Jimbo's Option Spread Journal

Discussion in 'Journals' started by jllm03, Aug 8, 2006.

  1. jllm03

    jllm03

    I have setup a couple IC scenerios on paper, but have not done one yet. May do this after the Oct expiration. After the Earnings and the Oct exp, the volitility will drop again, and a condor would look pretty good.

    I was looking at the 370/380-470/480 last week.
    Would give you about a 9% return, and a profit window between 360 and 460 at exp.

    The ATM Stradles would be nice, if you could afford the margin...
     
    #41     Oct 16, 2006
  2. ZeroINT

    ZeroINT

    Jimbo Great thread. I have a condor 450/460 and 390/380 with Oct expiration. I'm looking to get out before expiration probably late Thursday.

    I took a hit on the SPX too 1365 but the put side saved me. Pretty much broke even. I'm staying out of SPX for now.

    What do you think about going long on some calls prior to the earnings report?
     
    #42     Oct 16, 2006
  3. jllm03

    jllm03

    I usually do not buy calls by themself anymore. I would rather spread bet.
    I used to several years ago, but found I was losing more on buying the calls. I made a ton of money doing that back in 2000 (AOL was my prefered stock..it would move 5 to 10 point a day), but it finally caught up with me and whacked me good...
    Credit Spreads, Calendar Spreads, are the way I go now.
    I like the credit up front so I can set a break-even point to get out. With going long, you are already in a Debit that you have to climb out of.
     
    #43     Oct 16, 2006
  4. You can set a break-even point on debit trades too!
     
    #44     Oct 16, 2006
  5. I decided to put an order in to sell 1 IC on GOOG. 410/420/430/440 at 7.30. Just got filled.
     
    #45     Oct 16, 2006
  6. jllm03

    jllm03

    I fill more comfortable being on the "Seller" side of the options, than being the "Buyer". They say most options sold, end up worthless...I can attest to that from some of my previous experiences. Back in 2000 the market was similar to what is happening now (and I said similar...not the same).
    I took $5K and in 6 weeks turned it into $23K just buying calls and puts on AOL. I thought this market would start to turn back so I started to load up on puts, and what do you know...It kept climbing and my puts value started dropping. Eventually all of them expired worthless. My account went below the original balance I started with. Hard lesson for a newbie back then. I have started trading Credit Spreads and have not looked back...The Time decay just became my best friend, instead of my enemy. It is just MY preference to NOT do Debit trades anymore.
    I have not bought an individual option since then, that was not used for only protection purposes of a short option.
     
    #46     Oct 16, 2006
  7. jllm03

    jllm03

    Just keep a close eye on the short legs on Thursday.
    That is a little too close to the underlying stock for my comfort, but good luck to you.
     
    #47     Oct 16, 2006
  8. segv

    segv

    Some debit spreads are long theta.
     
    #48     Oct 16, 2006
  9. Thanks. I didn't realize how low it was going while waiting for my order to fill. It was all over the 430-420 range today.
     
    #49     Oct 16, 2006
  10. But what about that edge you get for selling premo?:p
     
    #50     Oct 16, 2006