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Vega Crush Candidates
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Vega Crush Candidates

by The MoleMay 4, 2016

The first round of our IV crush earnings plays was a resounding success and as there’s about a week’s worth of announcements left in this quarter we are pumped and ready for a second helping. If you’re new to options then I suggest you point your browser to to the first three posts in our ongoing tutorial series on option theory. Once you develop a basic understanding of what we are doing and how, selling volatility ahead of earnings announcements may become another profitable tool in your trading arsenal.

If you are a noob to options but want to shadow our campaigns with real coin then we recommend that you only take out one single position as to keep your exposure as minimal as possible. This way, if you somehow screw something up, e.g. place the wrong strikes or the wrong months, the damage should be minimal. When in doubt ask away in the comment section – both Jay the Option Executioner as well as yours truly will be happy to answer any questions you may have.

Alright, so let’s introduce our latest victims – starting with Alibaba.

Alibaba

Symbol: BABA
Strategy: Limping Condor
Idea: Sell inflated pre-earnings IV.
When To Enter: Before 5/5 earnings announcement.
When To Exit: After earnings announcement OR we hold through expiration if there is little IV movement.
Strategy Details:

 Action  Strike Type  Premium  Price
Buy 1 20th May $69.00 Put $0.58 -$58.00
Sell 1 6th May $70.50 Put  $0.44  $44.00
Sell 1 6th May $80.50 Call  $0.59  $59.00
Buy 1 20th May $82.00 Call  $0.75  -$75.00
Net Debit   -$30.00

2016-05-04_BABA_details

Initial outlay: $30 (net debit)
Maximum risk: $182 at a price of $54.25 at expiry
Maximum return: $181 at a price of $80.50 at expiry
Break/evens at expiry: $84.30, $67.90

2016-05-04_BABA_IV

Considerations: BABA’s earnings come out tomorrow morning and front month IV is running almost double HV. With HV at a very low level of 18%, even double the normal volatility should easily fall within the short strangle part of our LC (the short call and put). In this case, we’re leaning towards the LC (as opposed to the Double Calendar) because this strategy has a superior payoff in the event the stock does very little on expiration. If BABA doesn’t move post earnings, the strategy will still collect nearly $70 (on just a $30 initial outlay).

Mobileye

Next on the crushing platform is Mobileye, a company that develops vision-based advanced driver assistance systems providing warnings for collision prevention and mitigation. Not that I care, for me it’s just another symbol to be manhandled.

Symbol: MBLY
Strategy: Limping Condor
Idea: Sell inflated pre-earnings IV.
When To Enter: Before 5/5 earnings announcement.
When To Exit: After earnings announcement OR we hold through expiration if there is little IV movement.
Strategy Details:

 Action  Strike Type  Premium  Price
Buy 1 20th May $31.50 Put $0.57 -$57.00
Sell 1 6th May $33.00 Put  $0.38  $38.00
Sell 1 6th May $40.00 Call  $0.33  $33.00
Buy 1 20th May $41.50 Call  $0.48  -$48.00
Net Debit   -$34.00

2016-05-04_MBLY_IV

Initial outlay: $34 (net debit)
Maximum risk: $185 at a price of $20.80 at expiry
Maximum return: $111 at a price of $40.00 at expiry
Break/evens at expiry: $42.05, $31.40

2016-05-04_MBLY_IV

Considerations: MBLY’s earnings (tomorrow) have also created an extreme gap between IV and HV – almost as much as a 30% difference.  Once again, we like the LC payout in the event of a boring earnings results.  A non-move would pay about $50 on an initial outlay of just $32.  Because MBLY’s volatility environment (both HV and IV) are a bit higher relative to most other stocks, we’re going a bit more conservative on this LC. We used the straddle price plus $0.50 on each side to determine our short strikes (normally, we just use the straddle price by itself).  Just a note about max risk – it should equal the difference between the short and long strike (in this case 1.5 or $150) plus the initial outlay ($34), or $184 total (giver or take a $1 due to rounding).

 


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • rmwaddelljr

    How crucial are the premiums on these strikes? + or – a little?

  • The Options Executioner

    It’s the relationship that matters most – the actual premiums can vary a bit. As long as the distance between the spot price and strikes remains constant to the examples above, the premiums shouldn’t vary all that much – a few cents here or there in most situations.

  • http://greenlander1.blogspot.com/ Greenlander

    De puta madre! 🙂

  • http://greenlander1.blogspot.com/ Greenlander

    Long SPY 204.9 based on hourly divergence and low sellling vol

  • http://greenlander1.blogspot.com/ Greenlander

    Shorting TVIX too here

  • Tomcat

    $BABA 82 strike for May 20, is going for .58 or so

  • Time Bandit

    Mole, I was just fooling around with the TOS ‘Risk Profile” on BABA. I think you can put this in as one trade on TOS and only pay one transaction cost plus the price of each contract. I used a Double Diagnal and lined the puts and calls up to do this because there is nothing that lines up with “limping condor”. 🙂

    This looks like a good setup but I probably wont take the trade because I have my hands full with what I’m already doing. However, I wanted to mention about trying to make this as one trade at entry for people who are new to the game to try avoiding the 4 individual trade costs.

  • The Options Executioner

    Yes, it’s definitely a double diagonal, but limping condor was so much more colorful!

    Thanks for pointing that out, as it’s definitely vital to make it as one trade and not have to expand commission costs more than necessary. I should have mentioned that somewhere so I appreciate the comment.

  • The Options Executioner

    Looks like the call skew shifted down pretty dramatically this morning since we recommended the trade. You can still use the same strikes, except both the the long and short call strike will be about 15-20 cents cheaper. As long as they both move together like that, it’s not going to change the risk/reward profile much at all.

  • http://greenlander1.blogspot.com/ Greenlander

    Thanks TB for the tip.

    Jay, commissions aside would you say the fills are as good if you are trying to do a double diagonal vs legging into each chunk of the diagonal, i.e. buying in 4 transactions, 2 sets of calls and 2 sets of puts?

  • http://evilspeculator.com Sir Mole III

    Yup exactly – that’s actually how I price it as well. Limping condor is our own nickname and you won’t find it in TOS 😉

  • http://evilspeculator.com Sir Mole III

    Guys – in general it’ll be difficult to time those option setups perfectly as the premiums as well as the IV changes constantly. Eventually we’ll make it a service and if you’re a sub you’d receive an email as soon as we price a setup. The posts will be for confirmation.

  • Time Bandit

    I would be interested to see what Jay has to say about this.

    But my answer would be it depends on the volume of the options in question and the spreads between bids and asks. Also it would depend on the number of contracts you do. If you are only doing one contract per leg then doing individual legs becomes relatively expensive. But if you are doing multiple contracts then the individual tranaction costs become less per leg keeping in mind that you still have to pay the same price per contact no matter the number of legs it takes to fulfill the entire trade.

  • http://greenlander1.blogspot.com/ Greenlander

    Trimmed back longs and will take another stab if we have another day like today tomorrow. Close needed a little more umph.

  • Time Bandit

    I wound up flat on the day thanks in part to a mistake made this morning otherwise I would have been up today. I’ve made five mistakes in my last 80 trades and need to improve this stat to five mistakes or less out of a 100 trades before I can increase my size to the next level.

    I’d like to have 0 Mistakes out of a 100 but being human and all . . . 🙂

    Catch y’all in the AM

  • Billabong

    BIS continues to be the canary in the coal mine. It’s a gift that keeps on giving … LOL

  • http://evilspeculator.com Sir Mole III

    bank for international settlement?

  • Yoda

    Ultra short Biotech ETF

  • http://greenlander1.blogspot.com/ Greenlander

    Excluding commission, mine came to $42 cost/ double diagonal

  • http://evilspeculator.com Sir Mole III
  • Round we go

    stoner roadmap. sorry to be on edge but only those who ever commit to a trade enough to load the boat short, can relate. I am tired of hearing about how you tanked an account in the past shorting. but if you did it in election years, you wouldn’t have those stories.

  • Time Bandit

    Hope it works out for you Greenlander. Please let us know how you make out.

  • Time Bandit

    Just closed my Short GBP/JPY and booked +1.8 R. After the last decent downstroke on April 29th it’s been kind of drifting in and out of sleep. I’ll take another look at it tomorrow.

  • http://greenlander1.blogspot.com/ Greenlander

    Yeh just doing this for educational purposes. This sort of thing is a lot more complex than the simple spreads I have been using

  • Time Bandit

    I found the most difficult thing about complex option strategies is closing them out properly and this could be an education all by itself.

    BTW, I paid a lot of $ tuition trying to learn the option market. I think it’s the toughest market of them all.

  • BKXtoZERO

    So where is that LOSER Douche bag BKKtozero? Hey guys…. I am still sitting on an underwater short position. I ignored the “Words to the wise” section of mole’s posts and look where that got me. Anyway, as some of you know I was really busy with my house. I was busy with work too and my wife was hating my guts for trading on top of everything else…… then, there were you guys….. some of you guys busting my balls here. Not whining but will say hanging w/ real traders was constant pressure and was kind of too much with all else combined. So…. I fell back into my old rut of building a position and sitting on it. So, no Friday reports, not much to report. Just checking in from Chicago Ohare to say hello. Perhaps I’ll be active again at some point but I’ve actually been enjoying my time away. I clearly needed a vacation from trading and most other things too and perhaps this was not the best way to do it but oddly I don’t miss it. As much as I applied myself and did some decent active trading, it just wore me down. I am also putting together a website to publish my research on ENS “Empty Nose Syndrome” which I unfortunately have. I’ll be around at some point. Later dudes and dudettes.

  • BKXtoZERO

    actually I miss hanging with you guys…..! just don’t miss the pressure. didn’t mean to sound jack assed………

  • Time Bandit

    Almost everyone here except for Mole has taken a break from the blog for awhile at one time or another. Hope you’ll come back.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    ERY 3x fund, tricky little bugger.
    hit 50% and pulled back.
    😉

  • Time Bandit

    I’ve been charting XLE and trading ERY. Must be Putin or the ME or the Natives blowing darts at the pipelines in Nigeria pushing crude up today. I’m getting whacked a little this AM but that’s part of the game. My stop on ERY is based on XLE trading above 66.52 at 1:30 PM or 3:55 PM. (4 Hour)

  • mugabe

    Interesting recovery in utilities – I saw people saying it was dead due to sector rotation into riskier sectors, but now v near all time high again.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    $66 is a tough spot.
    while the RSI is above 50, price could hover sideways for a long time.
    look at Oct/Nov last year.

    http://stockcharts.com/h-sc/ui?s=XLE&p=D&yr=1&mn=0&dy=0&id=p17959494094

  • phantomflash

    How about this alternate nickname: “calendar condor”?

  • Billabong

    This whole oil thing is hilarious … The only place left globally with storage capacity is the US … Pre-mkt CL +2 (short squeeze?)

  • phantomflash

    P.S. Bought both of these yesterday and they are profitable in aggregate. Even though I came out ahead last time, after reading your results it seems I left money on the table, closing one or both of them out too early, so I’m letting them both sit. I see the gains still increasing gradually.

  • Time Bandit

    Just a different lens.

    I use ATR Multiples for my stops and have found this method to be the best fit for me.

  • http://evilspeculator.com Sir Mole III

    Possible bullish divergence on the Zero…

    .

  • http://evilspeculator.com Sir Mole III

    That’s actually not a bad approach. What is your average range?

  • http://evilspeculator.com Sir Mole III

    ” I am still sitting on an underwater short position”

    Stopped reading there so that I don’t have to pop another Zoloft. “Underwater” is weasel speak for trading without a plan and worse – unable to accept the consequences. The worst thing that can actually happen to you is that the market turns back into your favor, thus serving to ingrain bad trading habits into future behavioral patterns.

  • http://evilspeculator.com Sir Mole III

    Reading BKX’ comment above and considering how much time/effort was spent here guiding him into the right direction makes me want to take the rest of the year off. I can appreciate the reasons why Scott left. He told me in pretty certain terms that I am wasting my time and that I should just focus on my own trading. That day may come – although I myself would miss the community I have built over the past eight years. But yes, I myself often feel the burn. I lot of my life energy has gone into building this place but sometimes I feel like Don Quixote.

  • Time Bandit

    The multiple varies with the time frame and the actual vehicle being charted and traded. On my XLE 4 Hour Chart it’s 5 Period 1.75X. Overall, I’ve found a 5 Period Range works best for me.

  • http://evilspeculator.com Sir Mole III

    Why don’t you just use a fraction of the daily? A bit more conservative but bear in mind that the cyclical nature of the sessions will affect your output.

  • http://greenlander1.blogspot.com/ Greenlander

    Went long SPY on the dip this morning

  • http://greenlander1.blogspot.com/ Greenlander

    Decent positive divergence but not counting out another dip to flush people out before potentially setting a short term bottom

  • Billabong

    Consider all the people you helped, with many doing great things in the trading realm, versus the few that come by and just don’t get it. It always that one horrible driver on the road that causes multiple people to border on road rage throughout the day.

  • http://greenlander1.blogspot.com/ Greenlander

    Mole/ Jay, question on the BABA double diagonal. This is pretty new to me having to monitor all these positions at the same time but what would be your thoughts here? Are there conditions where you might close out the 80.5 call which we are short on?

    short positions – may 6
    The 70.5 put is toast
    80.5 call is losing value (this seems to be the critical piece)

    long positions – may 20
    69 put is toast
    82 call is a lil bit up

    Thanks

  • http://greenlander1.blogspot.com/ Greenlander

    This sounds like an obvious rookie issue but evaluating the benefits of strong theta burn , i.e. within the 1-2 days to expiry vs being right next to the strike and having things potentially swing in the wrong direction is something I would like to hear thoughts on

  • Time Bandit

    Thanks, but to be totally honest, one of the primary things I’ve ever wanted to accomplish in my trading over the past 18 years was to be “consistently” successful.

    Since October 19th, (Apx. 7 Months), and over the last 80 Trades, I’ve been pleasantly surprised with my results. My APE is .48, SQN is 2.52 and my SQN 100 is 2.80. So I don’t want to change anything that I’m doing. 🙂 BTW, I learned how to measure my performance and what these measurements mean here. I’ve also learned how to put everthing together (some of what I already knew and some that I didn’t) from the vast smorgasbord of knowledge that the Evil Speculator provides. So everything that goes on here does not fall on deaf ears and there are quite a few of us that have taken advantage of the opportunities to learn.

  • http://greenlander1.blogspot.com/ Greenlander

    Another qustion, how did you go about setting the strikes and expiration dates? Also is Ivolatility the preferred site to find stocks w inflated IV?

  • http://greenlander1.blogspot.com/ Greenlander

    The location of the strikes is a function of actual volatility? Like if vol was expected to be super low you woukd set strikes right ATM for double calendar?

  • tandaradei

    Would love to hear the answer to that as well. I closed out the short put since it went to 0 already. I’m waiting till tomorrow for expiry to burn out the short call, but I gotta say – there are so many moving parts in thinking how the value of the entire construct changes it’s making my head spin.

  • Time Bandit

    Just took a 20 Tick Scalp of /ZL.

    I’m trying to move my trading from a 30 Minute chart to a 3 Hour Chart on this one. But by doing so my stops and initial risks become higher (but so does the potential gains). The problem is that the 3 Hour Short was already long on the tooth so with price being jiggy over the past couple of days, it was wham, bam, thank you, mam. 🙂

  • mugabe

    I can undestand that – if it ain’t broke, don’t fix it:)

  • mugabe

    It’s also consistent, I think, with your whole approach which is based on volatility.

  • Time Bandit

    Funny thing is that I never really thought much about the volatility built into my stops but now that you mention it, an average range measuring movement uses volatility to change the ATR. If there was no volatility, the ATR would always be constant. Good point.

  • mugabe

    happy to reveal your own system to you, lol

  • Time Bandit

    Left some on the table with this one as it continued to drop another 20 Ticks at $6 per Tick.

  • Yoda

    Think about all those you have helped throughout the years and who now quietly and consistently bank coin thanks to your guidance. I for one am so grateful to you for all that I have learned here in the years that I have been reading this site. Thank you Mole for your commitment and patience. Do not quit because of a few bad apples as the orchard is strong and bearing healthy fruits. This is the best trading blog on the net by far and it would be a real pity if it were to close down. Myself, I would likely not be trading without your assistance and the tools you have created.

  • http://evilspeculator.com Sir Mole III

    In case anyone is wondering – I feel a bit under the weather lately (burn-out) and don’t have a post in me today. I’m doing a bit of coding instead which at least doesn’t require multi-tasking (or a sense of humor).

  • http://evilspeculator.com Sir Mole III

    If we hold VWAP in the coming hour or so then we may see a punch higher.

    .

  • http://greenlander1.blogspot.com/ Greenlander

    The tricky thing is that max value of this trade is if price ends up at 80.5 precisely where Id be worried about the May 6 call landing ITM.

  • http://evilspeculator.com Sir Mole III
  • http://evilspeculator.com Sir Mole III

    I think I can hear an echo in here – you lazy bastards!!

  • http://evilspeculator.com Sir Mole III

    I would agree – you seem to be golden. Don’t change a thing.

  • tandaradei

    Ok, closed out the calls – not much theta left in the short leg and the BABA chart doesn’t exactly scream ‘higher’.

    So for now the tally for the trade is a 7$ loss – I paid almost twice the premium than Jay showed in hist post and I probably messed up the strike placement, but was wondering how this game plays.

    Only the long put left, but since its worth like 7$ now might as well keep it as a lotto. The moral of the story – this is a lot harder than it looks 🙂

  • http://evilspeculator.com Sir Mole III

    I can sense that constructive advice is not highly valued if it hurts feelings 😉

  • tandaradei

    Still admire your german work ethic. I’m a lazy polish ass myself.

  • Yoda

    nice one

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    Spoos 5m put me to sleep.
    up, down, up down, up down..

  • Yoda

    Effin’ unsecured Millennials.

  • The Options Executioner

    Lots of great questions, so let me start working my way through them. iVolatility is a great site to look at IV and HV data – you have to pay for advanced screeners but if you just want to peruse vol data for free, there’s plenty of good info there.

    We pick the short strikes based on the price of the ATM straddle. In my experience, the straddle price is an excellent metric to estimate risk. I like to go 1.5 out on the long strikes, but that can vary depending on the pricing structure of the particular chain.

    In terms of expiration dates, we shoot for the front month and then 2 or 3 weeks out, we’ve used both so far. The risk parameters are pretty close on 2 or 3 weeks, so really it’s just a matter of personal preference.

  • Yoda

    Don’t know if we gonna get a trending move today given the NFP numbers due tomorrow.

  • The Options Executioner

    Picking the short strikes is a function of volatility (implied more than historical) but using a Double Diagonal (Limping Condor as we call it) versus a Double Calendar is really a matter of risk preference. I like DDs because they pay a bit more on a non-event and the initial outlay tends to be lower (although margin can be a factor).

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    that’s explains a lot.

    ..for today
    never jump a single 5m candle in a quiet session. IMHO.

  • The Options Executioner

    Excellent question. I want to answer this generally because frankly, management of complex strategies is really a matter of style more than anything else. I personally do not believe in closing out legs of a trade early in most situations. I like to have very defined risk parameters at all times. If I’m going to change a strategy (pretty much only in a losing scenario) then I will roll the whole thing up/down or out. There are some rare circumstances where I may close the shorts and let longs ride – but it doesn’t happen often. To me, the only question on a winning trade is whether to take profits early or let it ride until expiration to potentially capture more gains.

  • Jay Thomas

    I have been lurking here for several years. You, Mole, have changed my life. Granted, finances is not a large part of my life, but I was floundering, wading through a sea of retail rat droppings. I don’t have time to be a day trader, but the principles apply to longer term trading as well (~25 trades per year), and I have applied many of the principles with success. I am still learning, but I have not found anywhere else that gives us the real dope. Now, just to make sure your ego doesn’t get too big, I’m still better looking than you. Thanks, man.

  • The Options Executioner

    Interesting that your premiums were that much higher. It shouldn’t have varied that much yesterday. Did you use a later expiration than May 20th?

  • The Options Executioner

    I don’t think that’s a rookie question, I think it’s a very smart question for someone who understands the nuances of options trading!

    This is where historical vol can come in handy. So take BABA for example, which has a HV recent under 20% but was trading at an IV of over 35%. Once the earnings are out and IV collapses, we’re generally looking at a pretty tame stock. In that case, odds are in your favor to let the short strikes ride until expiration. Moreover, the probability after earnings that you’re going to lose money on this trade prior to expiration is close to nil – so I think the risk is worth it. Now, if we’re talking about a highly volatile stock that can move in gaps in non-earnings situations (like TSLA for example) is a situation where you just collect your short-term vega gains and call it a day. TSLA’s HV is close to 40% as a point of reference.

  • http://evilspeculator.com Sir Mole III
  • The Options Executioner

    As a former market maker I can only say… you never know. 😉

    Honestly, it’s going to vary case by case. We’re trying to use very liquid options in so that the bid/ask spread is as minimal as possible. Sometimes you can work the legs and get a better fill, but other times, you may be better off just sending the trade in all at once. Personally, unless we’re dealing with unusually large bid/ask spreads, I would lean towards minimizing commissions and just send it all in one trade.

  • The Options Executioner

    Not a bad fill consider the market changed a bit since we posted the original trade.

  • The Options Executioner

    Very true about closing/managing trades being the hardest part.

    Regarding options being the toughest – it just makes it that much more enjoyable when your kick the market’s ass. 🙂

  • http://evilspeculator.com Sir Mole III

    Nope – NO cookies today.

  • almez

    Hmm…is that divergence busted?

  • Mark Shinnick

    Thing is about people like BKX, so long as he is in communication and thinking…he will turn out OK, its just recent corrective action against his growth trend….a pause that refreshes as he assimilates the error. That’s not time and effort lost; the cycles of life and learning with good people just takes it own time; don’t sell that process short.

  • Time Bandit

    It looks like crude’s big move up this morning might have been only fooling. 🙂 After the first 4 Hours today, my energy shorts are pretty much flat from yesterday’s close and my XLB Short is up from yesterday’s close. The next 43 Minutes until 2:35 PM EDT (Open Outcry Close) should be a pretty good tell.

  • http://evilspeculator.com Sir Mole III

    Yeah but Polish women are known to hot and to have big t…s – so that counts for something!

  • http://evilspeculator.com Sir Mole III

    Indeed…

  • http://greenlander1.blogspot.com/ Greenlander

    Thanks Jay,

    Going to need to digest all your comments a/h as today is gonna be a busy work day but much appreciated. Looking at the 10 min chart going to let all the positions ride til expiry unless something unusual happens.

  • http://evilspeculator.com Sir Mole III

    Right you are!!

  • http://greenlander1.blogspot.com/ Greenlander

    Today’s trashing looks pretty productive for swing trade. Already long SPY from this morning.

  • http://greenlander1.blogspot.com/ Greenlander

    Last chart for today for me. Gotta ge tback to work…

  • http://greenlander1.blogspot.com/ Greenlander

    Fck that, my money is worth more than my feelings

  • Yoda

    today could be a failed retest of the high. Today’s candle could be a good set up for tomorrow. Short on breach of low, and long on breach of high. I have a slight bias for the short side.

  • mugabe

    can you have a *slight* bias?

  • Mark Shinnick

    This is the why for Bernie’s movement. The seminal work on the how and why of movements and their dangerous ignorance done by Eric Hoffer, 1950, with “The True Believer”.

    A incredible read that unravels a lot of misunderstanding in multiple levels, about 130 pages.

    Free .pdf at: http://evelynbrooks.com/wp-content/uploads/2011/10/The_True_Believer_-_Eric_Hoffer.pdf

    https://en.wikipedia.org/wiki/The_True_Believer

  • Time Bandit

    I was already short going into this morning and price technically went through my stop early in the day. However, I don’t use hard stops with ETFs in this sector when I’m around to see what’s going on. There’s way too much fuckery going on with crude prices. I also try to be patient and see if price is still through my stop by the close of the current candle and if so I’ll close my positions at that time. By 1:30 PM price had recovered.

    Having said all that, even though my positions are probably safe for the next hour, tomorrow’s another day and we’ll see what price has to say then.

  • Yoda

    You are correct. There should be no bias in a set-up. What I am trying to say is I have a slight preference for the short side now given that the bull run from February could deserve a little break and consolidate some. Let us see what the $ does tomorrow after NFP.

  • mugabe

    what I was getting at is that you either have a bias or you don’t. It’s a bit like trying to say you’re slightly racist – you either are or you aren’t.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    you guys got me hungry.

    just picked up some brats & kraut.

    http://www.kitchenproject.com/german/Bratwurst/BratBread/4/IMG_3551.JPG
    😉

  • Time Bandit

    The moment I enter a trade, I have a bias in the particular direction that the trade is placed. You have to have a bias of some sort or none of us would ever make a trade. However for me, my bias is based on what price and what my price pattern is telling me and not based on some gut feeling or what I read or heard in the news.

  • Billabong

    I received a sell signal on CL this afternoon and a buy signal on SCO yesterday but nothing on UCO … go figure.

  • Billabong

    Cough, cough … when you enter a trade you are going in on an RBT for the environment. Then you will find out if the RBT is working in the specific environment. A good RBT entry should have you moving in the entry direction by the second day. There should be no bias in the decision … Right brain only, leave the intuition to the left brain.

  • Time Bandit

    My Daily on /CL hasn’t flipped to short yet but my 4 Hour has. My UCO reads the same way. We’ll probably catch up pretty soon as we’re usually pretty close.

  • Billabong

    Outcome bias or recency bias?

  • Time Bandit

    “se·man·tics

    s??man(t)iks/

    noun

    the branch of linguistics and logic concerned with meaning. There are a number of branches and subbranches of semantics, including formal semantics, which studies the logical aspects of meaning, such as sense, reference, implication, and logical form, lexical semantics, which studies word meanings and word relations, and conceptual semantics, which studies the cognitive structure of meaning.”

    🙂

  • Yoda

    I’d say recency bias because it is based on past price action.

  • mugabe

    it depends on what the meaning of the word is is

  • Billabong

    Ok, ok…. BTW …. CL overall trend is still up. Any down move may not be worth more than 5%

  • Time Bandit

    Your’re probably right. And when I get stopped, I’ll jump back over to the long side. Price is nuts but it is what it is. Is. 🙂

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    Hey, Bandit.
    you ever need real-time ERY assistance, give me a ping.
    I’ve got it dialed in.
    😉

    Sincerely,
    Rat_Sniper

  • Billabong

    If CL drops another 10-15 cents (44.15-20) before the NYSE close, we may have a solid Gravestone on the daily candle.

  • Time Bandit

    No thanks, I prefer to go after Multi R gains on ETF’s and let the small gains go to those in need. LOL

    Seriously though, I’m still in it but congrats on your win. 🙂

  • tandaradei

    No, I set up the same trade u did, but I sold the front legs way to cheap.

    Any chance we get another post on this, I see you talking about stuff I don’t fully grasp: like setting strikes based on the ATM straddle (how exactly?), what does “roll the whole thing up/down or out” with regards to a position mean?

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    well, you mentioned wham, bam.
    thought you may discovered fountain of youth.
    looking for the quick trades.
    😉

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • The Options Executioner

    Ah gotcha. Yeah, the short premium is the biggest part of the profit potential, so cutting some of that out could definitely take a toll.

    Absolutely, we plan on posting quite a bit more about these topics, but in interim:

    The ATM, front month straddle is the price the options market expects the underlying to move by expiration. Now, it doesn’t have to be a one way move, but generally that’s going to be the case after earnings. By setting the short strikes at the edges of the straddle price, you are giving yourself a high probability of capturing the move. Now, straddle prices aren’t perfect, but they tend to overprice risk, so it’s typically a very good guideline. (Plus, we have plenty of extra cushion for moves doing the Double Diagonals.)

    Roll down/up/out is just saying I’d close the original trade and move it higher or lower (down/up) in the same month or move it to a farther expiration (out). It’s generally a good way to earn back or exceed money lost if a trade moves against you. Instead of closing certain legs, I like to move the whole trade. It keeps your risk parameters roughly the same but allows you to change your strikes or time to expiration.

  • tandaradei

    Oh for crying out loud, thats exactly opposite to what I did – closed out BABA and I’m riding out TSLA double calendar that I whipped out myself before you posted your setups. And the TSLA position is actually making money, I don’t even know any more…

    Anyways one more question – I’ve triangualted the TSLA dbl cal looking at IV/HV in TOS. Is the data comparable to what’s available at iVolatility?

  • Time Bandit

    Most of my ETF trades are designed to go for as long as they can. The only thing I’ve been scalping lately is Soybean Oil Futures /ZL but I’ve been scalping mainly because I don’t feel comfortable trading it on longer time frames yet. But I’m working on it and am getting close.

    Even when trading only one or two futures contracts at a time, price and dollars can flow like a gas pump under full pressure. On most days, the ETF’s move like molasses in relative terms. 🙂

  • Billabong

    Inverted hammer … BPI now has 6/12 sectors below 80% and both Summation indexes are rolling over.

  • The Options Executioner

    Hah! Great timing. 🙂 TSLA was just on my mind because of earnings, that doesn’t mean it was a poor choice at all. I just happened to pick it because it runs at a higher HV than many super liquid stocks. I actually looked at it to for a possible setup and it wasn’t bad .. we just found a couple we liked better. Anyways, glad you are making money on it!

    The thing is, these double diagonal and double calendar trades are such great ways to make money during earnings season, it’s hard to narrow them down to a just a few a week.

    Yeah, the TOS stuff should be pretty similar to iVolatility. Nice job again, on the TSLA DC.

  • http://greenlander1.blogspot.com/ Greenlander

    Yeh if I wasn’t swamped I was going to jump on a double calendar there too. Glad someone got a piece

  • http://greenlander1.blogspot.com/ Greenlander

    Yeh I ended up closing out the short 80.5 call as it had fallen to .10 from .35.

    The rest of the positions are running and potential for more upside if BABA runs tomorrow which would increase the value of the 82 call which I am long on.

    short May 6
    BABA 70.5 put – entry .32 , current .01
    BABA 80.5 call – entry .34, closed .10

    long May 20
    BABA 82.0 call – entry .51, current .55
    BABA 69.0 put – entry .54, current .05

    As of now, net +.10 exclusive of commissions

  • http://greenlander1.blogspot.com/ Greenlander

    CPC ratio closed at 1.18 today (little orange box). Last 9 times with a single day reading above 1.10 it hasn’t resulted in a down day in equities the next day. 2 of the days were flat. Last time this triggered was Apr 30 and SPY went up 1% the next day. This is tailwind for a potential spike up tomorrow or Mon.

    Currently
    long
    SPY, entered today
    IBB, entered today
    UUP , entered Tues

    and
    short
    GLD, entered Weds

  • http://www.ProfitFromPatterns.com/ Ivan K

    G’lander – is a sample of 9 valid … or just interesting?

  • http://greenlander1.blogspot.com/ Greenlander

    Nope 9 isn’t valid and more on the interesting side than actionable. I should add that I just noticed this now after I had already entered my longs.

  • http://greenlander1.blogspot.com/ Greenlander

    On a side note, do you work with call put ratios at all? I do have a bunch of other things I have been monitoring like short term CPC moving averages and such which have created some ‘interesting’ results.

  • http://www.ProfitFromPatterns.com/ Ivan K

    G’lander – I only focus / use / need OHLC data of what I am looking to engage … all else is superfluous to my DNA requirements.

  • http://www.ProfitFromPatterns.com/ Ivan K

    G’lander – what I have found to be far more beneficial to success is plotting the EqC and Distro’s of a RBT … as opposed to a running disclosure of being long or short or both … hmmm … now … there is a rare concept to work with !

  • http://greenlander1.blogspot.com/ Greenlander

    Cant argue with you there Ivan. I def need to put more effort in record keeping.

  • mugabe

    good to see you back in the saddle here Ivan:)

  • Time Bandit

    Damn, I just busted a tooth. Of course it’s in the front and I look like Alfred E Newman now. Probably needs a crown. There goes > $1,000. 🙁

  • mugabe

    it’s just a cost of eating 🙂

  • http://www.ProfitFromPatterns.com/ Ivan K

    G’lander – I suggest the solution is far simpler than ‘I need to put more effort in …’

    Simply treat risk-taking as a legit business … btw … rhetorical Q … do you file annual tax returns ? Then apply the same approach to this quest … I suggest.

  • Time Bandit

    LOL I hate expenses like these. It’s not like getting something new that I didn’t have before. 🙂

  • mugabe

    yeah, I’m sure I’d be pissed off if I were you .. not that that it helps!

  • http://www.ProfitFromPatterns.com/ Ivan K

    Cost of eating and living ‘western’ style !

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    http://www.dentalaffairs.com/images/joke01.jpg
    like I said, call me when you need me.
    ;-D

  • mugabe

    what – don’t they use their teeth to chew where you live?

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    Ivan speaks!

    only slightly rarer than Bigfoot.

  • mugabe

    has Bigfoot ever been reported to speak?

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • http://www.ProfitFromPatterns.com/ Ivan K

    M’gabe – I have never seen a local who has not been exposed to western foods / sugars / chemicals / crapola … with other than pearly whites … the only exceptions being those who choose to chew certain root crops and / or smoke same.

  • Yoda

    On the bright side a visit from the tooth fairy you may get tonight :-}
    http://www.superstitions.biz/images-2/Tooth-Fairy.jpg
    If lucky you are a coupon for your next dentist appointment under your pillow you may find in the morning 😉

  • http://evilspeculator.com Sir Mole III

    $1k only? Where do you get your crowns – at Walmart? Clearly you don’t live in California.

  • Ronebadger

    Uh- oh…

  • Round we go
  • Time Bandit

    It’ll be over $1,000 but I’m in North Carolina and crowns are not as expensive here as they are in CA or in the Northeast where I’m originally from.

  • Yoda

    For over 1000 bucks a gun they’ll throw in too.
    😉
    http://evilspeculator.com/wp-content/uploads/2013/10/chopper-1.jpg

  • Time Bandit

    LOL

    Last year there was a local Ford Dealership that had ads on TV that showed guys dressed in Camo buying a new Ford Pickup and if you bought a truck you got a gun. The ad was “Buy a Truck Get a Gun!”

    I own a gun myself but for the most part, the culture between here and CA/Northeast when it comes to this kind of stuff is like night and day.

  • http://evilspeculator.com Sir Mole III
  • Yoda

    I am sure you are glad to live where you are now. You don’t have to put up with a bunch of sissies on a daily basis, and on top of that you’ll get to wear a gold tooth to look like a real bandit from now. 😉