naabish question about ES straddle strategy margin requirements...

Discussion in 'Options' started by Imba, Apr 26, 2009.

  1. Imba



    Can anyone please help me.

    Here is a point.

    I trade ES for a few years, and somehow delevop a very easy strategy.

    For example, we are in the middle of the current trading week. My simple strategy "alrarms" me that 20-40pts movement incming in near 24hours. But there is almost impossible to predisct the way of that movement.

    So, what do i do: sell 20ES cars on one account, and buy 20ES cars on another account.

    Both position have 10pts stop + 30pts take-profit.

    (Please, i dont want to discuss whats the point of that strategy, or how risky it is).

    All i want to know: is there any posible way to involve "straddle strategy" onto that ?

    I mean, is it a possible way, to just buy a straddle options (instead of buy\sell ES contracts on different accounts), or the overall margin requirements are to hich for such options, to make any profit even from a 30pts ES movement (in 1-2days).

    Atm my strategy (from a finansial point of view) looks liek that:

    (for 20 contracts on each account)
    1)10.000USD loss on one account.
    2)20k\30k USD profit on another account.

    so, my loss is exacltly 500USD\per contract on that account which catch a stop-loss.

    Again, the main point of the strategy is that i do know exact time when the panic movement will begun on market, but sometimes its kinda hard to predisct the way of that 20-40pts movement.

    So, im a total newbie in options (i only know the basic terms how they work), but i dont know the margin\premium requirements. So, its kinda hard for me, to calculate, whenever it will be more\less easy to trade such strategy of "20-40pts movement) with the way of buyin options straddle, or for a such short movement, its not worth the margin\premium.

    Anyone can give me some calculations please?
  2. You can do this with stop buy/stop sell in one account.

    Say ES is at 810

    Currently you are buying 20 contracts at 810 and selling 20 at 810 in two accounts and one will be stopped out.

    Instead of doing two trades in two accounts just enter stop buy/stop sell in one account.

    Stop buy 20 @ 820
    Stop sell 20 @800

    Cancel the other once one of them gets executed.
  3. Imba


    well, sometimes i really use that exact method. I just too lazy to text all the ways to calculate stops\profits\entry point. Just to be short and dont miss the main question.

    So, question is still the same really :)

    is it possible to catch a 20-40pts rallyes with options, or does their cost is way too high, to make some nice profits from such short by time (1-2 days max) and short by leight (20-40pts)?

    For example, if a sttradle combination of options cost (i dont know that price really), lets say 2000USD premium on each.

    a 40Pts rally will only make that strategy show zero loss and zero profit really.

    Hmm.... im sorry guys, English its not my common laguage, so its kinda hard for me to explain everything clearly, let me re-phrase my main question with a more simple way:

    For example, if we have a market on 800. And we absolutely sure (with a 80-90% probabilityes) that in near 1-2 days(not more), the market will be either 830-40 either 760-770.

    Is that possible to catch some profit in that condition with straddles?
  4. Nebbish, not nabbish.