Hello
This thread is for educational purpose and nothing else.
Underlying:
- INFY (Closed today @ 3271.25)
Trade: Long APR Strangle
- Long APR 3000 put @ 33.70, IV 34.19, OI 1'625
- Long APR 3600 call @ 38.00, IV 32.20, OI 20'500
Risk:
- Limited: 33.70 from the put and 38.00 from the call = 71.70
Profit potential:
- Zero to unlimited
Level:
- Intermediate to advanced
End of day option matrix 19 Mar 2014:
- http://i57.tinypic.com/2pq0xv5.png
End of day charts 19 Mar 2014:
- Monthly: http://i61.tinypic.com/73i4d3.png
- Daily: http://i59.tinypic.com/33mc19j.png
Reason behind the trade:
Have a look at the monthly chart in the last few years. There are not many candles which have a range of over 600 points. On the other hand: The volume on this monthly chart still is very low compare to the other candles which made such ranges. Also all the next candles to the right side of those huge candles are small or in a range of 300 points. So we could buy an APR 3000 put and an APR 3600 call = Long APR strangle. If we want to short, we add and sell APR 3100 put and APR 3500 call = Long Iron Condor or we sell APR 2900 put and APR 3700 call = Short Iron Condor. According to market moves with a range of 100 - 150 point on a single day, we adjust our long options by moving the other side up (Put) or down (Call) to the next 100 strike level.
Trading plan:
- If market moves in either direction in one day over 100 and more points, we adjust the other side according to the whole move by rolling up or down the put or call.
- If market shows up with a side way zone in which he jumps up and down 100 point, we do not roll up or down the legs. We try to take out profit of those moves by selling legs and buying back legs.
- If market moves in either direction less then 100 points a day, we wait and analyze the situation. If needed we protect profit by selling legs.
- To protect any profit, we will test the selling of 50 point strike levels at what ever strike level it makes sense. We have to analyze any OI, IV and prices on those specific levels.
Edit by adding information:
To keep it on a normal level, only the following specific four strategies are used in this thread/trade:
- Long strangle: http://www.theoptionsguide.com/long-strangle.aspx (Neutral - bullish on Volatility)
- Long Iron Condor: http://www.theoptionsguide.com/iron-condor.aspx (Neutral - bearish on Volatility)
- Short or reverse Iron Condor: http://www.theoptionsguide.com/reverse-iron-condor.aspx (Neutral - bullish on Volatility)
- Calendar spreads: http://www.theoptionsguide.com/neutral-calendar-spread.aspx (Neutral - bearish on Volatility)
There are different kind of Calendar spreads like "Horizontal Calendar Spreads" or "Diagonal Calendar Spreads" or "Double Calendar Spreads". In this educational thread I will use only some sort of "Horizontal Calendar Spreads" if needed/possible.
Here some videos about the used option strategies in case you do not have any idea about them:
- Long Strangles: https://www.youtube.com/watch?v=l5z_blc_zk8
- Calendar Spreads: https://www.youtube.com/watch?v=LXUAUAEPu6k or https://www.youtube.com/watch?v=Ywu1AueH2b8
- Iron Condors: https://www.youtube.com/watch?v=PflbtM2K1Zo
And here how the option legs are used and in what combinations they can be implemented:
Basically we start with two long legs which are a long put and a long call. Those two legs you will find in any shown combinations:
- Long otm Call + long otm Put = Long Strangle
Now we add the legs in what ever way it will be needed. Market is the boss, so we act according to his moves and volatility sentiments. In some cases we may stay with two legs in the trade, in other cases with three or even four legs.
- Long Apr otm Call + short further Mar otm Call = Call Calendar spread
- Long Apr otm Call + short near Mar atm Call = Call Calendar spread
- Long Apr otm Put + short further Mar otm Put = Put Calendar Spread
- Long Apr otm Put + short near Mar atm Put = Put Calendar spread
- Long otm Call + short less otm Call + short less otm Put + long otm Put = Long Iron Condor
- Short further otm Call + long otm Call + long otm Put + short further otm Put = Short or Reverse Iron Condor
Some last informations:
The level of option trading discussed here will not be for beginners. Intermediate level is a must, as we go up to advanced levels at any time needed. Of course: Every body is welcome to follow this thread. But let me clear one point: If you have any questions about the basic of option Greeks, please refer to existing threads in the option section. Threads which already posted about this topic into the last details. I will not answer any questions about option Greeks. Kindly read in the following threads about this needed knowledge in option trading if you are not familiar with it:
http://www.traderji.com/options/305...ading-strategy-option-spreads.html#post333541
http://www.traderji.com/options/66266-option-trading-danpickup.html#post639903
http://www.traderji.com/options/92743-options-my-way-looking.html#post941872
Now you are invited to follow this educational trade and let's see what can be done or what happen. I not can guarantee to update here every day, but as you have all numbers, just follow them and write them down.
Warning: This thread is only for educational purpose. Option and future trading can lead to huge losses. You (The reader or even active writer in this thread) are responsible by your self for what happen with any trade you do or implement in the market. No responsibility can be token from any body here (Neither me or any other person) for what is discussed or what is given as ideas. I/we do not share any profit or loss which can occur in this educational thread and trade.
Somatung
This thread is for educational purpose and nothing else.
Underlying:
- INFY (Closed today @ 3271.25)
Trade: Long APR Strangle
- Long APR 3000 put @ 33.70, IV 34.19, OI 1'625
- Long APR 3600 call @ 38.00, IV 32.20, OI 20'500
Risk:
- Limited: 33.70 from the put and 38.00 from the call = 71.70
Profit potential:
- Zero to unlimited
Level:
- Intermediate to advanced
End of day option matrix 19 Mar 2014:
- http://i57.tinypic.com/2pq0xv5.png
End of day charts 19 Mar 2014:
- Monthly: http://i61.tinypic.com/73i4d3.png
- Daily: http://i59.tinypic.com/33mc19j.png
Reason behind the trade:
Have a look at the monthly chart in the last few years. There are not many candles which have a range of over 600 points. On the other hand: The volume on this monthly chart still is very low compare to the other candles which made such ranges. Also all the next candles to the right side of those huge candles are small or in a range of 300 points. So we could buy an APR 3000 put and an APR 3600 call = Long APR strangle. If we want to short, we add and sell APR 3100 put and APR 3500 call = Long Iron Condor or we sell APR 2900 put and APR 3700 call = Short Iron Condor. According to market moves with a range of 100 - 150 point on a single day, we adjust our long options by moving the other side up (Put) or down (Call) to the next 100 strike level.
Trading plan:
- If market moves in either direction in one day over 100 and more points, we adjust the other side according to the whole move by rolling up or down the put or call.
- If market shows up with a side way zone in which he jumps up and down 100 point, we do not roll up or down the legs. We try to take out profit of those moves by selling legs and buying back legs.
- If market moves in either direction less then 100 points a day, we wait and analyze the situation. If needed we protect profit by selling legs.
- To protect any profit, we will test the selling of 50 point strike levels at what ever strike level it makes sense. We have to analyze any OI, IV and prices on those specific levels.
Edit by adding information:
To keep it on a normal level, only the following specific four strategies are used in this thread/trade:
- Long strangle: http://www.theoptionsguide.com/long-strangle.aspx (Neutral - bullish on Volatility)
- Long Iron Condor: http://www.theoptionsguide.com/iron-condor.aspx (Neutral - bearish on Volatility)
- Short or reverse Iron Condor: http://www.theoptionsguide.com/reverse-iron-condor.aspx (Neutral - bullish on Volatility)
- Calendar spreads: http://www.theoptionsguide.com/neutral-calendar-spread.aspx (Neutral - bearish on Volatility)
There are different kind of Calendar spreads like "Horizontal Calendar Spreads" or "Diagonal Calendar Spreads" or "Double Calendar Spreads". In this educational thread I will use only some sort of "Horizontal Calendar Spreads" if needed/possible.
Here some videos about the used option strategies in case you do not have any idea about them:
- Long Strangles: https://www.youtube.com/watch?v=l5z_blc_zk8
- Calendar Spreads: https://www.youtube.com/watch?v=LXUAUAEPu6k or https://www.youtube.com/watch?v=Ywu1AueH2b8
- Iron Condors: https://www.youtube.com/watch?v=PflbtM2K1Zo
And here how the option legs are used and in what combinations they can be implemented:
Basically we start with two long legs which are a long put and a long call. Those two legs you will find in any shown combinations:
- Long otm Call + long otm Put = Long Strangle
Now we add the legs in what ever way it will be needed. Market is the boss, so we act according to his moves and volatility sentiments. In some cases we may stay with two legs in the trade, in other cases with three or even four legs.
- Long Apr otm Call + short further Mar otm Call = Call Calendar spread
- Long Apr otm Call + short near Mar atm Call = Call Calendar spread
- Long Apr otm Put + short further Mar otm Put = Put Calendar Spread
- Long Apr otm Put + short near Mar atm Put = Put Calendar spread
- Long otm Call + short less otm Call + short less otm Put + long otm Put = Long Iron Condor
- Short further otm Call + long otm Call + long otm Put + short further otm Put = Short or Reverse Iron Condor
Some last informations:
The level of option trading discussed here will not be for beginners. Intermediate level is a must, as we go up to advanced levels at any time needed. Of course: Every body is welcome to follow this thread. But let me clear one point: If you have any questions about the basic of option Greeks, please refer to existing threads in the option section. Threads which already posted about this topic into the last details. I will not answer any questions about option Greeks. Kindly read in the following threads about this needed knowledge in option trading if you are not familiar with it:
http://www.traderji.com/options/305...ading-strategy-option-spreads.html#post333541
http://www.traderji.com/options/66266-option-trading-danpickup.html#post639903
http://www.traderji.com/options/92743-options-my-way-looking.html#post941872
Now you are invited to follow this educational trade and let's see what can be done or what happen. I not can guarantee to update here every day, but as you have all numbers, just follow them and write them down.
Warning: This thread is only for educational purpose. Option and future trading can lead to huge losses. You (The reader or even active writer in this thread) are responsible by your self for what happen with any trade you do or implement in the market. No responsibility can be token from any body here (Neither me or any other person) for what is discussed or what is given as ideas. I/we do not share any profit or loss which can occur in this educational thread and trade.
Somatung
Last edited: