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The fancy equity derivatives vol arb thread... a.k.a. Options trading extravaganza


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i went short on AAL, UAL, LUV, CCL, and other travel stuff via long puts.  flipped them intra day for gains.  i think the travel sector will continue to be a bloodbath, worse than equities.  IATA forecasts are worse than expected.  airline cash burn are twice as bad as projected. etc etc etc

Fingers crossed this jnj vax approval provides a sentiment boost to cash in on Monday. Also back heavy on xom calls after cashing the initial batch last week.
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I think I posted it here, but on Friday, I bought 10 AAPL 3/26 $135C for at $1.19.  Right now, they are at $1.58 thanks to a nice rebound of AAPL today (they closed down on Friday thanks in part to Cathie Wood selling AAPL).  

I am disappointed that my UUUU options are not doing that well at the moment.  Maybe this week, we see some improvements.

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1 hour ago, PenelopeWitherspoon said:

I think I posted it here, but on Friday, I bought 10 AAPL 3/26 $135C for at $1.19.  Right now, they are at $1.58 thanks to a nice rebound of AAPL today (they closed down on Friday thanks in part to Cathie Wood selling AAPL).  

I am disappointed that my UUUU options are not doing that well at the moment.  Maybe this week, we see some improvements.

very nice.  you gonna close those?

i held mine through last month's peak (theyre 2022 expiry), and theyve done nothing but been sour since.  today they announced reopening of all physical stores which should aid the narrative. 

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Fingers crossed this jnj vax approval provides a sentiment boost to cash in on Monday. Also back heavy on xom calls after cashing the initial batch last week.

Closed all of xom, ccl, and aal before lunch for 30% pop in total. Felt foxy so picked up some Friday exp xom puts in preparation for opec fears

And as mentioned in stonk thread, leaps on uranium plays as the world builds more nuclear energy.
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23 minutes ago, bluto said:


Closed all of xom, ccl, and aal before lunch for 30% pop in total. Felt foxy so picked up some Friday exp xom puts in preparation for opec fears

And as mentioned in stonk thread, leaps on uranium plays as the world builds more nuclear energy.

that fucking opec announcement was bullshit.  party poopers

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4 hours ago, 52-80 said:

very nice.  you gonna close those?

i held mine through last month's peak (theyre 2022 expiry), and theyve done nothing but been sour since.  today they announced reopening of all physical stores which should aid the narrative. 

I am going to watch what happens this week.  I have a target in mind, and if I hit that, I will sell and take my profit happily.  

  

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AAPL down, so I am in the red again.  Sigh.  My F calls are looking good today.  Might exit out of those today.  Seeing where things are going.

Would like to get out of IDEX and NAK calls as well.  

Starting to look at some pharma companies as my next options targets.  And GM.

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So my AAPL options retreated and are back in the red.  I was able to exit other positions for no loss or small losses, so I have increased my AAPL position at lower prices. I do think AAPL is undervalued, and all it takes is one good day.  

My goal would be to close this out by mid-month.  Hoping that the bond markets settle and yields stop jumping around.  That is killing some of my plays.

 

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If I had the spare capital to have enough cash balance to be able to day trade without restrictions, I have a pretty good feeling you could retire in a month just swapping cheap options on high volatility WSB stocks. That subreddit can drive a stock up 25% in a day on... basically zero news. It's insane, and I wonder how long the MM will put up with it, unless they've also found a way to just make a killing off the crazy swings.

 

TLDR - Tried options trading without being able to day trade and never having learned what options were beforehand. Tread carefully those of you new to this. Upside potential is massive, but watching an option fall short of your breakeven, or even worse, short of the strike price, is an absolute beating.

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15 minutes ago, Chult86 said:

That subreddit can drive a stock up 25% in a day on... basically zero news.

I don't think it's WSB users that are driving the prices up. I think it's the brokerage houses pumping and dumping.

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Market makers have an incentive to stay bet-neutral. They’re kinda like sports bookies. 
 

Market maker, as a huge market mover by way of trade size, being wagged by derivatives flow (i.e. options) is the main catalyst behind quant-based index predictions and trading. 
 

‚Äėif options and futures action is this, mms do that on these timelines, hence general market will move this way or that‚Äô

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Welp, AAPL calls in the red.  I bought in on the slide (I still think it is undervalued), so am in for 40 calls with an average price of $0.7836.Of course, current market is at $0.54 for a nice $974.33 loss.  

If we could get a nice bounce tomorrow, I could be ok.  The longer it takes on the bounce, the worse off I am.  :(

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So i went and bought some April 16 $32 RKT calls on Tuesday around noon and saw it shoot past forty and didn't close the position before the bell that afternoon. Then when I saw it go to $48 in premarket the next morning, I got greedy thinking about GME. The rest, well you can guess what happened.

So how the fuck do I play it from here?

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30 minutes ago, Gourmand said:

So i went and bought some April 16 $32 RKT calls on Tuesday around noon and saw it shoot past forty and didn't close the position before the bell that afternoon. Then when I saw it go to $48 in premarket the next morning, I got greedy thinking about GME. The rest, well you can guess what happened.

So how the fuck do I play it from here?

If rocket is dead you take your lump and sell it. 
 

if you are confident it’ll run again and want full upside exposure you hold it. 
 

if you have some hopes it’ll run again but want to recoup some cost at expense of upside exposure, sell April 16th calls with strikes at 35, 37, 40, etc. 

 

it acts like your long call but in reverse. Offsetting effects  
 

There’s other constructions but again what’s past is past 

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1 hour ago, Chapo said:

I sold a bunch of high IV 4/16 puts today. Getting more than 10% for OPEN, PLTR and XL.

short puts on OPEN and PLTR are solid.  good companies.  cheap underlying (on per share basis). 

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Ok, so was liquidating some of my long positions this week.  

Ended up with a profit of 713 on an investment of $1,652.  That profit was realized with average hold times of 12 days and roughly $42 per contract (had 17 total contracts).

My goal is $50 profit per contract (average) and returns of over 40%,  So I am ticking one of those boxes.  Want to get hold times down to 10 days or less.

I do not want to day trade, but I do want to make short term profits.  I am only doing this in my high risk play account as this is pure making money to support my bad habits at this point.  

 

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3 hours ago, PenelopeWitherspoon said:

Ok, so was liquidating some of my long positions this week.  

Trimmed some of my holdings this week as well. 
 

PENN leap had gone up, down, and I sold it on Wednesday pretty much flat. 
 

This evening announced it’s being added to the S&P 500….LEAP position would be worth ~50%+ more come Monday. 
 

Sad )-:

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1 hour ago, 52-80 said:

Trimmed some of my holdings this week as well. 
 

PENN leap had gone up, down, and I sold it on Wednesday pretty much flat. 
 

This evening announced it’s being added to the S&P 500….LEAP position would be worth ~50%+ more come Monday. 
 

Sad )-:

Yeah, I have learned there is always regret with options.  For instance, I could have made more on my F options, but took the profit I had planned.  Win some, lose some.  I find if I stick to the plan, it all works out in the end.

I swept most of the profit out of my account (I had already reinvested more than I had held), and will be keeping that in just a cash investment.  If I can make this 500-1000 a week, my vacations in 2022 will be very nice indeed.

 

 

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Posted (edited)

Can't believe I just found this thread.  I will be paying attention.  I have made a lot of money on options . . . I've lost a lot, too.  To me, it's a volatility play at heart.

Best of luck to all.

Edited by jimmyjazz
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My batting avg on options trades is Brad Ausmus replacement level, but I'm a simple newb with a meager account balance so I've only bought long calls and one or two puts. I I fucked myself not getting out of RKT the same day as I bought those calls, lesson learned. I did manage a successful long call trade on OPEN (and I should have held it longer since it didn't expire until mid Aprl) so I'll take it, but my main focus has been on testing out failure in my paper trading account on Thinkorswim.

I've spent a fair amount of time watching youtube videos and reading online to get a better grasp of options trading before testing my skills with real money. Right now I'm mostly focused on making trades in that account and learning from it. My goal is to be able to add options trading to help build my portfolio and give me a little more leverage to earn bigger returns. Do you all have any good books or sites you would recommend to master the complexities of options trading?

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11 hours ago, Gourmand said:

My batting avg on options trades is Brad Ausmus replacement level, but I'm a simple newb with a meager account balance so I've only bought long calls and one or two puts. I I fucked myself not getting out of RKT the same day as I bought those calls, lesson learned. I did manage a successful long call trade on OPEN (and I should have held it longer since it didn't expire until mid Aprl) so I'll take it, but my main focus has been on testing out failure in my paper trading account on Thinkorswim.

I've spent a fair amount of time watching youtube videos and reading online to get a better grasp of options trading before testing my skills with real money. Right now I'm mostly focused on making trades in that account and learning from it. My goal is to be able to add options trading to help build my portfolio and give me a little more leverage to earn bigger returns. Do you all have any good books or sites you would recommend to master the complexities of options trading?

I also should have gotten out of my RKT trade same day, but I would’ve been in day trading jail for 90 days had I pullled the trigger.   I should have multiple times over the last week or two as well, but the damn thing would jump early in the morning or right at lunch only to finish right where it started.  Still think it could be ripe for swing trading/scalping during the day.  
 

TLRY is doing the same thing, but I have an inkling that it’s about to break out.  

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11 hours ago, Gourmand said:

I've spent a fair amount of time watching youtube videos and reading online to get a better grasp of options trading before testing my skills with real money. Right now I'm mostly focused on making trades in that account and learning from it. My goal is to be able to add options trading to help build my portfolio and give me a little more leverage to earn bigger returns. Do you all have any good books or sites you would recommend to master the complexities of options trading?

https://www.notion.so/Options-Starter-Pack-4d817a474aea413ca20a167d24b7928c

this book is free https://trading-volatility.com/downloads.html

the CME has a nice course and its also linked from first link

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been trying a new strategy of gradually peeling out of positions at different profit levels, like 10%, then 20%, then 50%, etc.

 

markets been really choppy so its a good way to capture profit when they're presented.  also having seen some short put positions have its margin requirement cranked up and cut into buying power, ive been doing more long options (where max loss = loss of premium = known).  and on these if i buy 5, 10, 20 contracts, ill incrementally sell out of them.

 

other thing im doing is chasing option flow, where i track how large derivative positions are traded and just follow it.  example i was bearish on AAL with long puts... position went slightly negative.  saw large bullish flows go into the calls.  closed my puts for slight loss, bougth the calls on friday.  sold them for 2x this morning.  (wouldve been 3x if i held on but gains are gains).   fundamentals dont even matter anymore

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1 hour ago, 52-80 said:

been trying a new strategy of gradually peeling out of positions at different profit levels, like 10%, then 20%, then 50%, etc.

 

markets been really choppy so its a good way to capture profit when they're presented.  also having seen some short put positions have its margin requirement cranked up and cut into buying power, ive been doing more long options (where max loss = loss of premium = known).  and on these if i buy 5, 10, 20 contracts, ill incrementally sell out of them.

 

other thing im doing is chasing option flow, where i track how large derivative positions are traded and just follow it.  example i was bearish on AAL with long puts... position went slightly negative.  saw large bullish flows go into the calls.  closed my puts for slight loss, bougth the calls on friday.  sold them for 2x this morning.  (wouldve been 3x if i held on but gains are gains).   fundamentals dont even matter anymore

Yeah, I have been profit taking today.  Nice 60% profit today based on the positions closed out.  Not 2 or 3 times, but still nice for short term holds.  Really would like to see IBRX take off swiftly this week and get out of the positions I have (5/21 expiry calls) to go into some LEAPs.

 

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Do you greek geeks play any Poor Man's Covered Calls and if so, what is your methodology for selecting the underlyings? Are you specifically looking at stocks you like, own, or follow or are you specifically targeting stocks with low implied volatility? I'm just paper trading this stuff right now, but I'm practicing with stocks I am familiar with in my portfolio. Most of these are growth stocks with higher implied volatility.  Is that a bad idea for a PMMC?

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i'm new to options trading, but i've been playing around with them over the past few months.

i'm doing it on robinhood, which has some obvious restrictions (depending on your acct type) but can someone tell me why some stocks are eligible for options trading, when others are just on a buy/sell basis?  obviously there are certain stocks that aren't on their platform at all, but every now and then, typically with lower priced stocks, i can't trade options.

i'll hang up and listen.

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13 minutes ago, henrygandorf said:

i'm new to options trading, but i've been playing around with them over the past few months.

i'm doing it on robinhood, which has some obvious restrictions (depending on your acct type) but can someone tell me why some stocks are eligible for options trading, when others are just on a buy/sell basis?  obviously there are certain stocks that aren't on their platform at all, but every now and then, typically with lower priced stocks, i can't trade options.

i'll hang up and listen.

https://www.investopedia.com/ask/answers/04/072104.asp

 lot of good info regarding options on that site

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12 minutes ago, henrygandorf said:

i'm new to options trading, but i've been playing around with them over the past few months.

i'm doing it on robinhood, which has some obvious restrictions (depending on your acct type) but can someone tell me why some stocks are eligible for options trading, when others are just on a buy/sell basis?  obviously there are certain stocks that aren't on their platform at all, but every now and then, typically with lower priced stocks, i can't trade options.

i'll hang up and listen.

for anything to be traded it just needs something to facilitate the trade, so something/someone to list and something/someone to provide liquidity.

the major options exchanges (like CBOE) have some requirements for a stock to be listed (just like a stock).  like has to be listed on popular stock exchange, has certain quantity of float, etc.  then market makers just (who are the actual direct counterparty for most retail transactions, NOT other traders) open up the chain.

so the reason certain stocks dont have options is...because they dont have options. 

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On 3/17/2021 at 5:43 PM, Gourmand said:

Do you greek geeks play any Poor Man's Covered Calls and if so, what is your methodology for selecting the underlyings? Are you specifically looking at stocks you like, own, or follow or are you specifically targeting stocks with low implied volatility? I'm just paper trading this stuff right now, but I'm practicing with stocks I am familiar with in my portfolio. Most of these are growth stocks with higher implied volatility.  Is that a bad idea for a PMMC?

its a small intersection of symbols with high enough vol to sell calls on, and low enough vol that you want to hold long term. 

something like that would be PLTR, or other more stable bluechips (msft, aapl), on the rare occasion their IV spikes up.  otherwise 1 short call contract for anything you hold underlying of, at a strike price where you dont really want the underlying called away, doesnt really net very much in premium

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So all my options are red right now, but since my earliest expiry is 5/21, I am not too worried yet.

However, I see opportunity, especially with UUUU and IBRX.  @Harrison Stafford, what would your strategy be here if you were playing options?

Also, interested to see if the Surly Illuminati think this margin shitstorm will be done by end of this week, or if this will continue rolling through the market.

 

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5 hours ago, PenelopeWitherspoon said:

So all my options are red right now, but since my earliest expiry is 5/21, I am not too worried yet.

However, I see opportunity, especially with UUUU and IBRX.  @Harrison Stafford, what would your strategy be here if you were playing options?

Also, interested to see if the Surly Illuminati think this margin shitstorm will be done by end of this week, or if this will continue rolling through the market.

 

I discontinued playing options because that special feeling of touching a hot skillet with a bare hand repeatedly left a mark.  No mas.  As I'm sure you know, roughly 80% of traders lose money in the options game.  Having said that, with the premium levels for both UUUU and IBRX, I would rather be a seller of calls than a buyer.

 

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On 3/23/2021 at 7:35 AM, 52-80 said:

its a small intersection of symbols with high enough vol to sell calls on, and low enough vol that you want to hold long term. 

something like that would be PLTR, or other more stable bluechips (msft, aapl), on the rare occasion their IV spikes up.  otherwise 1 short call contract for anything you hold underlying of, at a strike price where you dont really want the underlying called away, doesnt really net very much in premium

I write covered calls often. I typically shoot for a 1-2% return for the contract, 14-30 days out, and ~8-10% OOM. 
 

example I’m short FB 320 right now, 11 biz days to exp. if I sell at 320, fine with me for mid April. Ive also done well with QS, but had some called away. Thought about doing some QQQ covered calls as well today, but didn’t get to it. 

 

You don’t get rich quick this way, and it’s definitely irritating when they go against you.  But in my opinion worth trying.
 


 

 

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So just now getting into options...
Got some clf for April 23 and may 21and uuuu for January all calls fyi

Just in general what's the consensus on holding/selling timeline.

Smart to look at selling a week out or do ya gamble and hold until few days until expiry

Seen some reddit post holding to long and losing the gains.

I'm sure it's up to everyones risk tolerance and profit goals just looking for a general timeframe when others think of selling

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It really depends on the goal of your trade and the plan you have for it. If you don't have that, options will kill you., Know what price is your stop and what your profit goal is. 

Remember decay on your April and May calls. 

 

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i aim to close at 10%, 20%, 50% level.  you never go wrong taking a profit.

essentially all this being a vehicle of leverage, you can gain quickly, but you can also lose quickly.

i've closed early on things that would've  doubled, tripled, or more.  but i've also sat on things that swung up 33%, then go flat, then basically decay down to zero.  and if im really really lucky, they recover to recover to near flat again. 

if you are long options, just remember that (1) time is working against you [theta] and (2) if the stock goes against your strike price, the delta lowers, meaning when the stock price goes back in your direction, the benefit is less [gamma effect]

 

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i aim to close at 10%, 20%, 50% level.  you never go wrong taking a profit.
essentially all this being a vehicle of leverage, you can gain quickly, but you can also lose quickly.
i've closed early on things that would've  doubled, tripled, or more.  but i've also sat on things that swung up 33%, then go flat, then basically decay down to zero.  and if im really really lucky, they recover to recover to near flat again. 
if you are long options, just remember that (1) time is working against you [theta] and (2) if the stock goes against your strike price, the delta lowers, meaning when the stock price goes back in your direction, the benefit is less [gamma effect]
 
Gotcha...so shoulda sold when I was up 200%lol

Guess I just think clf has a chance to get over 25$ by the 23rd
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