My option trades

Discussion in 'Options' started by ryanpatrick, Nov 21, 2011.

  1. Jeff

    I see the VIX is dropping, so that should make it harder for you to make money with long options.

    The VIX and the daily Average True Range ( ATR ) pretty much reflect each other. When the VIX drops, the daily bar in the charts get shorter. Which means there is less price movement. This means you can require more days to get enough of an increase in VIX to make a long option pay off, as the amount of price increase gets smaller and smaller as reflected in the shorter daily bars.
     
    #1601     Apr 18, 2012
  2. Don't rely on VIX as an indication of relative vol. Best to remove VIX entirely from that equation.
     
    #1602     Apr 18, 2012
  3. falcon,

    I have made money with directional trades when the VIX was
    10 to 15 range during the early to mid-part of the bull market of 2003 to 2007.
    When low VIX occurs, I simply adjust the the VIX parameter in my trading program and suddenly a trading system that was looking for big discounted entries and profits is all the sudden looking for small discounted entries and smaller profits.
    The VIX was the last piece of the puzzle that I learned which actually gave my trade systems the ability to have at least adequate performance in all market environments.

    Jeff
     
    #1603     Apr 18, 2012
  4. Huge ebay block trade at July 40.

    15000 contracts
     
    #1604     Apr 18, 2012
  5. babu,

    It will be interesting to see if that block of 15K July 40 call contracts moves into Open Interest tomorrow. That might prove some type of conviction in direction within the next 3 months. Otherwise, if it doesn't move into Open Interest, its fairly meaningless.
    Even if this block moves into O.I. tomorrow, it could also just be some insider who has 1.5 million shares, who knows this stock won't get above 40 by July expiration, because he knows what's going on with earnings, so he sold calls on his stock to make a few extra bucks.
     
    #1605     Apr 18, 2012
  6. newwurldmn

    newwurldmn

    15,000 contracts as a block trade for a name like EBAY isn't unusual. I wouldn't try to read into it. Many blocks of 10k+ trade every day.
     
    #1606     Apr 18, 2012
  7. Well it's their earnings today in a few moments. So I thought it might have something to do with it.

    I had a "bearish" Qualcomm butterfly going into earnings betting it'll fall. Right after this analyst interview news surfaced that it might have weaker results next time. This thing flew right out of the lower wing lol... o well tiny loss... nothing that i can't handle. I'll probably break even above 66.5..

    Sucks losing money even when you're right..haha
     
    #1607     Apr 18, 2012
  8. newwurldmn

    newwurldmn

    I personally think that's the worst trading sin: being right and losing money.

    Yeah, 15,000 contracts at 1.7 = like a 2.5MM bet. Almost a tiny punt if you are a 700MM long short fund.
     
    #1608     Apr 18, 2012
  9. Why is it a pain? I've only used TOS but when I tried out IB it seemed fairly easy.
     
    #1609     Apr 18, 2012
  10. It is except when you're so used to TOS's interface- I use it to enter simulated orders just to visualize my risk. It's a really good proxy for your actual trades.

    I wish IB spent a little bit more time improving their system. Nothing wrong. Just could compete a bit better if they had a few more upgrades- like better risk graphs, etc...
     
    #1610     Apr 18, 2012