Long-scalping equity options against time decay and market drift

Discussion in 'Journals' started by fullautotrading, Jan 31, 2022.

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  1. Overnight

    Overnight

    Weirdness. Why would an internal name change IB is implementing to become more standardized affect your positions? It's an IB thing, not an exchange thing. It should not affect your position values?

    P.S.I notice you are now layering out into March and June contracts. Man, you are running some deep FOPS there.

    Well, be mindful of the Fed minutes in two days. They can sometimes be a surprise.
     
    #191     Nov 21, 2022
    fullautotrading likes this.

  2. Not weird at all :) Actually, it may create huge troubles for any platform connecting to IB. The reason is that for the data request and other operations you usually use a "ticker", which includes the name of the exchange. (Clearly, it could all be done using "Contract ID" alone, but it is not very friendly to the user).

    So you are right, it does not affect any "real" position you have, but nevertheless, it may make it impossible for the platform to continue trading those positions because it simply quits working: no data would come in anymore (because of no more "valid" tickers).

    See for instance how these users are complaining :) :

    https://ninjatrader.com/support/for...nge-names-problems-with-ninja-execution-at-ib
     
    Last edited: Nov 21, 2022
    #192     Nov 21, 2022
  3. Overnight

    Overnight

    But you are not using Ninja? *shrugs* In my logical mind, this sort of code should be flexible enough to adapt to simple changes in a field, such as "instrument name change".

    But if that were true, the Y2K bug panic would never have happened, hehe.
     
    #193     Nov 21, 2022
    fullautotrading likes this.
  4. Sure! some of those are the "long legs" (high vega) mentioned in the previous post. The "deep red" ones :)
     
    Last edited: Nov 21, 2022
    #194     Nov 21, 2022
  5. It's not a problem of simple adaptation. Once you define a ticker, it is "fixed" in your platform. You do not change the ticker market (nor you would want to allow that). In case, you change the instrument if you want to trade another exchange.

    But if they change unilaterally the ticker specs, when you use your ticker for an existing instrument, IB does not accept it anymore as "valid". So it's not an ordinary issue. Because it does not happen every day a "migration" of this sort (with the corresponding change of name of the instruments).

    But, any way I am not as slow as other platforms to respond to any issue. I can usually fix anything in a matter of hours :)

    (Actually, now I made a general feature, which can address other future changes of this nature, although relatively rare.)
     
    Last edited: Nov 21, 2022
    #195     Nov 21, 2022
  6. ES has been going up for about a month now:

    upload_2022-11-23_1-54-9.png

    ES FUT 202303 CME 50 E-mini S&P 500 [ESH3, 495512572, mult: 50]


    at the same time, we have defined a few "long legs" which currently are in DD, but that would provide good protection of our PnL (345K at the moment) in case of mkt correction:

    upload_2022-11-23_1-55-6.png

    I am keeping the fund usage pretty quite conservative (currently 55%), to be able to cope with a possible increase of margin requirements in case of market collapse.
    In the meantime, we are just grabbing the option decay and scalping a few short-term layers.
     
    #196     Nov 22, 2022
  7. We got all set. Ending today before the holiday with quite a low fund usage (45.49%), just prepared for anything :)

    Actually, one needs to be planning and set up for the worst occurrence every day, to survive the market :)

    Ending the day at 341K profit, and with 3 long legs (deep red columns in the chart below: -16K, -24K and -33K), which will provide good "protection" in case of any crash or whatever correction.

    upload_2022-11-24_0-15-8.png

    Well, at this point, the "Dent Blanche" is ready :) and we need to wait for the next moves of the market after the holiday.

    upload_2022-11-24_0-16-48.png
     
    #197     Nov 23, 2022
  8. End of the week with a holiday-shortened trading day.

    We end the week at 342K PnL (298 days elapsed), even though we have a lot of $$$ invested in "protective structures" (the 3 long red columns in the chart below). We can see that the long legs are "costing" us respectively: -19.9K, -24.1K and -33K.

    This is what we need to spend as insurance for our "safety" :)

    Fund usage is very "prudential": 45%.

    upload_2022-11-25_23-21-26.png

    Eventually, in the long term, we will "recover" those red layers too :)
     
    #198     Nov 25, 2022
  9. Overnight

    Overnight

    I am going to assume that you will want to close out all your positions before the end of year, just to keep the books clear for the start of 2023 so you can start fresh? Straddles and whatnot on that particular IRS form can get ugly.

    (And of course, you've had this going on since end of Jan., so I figure you want to make some bank this calendar year.)

    Do you have a strategy for it? Will you slowly layer out, considering seasonal strength? By that I mean, closing out short leg winners and letting longs run naked into EOY for the potential santa rally?

    Or will you just reach a point right before New Years where you flatten everything on same day and take the paycheck of ~340Kish?
     
    #199     Nov 25, 2022
    fullautotrading likes this.
  10. haha, Well, we should run the show until we give it all back to the market!

    Isn't that what many ET spectators are waiting for, after all? :)

    What do you suggest Overnight ? :)
     
    #200     Nov 25, 2022
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