Since the "Let's Trade Options!" thread is basically no longer active (I'll miss ya, TF), I thought I would continue with my options postings here so that I have someplace to post.
1. The old "Let's Trade Options!" thread has a ton of stuff of in it, some of it quite good. However, you're going to have to wade through a massive number of posts to get the nuggets. As an alternative, go to TastyTrade and start watching videos. The "Where Do I Start" (WDIS) videos are excellent for general background knowledge as to how options work, as are the "Market Measures," and "Anatomy of a Trade" series ... .
2. Unlike the "Let's Trade Options!" thread, I'm not going to be focusing a great deal of VIX/VIX derivative instruments. I do play them from time to time, but they don't occupy a core position in my portfolio; my two cents is that they probably should not be occupying a core position in yours either. They're finicky, particularly the derivative instruments that suffer from "contango," and if you don't have a full grasp on how these mean-reverting instruments behave, it's best that you avoid them.
Moreover, from a more practical perspective, these instruments were designed as "insurance" for long positions, to hedge against a market downturn. There's absolutely no point in using them for that purpose if you're able to hedge a bullish SPY spread with a bearish SPY spread, which you are allowed to do (i.e., an iron condor). Taking a long call VXX position to hedge your SPY short put credit spread is also capital inefficient, since you're invoking buying power once with the VXX position, and then a second time with the index spread. Hedging a SPY short put spread with a SPY short call spread uses as much buying power as a single-sided spread (assuming they're of equal strike width), so I can't see the benefit of using VIX or VIX derivative options in this manner for the ordinary retail trader.
Rather, my bread-and-butter trades are options setups in the indices, like RUT, SPX, and NDX and in individual underlyings where they are "ripe for play" (ordinarily around earnings announcements). That being said, I do look at where the VIX is at on a daily basis, since it can inform my decision of whether to pull the trigger on a premium selling play in a broad index instrument.
Naturally, however, I can see the tremendous "sexiness" of some these trades, for example, in UVXY or SVXY (oh, the moves ... ), so if you've got ideas for those, feel free to post them. Everyone is free to look at any given trade and either pull the trigger themselves or to say "not my cup of tea."
4. You Won't See Many Flies Here, Either. To me, "flies" have a particular, rare purpose that I virtually never take advantage of, since it requires that certain things happen during the life of a setup that are generally highly speculative as to timing and/or depth of movement and consequently have low probability metrics (in other words, I've been frustrated by flies in the past); I utilize them occasionally, but usually only in the form of an "iron fly" which, for one reason or another, I've been forced into due to price action during the life of a setup ... .
5. ... Or "Naked Longs." Most traders who use options are using them as a leveraging tool and use a "naked long" option (long call or long put) to play directional movement in the underlying. There are various problems with that methodology which I won't go into here, but I primarily focus on credit spreads, iron condors, and short strangles for all my plays. However, you're perfectly free to post a "naked long" trading idea here if you think it might be useful to someone ... .
6. Charts Might Be Helpful, But Not Required (Depending on the Trade). For the type of trader that I am (nondirectional), charts are virtually a useless tool and sometimes can actually bias my setups. The signal (if there is one) for me to pull the trigger on a trade is "implied volatility rank" (IVR) and/or "implied volatility" (IV), so you'll see me throwing "IVR" and "IV" around quite a bit ... . To me, all the other stuff (indicators, candle patterns, Elliott Wave) is just noise that I don't want in my premium selling trading head ... . (To be clear, I do scalp /ES on occasion; I do that in the same way I used to scalp spot, but with a couple of little twists peculiar to the stock markets (e.g., TICK)).
That being said, every so often I do take a "directional trade." For example, post-Brexit, there was a ton of stuff that just said "Trade me directionally" -- EFA, EWU, EWG, TBT, etc. ... . In that case, I will gander at a chart, 'cuz, well, it's a directional trade ... .
7. I used to trade a ton of spot, so you'll find me dabbling in "spot proxies" from time to time (e.g., FXE, the Euro proxy). However, there are literally a ton of spot forex forums here (it is, after all, called "ForexFactory"), so post spot forex setups in one of those forums unless there's some kind of options play that can be derived from it (there aren't many; most of the currency proxies are not that great from an options trader's perspective).
8. Trade Sizing is Peculiar to You. Most of the setups I've posted in the past are "one contract" setups. In reality, I use a different number of contracts that is peculiar to my risk tolerance and account size. Risk management in trading options is just as important as that for trading spot. As a general rules of thumb, keep the max loss metric of your trades to 5% of your total account size and attempt to keep 50% in cash at all times (a rule that I mildly violate on occasion depending on the instrument and market conditions).
9. I'm Not Running a Signal Service. The trades I make are my trades. You are free to copy them or not. When and if you copy them, they become "your trades"; you own them.
Some trades I make because I have different things in my portfolio I'm trying to hedge or do something with, so they may not be good "original" setups to play, and I'll try to point those out when I'm doing that.
However, the vast majority of premium sellers are doing the exact same, statistically based premium selling setups at exactly the same time in certain market conditions because the options model is the same for you, me, and the next guy; the Aug SPY 75% probability out-of-the-money call is the same for everyone at the same time ... . In that sense, my setups are hardly "original" just as the guy who's shorting EURUSD from 1.14 isn't putting an "original" idea out there; everyone's shorting that level ... .
10. I'll Critique Your Trades If You Want, But You Need to Do Your Own Homework. Homework takes time, and no one likes to do it. However, I'm not running a class; I'm just posting ideas ... .
11. Brokers. Interactive Brokers, TDA, OptionsHouse ... . There may be others. I like TDA's ToS platform for some things; TDA affiliate Dough's platform for others ... .
12. This is Not a Binary Options Thread. There are no doubt binary options threads somewhere in the Forums section. Please post any of your ideas regarding binary options in those threads.
1. The old "Let's Trade Options!" thread has a ton of stuff of in it, some of it quite good. However, you're going to have to wade through a massive number of posts to get the nuggets. As an alternative, go to TastyTrade and start watching videos. The "Where Do I Start" (WDIS) videos are excellent for general background knowledge as to how options work, as are the "Market Measures," and "Anatomy of a Trade" series ... .
2. Unlike the "Let's Trade Options!" thread, I'm not going to be focusing a great deal of VIX/VIX derivative instruments. I do play them from time to time, but they don't occupy a core position in my portfolio; my two cents is that they probably should not be occupying a core position in yours either. They're finicky, particularly the derivative instruments that suffer from "contango," and if you don't have a full grasp on how these mean-reverting instruments behave, it's best that you avoid them.
Moreover, from a more practical perspective, these instruments were designed as "insurance" for long positions, to hedge against a market downturn. There's absolutely no point in using them for that purpose if you're able to hedge a bullish SPY spread with a bearish SPY spread, which you are allowed to do (i.e., an iron condor). Taking a long call VXX position to hedge your SPY short put credit spread is also capital inefficient, since you're invoking buying power once with the VXX position, and then a second time with the index spread. Hedging a SPY short put spread with a SPY short call spread uses as much buying power as a single-sided spread (assuming they're of equal strike width), so I can't see the benefit of using VIX or VIX derivative options in this manner for the ordinary retail trader.
Rather, my bread-and-butter trades are options setups in the indices, like RUT, SPX, and NDX and in individual underlyings where they are "ripe for play" (ordinarily around earnings announcements). That being said, I do look at where the VIX is at on a daily basis, since it can inform my decision of whether to pull the trigger on a premium selling play in a broad index instrument.
Naturally, however, I can see the tremendous "sexiness" of some these trades, for example, in UVXY or SVXY (oh, the moves ... ), so if you've got ideas for those, feel free to post them. Everyone is free to look at any given trade and either pull the trigger themselves or to say "not my cup of tea."
4. You Won't See Many Flies Here, Either. To me, "flies" have a particular, rare purpose that I virtually never take advantage of, since it requires that certain things happen during the life of a setup that are generally highly speculative as to timing and/or depth of movement and consequently have low probability metrics (in other words, I've been frustrated by flies in the past); I utilize them occasionally, but usually only in the form of an "iron fly" which, for one reason or another, I've been forced into due to price action during the life of a setup ... .
5. ... Or "Naked Longs." Most traders who use options are using them as a leveraging tool and use a "naked long" option (long call or long put) to play directional movement in the underlying. There are various problems with that methodology which I won't go into here, but I primarily focus on credit spreads, iron condors, and short strangles for all my plays. However, you're perfectly free to post a "naked long" trading idea here if you think it might be useful to someone ... .
6. Charts Might Be Helpful, But Not Required (Depending on the Trade). For the type of trader that I am (nondirectional), charts are virtually a useless tool and sometimes can actually bias my setups. The signal (if there is one) for me to pull the trigger on a trade is "implied volatility rank" (IVR) and/or "implied volatility" (IV), so you'll see me throwing "IVR" and "IV" around quite a bit ... . To me, all the other stuff (indicators, candle patterns, Elliott Wave) is just noise that I don't want in my premium selling trading head ... . (To be clear, I do scalp /ES on occasion; I do that in the same way I used to scalp spot, but with a couple of little twists peculiar to the stock markets (e.g., TICK)).
That being said, every so often I do take a "directional trade." For example, post-Brexit, there was a ton of stuff that just said "Trade me directionally" -- EFA, EWU, EWG, TBT, etc. ... . In that case, I will gander at a chart, 'cuz, well, it's a directional trade ... .
7. I used to trade a ton of spot, so you'll find me dabbling in "spot proxies" from time to time (e.g., FXE, the Euro proxy). However, there are literally a ton of spot forex forums here (it is, after all, called "ForexFactory"), so post spot forex setups in one of those forums unless there's some kind of options play that can be derived from it (there aren't many; most of the currency proxies are not that great from an options trader's perspective).
8. Trade Sizing is Peculiar to You. Most of the setups I've posted in the past are "one contract" setups. In reality, I use a different number of contracts that is peculiar to my risk tolerance and account size. Risk management in trading options is just as important as that for trading spot. As a general rules of thumb, keep the max loss metric of your trades to 5% of your total account size and attempt to keep 50% in cash at all times (a rule that I mildly violate on occasion depending on the instrument and market conditions).
9. I'm Not Running a Signal Service. The trades I make are my trades. You are free to copy them or not. When and if you copy them, they become "your trades"; you own them.
Some trades I make because I have different things in my portfolio I'm trying to hedge or do something with, so they may not be good "original" setups to play, and I'll try to point those out when I'm doing that.
However, the vast majority of premium sellers are doing the exact same, statistically based premium selling setups at exactly the same time in certain market conditions because the options model is the same for you, me, and the next guy; the Aug SPY 75% probability out-of-the-money call is the same for everyone at the same time ... . In that sense, my setups are hardly "original" just as the guy who's shorting EURUSD from 1.14 isn't putting an "original" idea out there; everyone's shorting that level ... .
10. I'll Critique Your Trades If You Want, But You Need to Do Your Own Homework. Homework takes time, and no one likes to do it. However, I'm not running a class; I'm just posting ideas ... .
11. Brokers. Interactive Brokers, TDA, OptionsHouse ... . There may be others. I like TDA's ToS platform for some things; TDA affiliate Dough's platform for others ... .
12. This is Not a Binary Options Thread. There are no doubt binary options threads somewhere in the Forums section. Please post any of your ideas regarding binary options in those threads.
Fireworks are fun ... as long as you don't blow your fingers off.