Turning Silver into $$: Shortie's Hedge Fund Trades SLV Option Spreads

Discussion in 'Journals' started by shortie, May 23, 2011.

  1. added 1 Long Unit ~35. Nice range today, too bad did not catch more good swings.

    Short: 2 U
    Long: 4 U
    PL -15
    #11     Jun 2, 2011
  2. added 1 Short Unit ~35.3. So far I have not been able to catch good turns (will look in more detail at the entry levels later), otherwise I would have seen positive PL by now. The good news is that as the position growing in size it is very stable and balanced.

    Short: 3 U
    Long: 4 U
    PL -19

    #12     Jun 3, 2011
  3. added 1 Short Unit ~36.

    Short: 4 U
    Long: 4 U
    PL -12
    #13     Jun 6, 2011
  4. I did not follow your journal, but from a quick glance isn't your position flat/box? If yes, what is the aim (arb/etc?)?
    #14     Jun 6, 2011
  5. i need to re-think what i am aiming to do and what i have done so far. will comment on your question later.

    this morning when i finished building the last leg, it did occur to me that i have build some weird symmetrical structure so far.

    i still have 4 Units to deploy. but I do need to check that i am not doing something odd.
    #15     Jun 6, 2011
  6. lol, you're short the 35/37 box. I can see that you're going far, young man!
    #16     Jun 6, 2011
  7. sorry shortie, i know you are just learning but i really laughed out loud in the office here, people are looking at me.

    what you ended up with is just boxed synthetic shares with a few bucks profit locked in

    4x short 37P long 37C = 400x long slv shares
    4x short 35C long 35P = 400x short slv shares.
    #17     Jun 6, 2011
  8. yeah, the journal has turned out to be pretty funny so it is not totally useless.

    i chuckle myself imagining people giving you strange looks.

    Reading up on the Box spread I see that the structure is useless for my purposes since I am not doing any fancy arbitrage that Tradingjournals has inquired about.

    "In options trading, a box spread is a combination of positions that has a certain (i.e. riskless) payoff, considered to be simply "delta neutral interest rate position". For example, a bull spread constructed from calls (e.g. long a 50 call, short a 60 call) combined with a bear spread constructed from puts (e.g. long a 60 put, short a 50 put), has a constant payoff of the difference in exercise prices (e.g. 10). Under the no-arbitrage assumption the net premium paid out to acquire this position should be equal to the present value of the payoff.

    They are often called "alligator spreads" because the commissions eat up all your profit due to the large number of trades required for most box spreads."

    I need to modify my approach. One possible modification is to NEVER create Box Spreads by picking alternative option strikes while leggin into position.. It is not that they are hurtful. Simply, building the second leg to lock in the profit is the same as closing the original leg (but the downside is more open positions to make things confusing)
    #18     Jun 6, 2011
  9. Yes, you will find the position remarkably stable and balanced.
    #19     Jun 6, 2011
  10. the next step is to fix the position by substituting one of the legs. i will wait until SLV hits one of my target levels to do that.
    #20     Jun 6, 2011