Creative "Straddles" for Ceiling Deal/NO Deal Play

Discussion in 'Options' started by shortie, Jul 29, 2011.

  1. My understanding is that large moves are possible in various instruments in the next few days.

    Those who try to anticipate various scenarios what are the instruments you are focusing on and what sort of moves do you reasonably expect? What will move the most under different debt deal outcomes?


    I am fixated on volatility and will only play it on Short side via VXX options. I guess precious metals also may go down if the debt limit is lifted.
     
  2. I have been watching USD/CHF, and bought for the journal account at 0.78645.

    I tried buying puts on VXX this morning, but they did not fill me.:mad:
     
  3. joneog

    joneog

    Started a small bearish position on the VIX with Oct verticals, on the assumption a deal gets done over the weekend and the market starts pricing in another grind higher. Oct vs. Aug gives me a little time in case they don't come to a deal. Depending on what the political situation is, will probably add to it next week.

    Treating it as a bullish/neutral market bet with limited downside. Unless everything goes to shit we should see vols retrace at some point.
     
  4. VXX puts were chased today, so were calls. some of my puts that i bought prior to today actually improved quite a bit by EOD.
     
  5. US Default play via VXX 2:1 call backspread:

    buy 2x 30 Call (Aug 20) for 2x0.64
    sell 1x 26 Call (Aug 20) for -1.36

    the position is entered at a credit and one has an unlimited profit potential if VXX really skyrockets. how high could VXX go? if we assume it moves 1/2 VIX, you can use your imagination where VIX may end up

    (*Hint*: VIX>100 is not impossible)
     
  6. Obviously, predicting (guessing) the outcome correctly is the winner. My approach will be to get on the bandwagon for the ride if Tuesday comes and there's no agreement. Sorta like the ride down in 2008. Play the volatility not the guess.
     
  7. what's the biggest bang for the buck if the most likely deal goes through on/before Monday? Let's assume that trade was place at the close on Friday.

    the most likely bill right now is some sort of a hybrid of Boehner's and Reid's. at lest that what i understand.
     
  8. you are essentially Short this ETF that went above upper BB on weekly. I am using it for charting purposes and to demonstrate the crazy weekly VOLUME. Volume=Fear=Irrational_Flight_To_Franc?

    [​IMG]
     
  9. The market can be perverse. It hasn't tanked during all of this which implies that it expects some sort of deal. That doesn't mean that it will pop if one does. Or not...

    This is somewhat like an EA. If IV is up, the move must be in your direction as well as large enough to offset IV decrease/collapse.

    I'm hoping that there's no deal today and that roils the markets tomorrow. Will be interesting if there's no deal tomorrow and Obama invokes the 14th.

    Gimmee some rock and roll volatility, paleeeeeeeeeeeeeze !!!
     
  10. as reported they will likely have the deal today. i do agree that there is no 100% certainty that the market will go up or that the gains will hold until the end of the week even though the news is "good".
     
    #10     Jul 31, 2011