Key reversal

Discussion in 'Trading' started by Lojanica, May 22, 2013.

  1. Long PUT skewed straddle @1650

    1.2 per side. 2 puts 1 calls

    100 x 100 x 1.2 x 3 = 36000

    ((2.4 x 2) + (.25 x 1)) x 10000 =50500

    (50500-500(commissions)) -36000/36000
    14000/36000 =39% return for day trade with limited risk as theta rented for only one half day

    Event trade
     
    #51     Jun 20, 2013
  2. Nice trade! Still holding anything? Looks like that 50 SMA is a no-brainer target. Possible failure too given the Fed.
     
    #52     Jun 20, 2013
  3. I let one of the puts run so today is a good day, also as noted I was already short and hedged into the FED on another position so yes I am managing a nice profitable short now.

    The next question is 1600 close on the quad witching?

    This gap down looks like an exclamation mark!!! That is to say it may not fill trapping longs. Market can get ugly unless Ben and his Open Market Operations team step in.

    The straddle really was a good trade because 1600 or 1700 was in the cards but the ramp into the FED was a set-up for a sell-off.

    Wish it was always this easy.....

    Thanks
     
    #53     Jun 20, 2013
  4. Nine_Ender

    Nine_Ender

    Seems to me a short on US equities wasn't the best trade here. It's underperformed a TSX short two fold and a Gold short was even better. And the kicker is I don't think an exit point on a US short is very clear, you claim 1450-1470 but real support is around 1550. So while you may be happy you made some money today, the quandry I'm sure you have is your exit.
     
    #54     Jun 20, 2013
  5. There are many markets. This was a global rout for sure. If you can pull money in then you're doing OK.

    I appreciate the criticism but honestly if anyone including myself could trade as well as this thread they'd be happy.

    Exit. I massage my positions and now it is so profitable unless I fat finger my own ass I'll be fine. With the leverage used it is kicking off the positions, hedging, and day to day crap until it moves the way you are positioned that is painful.


    For now I'll enjoy the volatility because that's my preferred environ. Money sloshing around sets up many more opportunities as long as you don't get too greedy which is why you saw what you saw today.

    A rush for the exits followed by forced liquidations due to fund covenants which feed on themselves.

    Have a good weekend.
     
    #55     Jun 20, 2013
  6. achilles28

    achilles28

    Nice trade. Could you explain it, a bit? I'm pretty clueless with options :D

    Some more calls:

    - Good resistance at 1600.

    - Good support at 1560 - 1565


    The reversal down at 1654 was obvious, but I totally missed it.

    Just using trendlines and channels, here..

    One note - forex doesn't respect trendlines and channels so much. ES does, alot.
     
    #56     Jun 20, 2013
  7. Straddles are volatility breakout trades. You buy a put and a call at the same price. If a volatility breakout occurs you make money but price needs to move a lot. At 1650 in the Spoos in the context of the biggest FED meeting of the year so far and a bracketed range of 1600 to 1700 and only 3 days until expiration a straddle was a good play. I was bearish so I skewed it 2:1 with 2 puts to each call which means if I was wrong and price exploded to the upside I'd have broke even or lost just a little money. If price didn't move I would sell the options again with 2 days expiration left for a small loss but (and this is what happened) if price exploded to the downside you make money. This trade was spectacular.

    I sold one call and one put at the end of the first day and let the rest ride with a 39% profit intact. By the end of today it is in the hundreds % profit and was closed.

    The point was a low risk trade which in the event of a volatility breakout which is what we experienced you cash in.
     
    #57     Jun 20, 2013
  8. S2007S

    S2007S

    http://www.cnbc.com/id/100832846


    Some these "strategists" say buy buy buy.

    Funny as soon as there is a 2 day sell off people think its the best opportunity ....will tomorrow be a rally ...im sure it will be. They wont let a 2 day sell off stop this unstoppable bull market especially after a 150%+ rally in 4 years. The bulls start to cry after a small 5% drop.
     
    #58     Jun 20, 2013
  9. Hmmmmmmmmm. Quad witching is usually a tame affair but a retracement is likely in order. No way do we do a meltdown tomorrow. I'm with you a rally of some sorts.
     
    #59     Jun 20, 2013
  10. Nine_Ender

    Nine_Ender

    I was just observing disparities between different markets and whether SPX is easier to trade; obviously any money making trade is good and you are into riskier leveraged plays ( and more profitable ) then I am at this time.

    I had a theory a couple of years ago that Gold might be a bubble and recent market action suggests this might be in play now. There may be no buyers for a while.
     
    #60     Jun 20, 2013