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re: Options Trading Thread
Posted on 5/21/23 at 11:54 pm to Jag_Warrior
Posted on 5/21/23 at 11:54 pm to Jag_Warrior
I need a Jag W lesson. :)
We do much the same... but you do the tastee method.
Short summary?
We do much the same... but you do the tastee method.
Short summary?
1
Posted on 5/22/23 at 7:20 am to Jjdoc
Well, I think the short(est) summary on the Tasty/Sosnoff (and Option Alpha/du Plessis) methodology that I can offer is to sell various option structures on underlyings which have relatively high implied volatility. The core strategy involves opening those short structures (defined risk and undefined risk, as allowed by your account) at roughly 45 days to expiration and closing them at roughly 21 days, or when you reach 50-60% of your max profit. Trade management (rolling or closing) usually occurs inside that 21 days to expiration time frame.
Overall, just like an insurance company, both Sosnoff and du Plessis rely on many occurrences over time, with a high POP (probability of profit) and selecting short options somewhere around the 15-20 delta. Typically one wouldn’t devote more than 10% or so of available capital to a single trade or underlying - trying to have a diversity of tickers within the account.
TL/DR version: stay small, stay active and stick with high probability of profit trades. And most of all, always be willing to learn. I could live to be 1000 and Sosnoff will still have forgotten more than I could know in that time.
Overall, just like an insurance company, both Sosnoff and du Plessis rely on many occurrences over time, with a high POP (probability of profit) and selecting short options somewhere around the 15-20 delta. Typically one wouldn’t devote more than 10% or so of available capital to a single trade or underlying - trying to have a diversity of tickers within the account.
TL/DR version: stay small, stay active and stick with high probability of profit trades. And most of all, always be willing to learn. I could live to be 1000 and Sosnoff will still have forgotten more than I could know in that time.
Posted on 5/22/23 at 8:29 am to Jag_Warrior
quote:
Well, I think the short(est) summary on the Tasty/Sosnoff (and Option Alpha/du Plessis) methodology that I can offer is to sell various option structures on underlyings which have relatively high implied volatility. The core strategy involves opening those short structures (defined risk and undefined risk, as allowed by your account) at roughly 45 days to expiration and closing them at roughly 21 days, or when you reach 50-60% of your max profit. Trade management (rolling or closing) usually occurs inside that 21 days to expiration time frame.
You know I have rarely gone that far out. But over the weekend, I was looking at a poor man's Covered on an ETF in Jan 2024.
quote:
Overall, just like an insurance company, both Sosnoff and du Plessis rely on many occurrences over time, with a high POP (probability of profit) and selecting short options somewhere around the 15-20 delta. Typically one wouldn’t devote more than 10% or so of available capital to a single trade or underlying - trying to have a diversity of tickers within the account.
TL/DR version: stay small, stay active and stick with high probability of profit trades. And most of all, always be willing to learn. I could live to be 1000 and Sosnoff will still have forgotten more than I could know in that time.
I love learning new thoughts and methods. Keeps it fresh.
Posted on 5/22/23 at 11:43 am to Jag_Warrior
quote:
Low VIX ruins those opportunities. Adapting and pressing forward.
quote:
Please elaborate if you have the time.
So, after going back and back testing April and May (After volatility settled well under VIX=20), here's what adjustments I've made.
For Iron Flies: The days of collecting $25-28 net credit, per $50 Wide IF, are over (unless is binary events like FOMC, etc.).
You are now collecting $15-18 in credit.
When VIX was over 20, most of your IF premium decay would occur during the first hour of the day. Now, that's not the case.
I've adjusted by waiting to open my IFs at 11a CST. Most of the daily premium is still in tact (~$14-$17). I'm setting a 6% Profit Target and a 12% SL.
That metholodology has been a 30/34 winner since Apr 1st.
Had you done the same, but put the trade on right at open, it's a net loser and has only won 21/35.
I've also found that for 5 Delta Iron Condors, it's better to wait to put the trade on at 10a CST. 500% Stop Loss on the short legs, and letting it stay open until expiration.
Putting on 0DTE trades right at open as largely been a losing strategy. With low vol, there's just not enough decay and you give yourself more time to be wrong...
ETA: What this means is you will still see your total P/L drop, on 1 lot trades, simply due to lower premiums in today's market. You can adjust by sizing up. Trading 2-3 lots.
Big Rule for 5 Delta Iron Condors:
If VIX>19.5 at open, put trade on at 8:32a
If VIX<19.5 at open, put trade on at 10a.
This post was edited on 5/22/23 at 12:28 pm
Posted on 5/22/23 at 4:52 pm to Brobocop
quote:
Big Rule for 5 Delta Iron Condors:
If VIX<19.5 at open, put trade on at 10a
I agree. This is what I’ve been doing in the current sub 20 VIX environment on the 1DTE wide wing SPX ICs. I typically try to leg into each side and have the entire position established by 1ET. Fairly large lots, but low deltas, with buying power being recycled by the next day.
With the political theater in DC going on, I’m laying kind of low on new SPX positions for this week. I’d like to see a tick up in the VIX (wouldn’t we all?!) and be able to launch some more 45DTE trades though. What I have now are about ready to come off.
Posted on 5/22/23 at 7:21 pm to Brobocop
quote:Lovely write up. Great methodology
Brobocop
Posted on 5/22/23 at 7:26 pm to bayoubengals88
I was right enough on my PG IF to pocket 11.2% today. It was a three day trade.
Just one of the four consumer staples that I predicted had peaked.
They’re all falling. I wish I had traded with a bit more directional confidence, but alas these should ultimately be winners if they don’t drop too far!
KO, GIS, MCD (closed after one day at 17.1%) are the other three.
Also F, INTC, and VFC though not consumer staples.
Just one of the four consumer staples that I predicted had peaked.
They’re all falling. I wish I had traded with a bit more directional confidence, but alas these should ultimately be winners if they don’t drop too far!
KO, GIS, MCD (closed after one day at 17.1%) are the other three.
Also F, INTC, and VFC though not consumer staples.
This post was edited on 5/22/23 at 7:32 pm
Posted on 5/22/23 at 8:53 pm to bayoubengals88
Nice play. 
Posted on 5/23/23 at 2:05 pm to Jag_Warrior
quote:
I agree. This is what I’ve been doing in the current sub 20 VIX environment on the 1DTE wide wing SPX ICs. I typically try to leg into each side and have the entire position established by 1ET. Fairly large lots, but low deltas, with buying power being recycled by the next day.
I've never thought about this. I like IC's a lot but never know where to use them. I need to watch this for a while.
This post was edited on 5/24/23 at 9:13 am
Posted on 5/24/23 at 9:34 am to b-rab2
quote:
I like IC's a lot but never know where to use them.
I never know when to NOT use them, ha. But seriously, there are traders who do nothing but IC/stangle/syn strangle and are as profitable as you could dream of.
In other news, this week has been a great reversion to the mean for me. At the end of last week I was looking at having to roll quite a few positions, but thus far this week I haven't rolled anything, and several hit my 50% profit targets.
Posted on 5/24/23 at 11:25 am to dragginass
quote:
dragginass
What are you trading? ICs? Strangles?
Posted on 5/24/23 at 12:10 pm to Brobocop
IC's with exception to when I trade oil directionally, and I'll still use a simple credit spread there.
I'm not ready to do anything undefined risk yet, as this is still experimental for me. I have a large retirement account I would like to trade eventually, but I'm not touching it yet.
I'm not ready to do anything undefined risk yet, as this is still experimental for me. I have a large retirement account I would like to trade eventually, but I'm not touching it yet.
Posted on 6/1/23 at 11:04 am to Jag_Warrior
Bumping this back.
Synthetic Covered calls on Amzn are killing it.
Jun 2024 $95 Stirke With short leg on $130 6/9.
Synthetic Covered calls on Amzn are killing it.
Jun 2024 $95 Stirke With short leg on $130 6/9.
Posted on 6/1/23 at 1:00 pm to Jjdoc
You going to open up a July sold call if the June expired worthless?
Posted on 6/1/23 at 10:38 pm to LSUtoOmaha
quote:
You going to open up a July sold call if the June expired worthless?
I will close some and roll the others to another weekly... maybe 2 weeks out. But, If the stock drops and I can capture 50 to 60% of the premium, I will close the short and sell on the next up day about 2 weeks out.
I really don't like allowing sold calls getting to expiration.
Posted on 6/4/23 at 10:29 pm to Jjdoc
I have picked up put sales after concentrating on the Trade Machine strategy the previous few months.
What I've been doing in this account.
1. Long SPY with ~90% of account.
2. Sell weekly (usually) put spreads in individual equities I generally like and am fine owning longer term.
3. Keep short leg around 10 delta (anywhere from 8 to 15 typically) and long leg as far out as there is liquidity (say, 2 or 3 most commonly).
4. I've only been assigned one long position so far out of 10 trades, and I was able to sell the next day for a small profit. But, when assigned, I sell the SPY quantity necessary to fully fund the position.
5. I'll get more aggressive once I'm more comfortable. Goal is to beat the SPY over the long run.
What I've been doing in this account.
1. Long SPY with ~90% of account.
2. Sell weekly (usually) put spreads in individual equities I generally like and am fine owning longer term.
3. Keep short leg around 10 delta (anywhere from 8 to 15 typically) and long leg as far out as there is liquidity (say, 2 or 3 most commonly).
4. I've only been assigned one long position so far out of 10 trades, and I was able to sell the next day for a small profit. But, when assigned, I sell the SPY quantity necessary to fully fund the position.
5. I'll get more aggressive once I'm more comfortable. Goal is to beat the SPY over the long run.
This post was edited on 6/4/23 at 10:34 pm
Posted on 6/5/23 at 4:12 pm to LSUtoOmaha
I’m in for 7/21 SPY short Iron Condors for a credit of .33
Roughly 15 delta on both sides.
Liking my 7/21 SBUX $97.5 put spread too.
Roughly 15 delta on both sides.
Liking my 7/21 SBUX $97.5 put spread too.
This post was edited on 6/5/23 at 7:47 pm
Posted on 6/5/23 at 7:13 pm to bayoubengals88
Me from mid March until Thursday of last week:
Me at 4:01 PM ET last Friday:
Me today:
Me at 4:01 PM ET last Friday:
Me today:
Posted on 6/5/23 at 7:46 pm to Jag_Warrior
What the hell happened??
Posted on 6/5/23 at 7:52 pm to bayoubengals88
Someone’s been selling calls I suppose
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