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Creditspread

AEP - May '18 Exp. Put Vertical Credit SpreadTrade details: 65/60 Put Vertical Credit Spread @ $1.00 Prob. of Max Profit = 70.13% Prob. of Max Loss = 10.10% Break-even @ $64.00 119 D.T.E. Trade plan: Entry by oversold + support/resistance analysis Expecting $68.00 support level to survive possible test before earnings report next week for an uptrend continuation before May '18 expiration. Using longer duration for some more premium + allow for adjustment if trade goes very wrong. Expecting spread to expire worthless but will take early profit + place new trade with same bias around earnings if IV swells premium up enough to give a greater edge.
ALong
by AtoHoward
SOLD TO OPEN APRIL 15TH RUT/IUX 1025/1035 SHORT PUT VERTAfter closing the short put wing yesterday for a small profit and rolling the short call wing up and out a week for an additional credit, I'm selling a 1025/1035 short put vertical in the same expiry as the rolled out call wing to complete an April 15th 1025/1035/1105/1120 iron condor. I'm still playing a little bit with the percentage of max profit to either take the whole setup off or an individual wing off. Ordinarily, I take off the entire setup as a unit at 50% max profit, but I regard these short term setups kind of like scalps, so have been taking them off at lower profit percentages (money, take, run ... ). Filled for a 1.21 ($121) credit ... .
I
by NaughtyPines
BOUGHT TO CLOSE RUT/IUX APRIL 8TH 1050/1060 SHORT PUT VERTICALAlthough today's upmove was fairly slight, the move -- coupled with a bit of volatility weakness -- was enough to get me out of the short put side of this setup for about a $50/contract profit. That isn't great, but the put side was a rolled spread that was a bit close to current price, so I seized the opportunity to close it out here. I then proceeded to roll the short call side out another week and one strike higher and wider to the April 15th 1105/1120 for an additional .93 ($93) credit. I will probably match that up with an April 15th short put vertical or see if I can just exit the short call side in profit here in the next couple of days ... . The beginning of earnings season is upon us after all ... .
I
by NaughtyPines
GLD -- ROLLING OF SHORT CALL SPREADSSeveral weeks ago, I iron condored GLD on the notion that we would see some resistance around the 111 area. The short call spread of that original iron condor was 111/114. I stripped off the short put side at near worthless and also added to the position with a GLD 115/118 short call spread. Needless to say, 111 provided scant short-term resistance and now GLD is flirting with breaking 120. So currently I'm left with two troublesome short call spreads in the March 18th expiry -- a short 111/114 and a short 115/118. While there is still some time for these spreads to work out, I am not hopeful, particularly with the 111/114, so I figured I'd attempt to do some house keeping here ... . (Naturally, the ideal situation would be to wait for a substantial dip in price, since I will be rolling the short call spreads out and selling a short put side against for a credit that exceeds the cost of the roll ... ). What to do? The answer is to "putz with setups." So I proceeded to (a) look at what it would cost to roll out both of these spreads, improving each of them by a single strike (i.e., rolling the 111/114 to 112/115 and the 115/118 to the 116/119) in various expiries; (b) look at what it would cost to roll both spreads out, but improving only the strikes of the 111/114, also in various expiries; and (c) what I can get for credit for the sale of an oppositional short put credit spread against the rolled out positions. So, here's the plan I came up with after looking at all the possibilities: I'm looking to roll out the 111/114 up and out to the June 17th expiry 115/118 for a 1.07 debit and the 115/118 "sideways" or "as is" and out to the June 17th expiry for a .57 debit. This will essentially "merge" the two spreads into a single June 17th 115/118 short call spread. The total cost to roll these two spreads is 1.64 (assuming I can get a fill of both at these prices), which means that I will want to sell a short credit spread against these rolled out positions for something in excess of 1.64. The June 17th 111/114 (rather ironically, since this is what the short call side of my iron condor started out at) fits this bill, as it will bring in an .82 credit/contract. (Keep in mind that the 115/118 is now "times 2," since I'm going to be merging the March 18th 111/114 with the 115/118). The result will be a June 17th 111/114/115/118 GLD iron condor. Naturally, were this to be an "original" setup, it would be low probability and probably qualify as "horrible." The only way it completely works out at expiry is for price to magically settle between 114 and 115 (the short put and short call strikes, respectively). However, we these broken setups, the goal isn't to roll into an ideal 70%+ probability of profit setup, but rather to gradually mitigate loss and to slowly work it into a state where you an exit one side of the trade at or near max profit, and then to exit the other in the same state ... . Of course, sometimes it takes longer than you'd like. (A Side Note: I considered adding risk here on this up move with an additional short call spread above current price (e.g., an April 15th 129/130 GLD short call spread currently goes for a .35/contract credit), but thought the better of it, since the jury's still out as to whether it will break 120 ... ).
AMEX:GLD
by NaughtyPines
Spy Weeklys In the Money,At the Money or Out of the Money?Spy Weeklys In the Money,At the Money or Out of the Money? What strike price is the best to trade for max bang for the buck? First you have to get the direction right and assuming you did that next you have to decide which strike price is the best to play for max profit in a short time period. Attached is a chart that shows the SPY trades we followed over 2 weeks that we were mostly out of the money with one trade at the start the SPY 191.50 CALL bought at $2.00 then sold at $3.85 for a 90% profit. We noticed that the out of the money option were up around 200% in one day. So the at the money was profitable but the out of the money options were noticeably more profitable. During the following 2 weeks we followed mostly out of the money options with remarkable profits. On Thursday March 3 2016 we followed 2 options bought on Thursday when we got a bottom signal. They were out of the money options, one option was SPY Mar 11 201 CALL bought at $.90 that had a high for the day of $1.74 on Friday for a 90% profit. We usually follow options with at least 2 full trading days to expiration to allow time for the option time to play out. But on Thursday we decided to also followed an out of the money option with less than 2 days to expiration which we called The Gambler it was a SPY Mar 04 200 CALL bought at $.40. We decided on the 200 strike because we wanted something that was out of the money but had a chance of getting in the money. It got to $1.36 for a high and a 240% profit. The bottom line is the out of the money options apparently have the greatest profit potential but you have to be aware of the risk involve especially as you approach expiration and the accelerated time decay on Thursday and Friday the week of expiration RISK DISCLAIMER Options involve risks and are not suitable for everyone. Option trading can be speculative in nature and carry substantial risk of loss. Only invest with risk capital. topandbottomtradesignals.net
AMEX:SPY
by GIFTEC
FXE/EURUSD -- WATCHING FOR THE SAME THING AS BEFOREOkay, okay, okay ... . So I've griped on occasion about trading FXE as the EURUSD proxy (no volatility, not good for premium selling, blah blah blah). But I can't help but think that I might get an another opportunity to short FXE on one of these weak dollar/risk off spikes. We're three points away in FXE, so I might get a shot ... . Keep an eye on the long-term horizontal resistance at between 112 and 113 and erect short call verticals with strikes clear of that level if we get there (e.g., 113/116, 114/117), assuming you can get a decent credit to do so ... .
AMEX:FXEShort
by NaughtyPines
GLD MARCH 18TH 115/118 SHORT CALL VERTICALSelling on strength here ... . March 18th 115/118 short call vertical Probability of Profit %: 78% Max Profit: .41/$41 contract Buying Power Effect: $259/contract Notes: I already have a GLD iron condor on, so I couldn't get the exact strikes I wanted (since I already have a 111/114 call vertical in GLD in the same expiration), so you could probably go with a more aggressive spread (e.g., 114/117). But the spread I filled is in one of the general strength areas I wanted to sell into ... .
AMEX:GLD
by NaughtyPines
OPTIONS TIP: MANAGING MULTIPLE, SINGLE INSTRUMENT SETUPSAt this point in time, I've got a goodly number of SPY iron condors on both in time by expiration and layered on in the March 18th expiry. (I also have an April SPY iron condor on that I'm managing "dynamically" by rolling the wings in toward current price when the value of the short option approaches worthless). As you may know, iron condors are made up of two parts -- a short put credit spread and a short call credit spread. The short put credit spread generally has a positive delta value associated with it; the short call spread, a negative. As price moves toward a short put spread, its positive delta increases; as it moves toward a short call credit spread, its negative delta increases. If you have multiple setups on in a single instrument, your platform should show you what the net delta for all of those setups is. With credit spreads, a positive number indicates a skew toward the short put side; a negative number, toward the short call side. But what do you do with this number? If it's negative, for example, do you put more long delta on (i.e., sell short put credit spreads); take off short delta (i.e., buy back short call spreads), or roll long delta short put spreads toward current price? You can naturally look to put on short put credit spread(s), as long as that makes some objective sense and/or roll up short put sides toward current price in order to balance, but my preference for multiple setup arrangements -- particularly with setups layered on in a single expiry -- is to take off spreads to balance delta, particularly where my plate is full over expiries and within expiries such that adding additional risk (and clutter) is ill-advised. Ideally, in an "onioned", layered on arrangement with spreads at different strikes, you can pick and choose the spreads that it makes the most sense to do this with (the spreads that are at or greater than 50% max profit). You can always put these spreads back in after you profitably "thin the herd" and when price moves in the direction that makes doing that favorable (sell on strength/buy on weakness).
FX:SPX500
by NaughtyPines
SVXY -- SHORT VOLATILITY PLAYIf you know anything about volatility products, you'll know that -- unlike VXX and UVXY, SVXY increases in value as volatility declines (it's an inverse) and suffers from "inverse contango" which ultimately means that, over time, SVXY's value will go to infinity in the absence of backwardation, splits (it's undergone two since inception -- a 2/1 in 2012 and a 2/1 in 2014), or a massive increase in volatility, which could arguably reduce its value to zero in fairly short order. For purposes of this play, however, you need not fret about the long term effects of "inverse contango" and "backwardation" -- all you need to really know is that as volatility declines, SVXY rises. At this point in time, we're at a fairly significant low in SVXY, and I'm betting on volatility contracting somewhat over the next 40 days or so such that SVXY finishes clear of my 35 short put strike at expiration or at a price that allows me to take the trade off for 50% max profit prior at some point between now and then: Feb 26th 30/35 short put vertical Probability of Profit %: 55% Max Profit: $201/contract Buying Power Effect: $299/contract Break Even: $32.99 Naturally, if volatility does not contract such that price moves above my short strike, I'll roll the setup for duration and credit.
CBOE:SVXYLong
by NaughtyPines