and hold 2 contracts of each.
Which in this novices calculation comes to 400 x .44 = +$176. If I close it now, I make money less commissions $12. What the heck do I do? I wasn´t planning on this.
Either buy/ sell stock to get delta neutral or sell 1/2 the straddle and keep the other 1/2
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falconview
Registered: Jun 2010
Posts: 1465 |
06-16-11 07:14 PM
Forexforex
I bought in paper money in TOS 2 contracts in GOOG as a straddle in puts and Calls. Two hours before the close. See what we will see tomorrow? Ordinary August two months out. Ouch! I forgot this is supposed to be in the WEEKLY. Whoops! Let me go back and do it again.
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