re: Options Trading Thread

That I was doing 0-1DTE SPX trades throughout the week throws a bit of a kink in the calculations. But just on earnings trades last week, using margin maintenance requirements of 30% (typically 10% requirement on the short put or call strike), I was at 13.5% of account equity on Friday, if I’d been assigned on everything. If I throw in the max loss on my typical SPX trades on a given day, it would have taken me to about 40%. But since SPX is cash settled, the only way those trades could reach true max loss would be if my system went down or something happened that I’d be unable to close a true loser before the close - so the more realistic total number would be about 30% of account equity.

The VIX is (finally) back above 17!

Thankfully I was able to dump those assigned PYPL shares yesterday at 64.26 to get some capital back, instead of selling calls and trying to wheel my way out.

JAG- I'm going to play AXON earnings (after market close). IV is 51% and it's a good company (formerly TASER). Will probably short the 155 (12 delta)

I just got back in. AXON looks like a good play with above average IV and IV percentile.

The IV is something of an indicator of how much relative premium is in the options (buying and/or selling). While the IV percentile roughly tells you where that IV is now in relation to where it’s been… and could be an indicator of how likely it is to expand or contract.

Rough example: ABC stock has an IV of 30, with an IV percentile of 90. XYZ stock has an IV of 90, with an IV percentile of 30. There should be some killer premium on XYZ’s options, but there’s a greater likelihood that implied vol. could expand from where it is now. So if choosing, all things being otherwise equal, I’d probably go with ABC (the lower IV underlying) as a short option play - less premium, but a greater chance that IV won’t greatly expand and hurt my short options. Especially on earnings, we make a large percentage of our money when IV gets crushed, and we tend to suffer when it expands.

Having both IV and IV percentile above 50 is a good starting point. But recently IV has, well… sucked royally (except for really speculative stocks). But you can still make money on lower IV plays. With earnings plays, do what LSUtoOmaha did with AXON and keep an eye on the deltas and sell your options or spreads shortly before the vol spike as close to the earnings announcement as you can. He just made a nice score, so let’s hit him up for a loan tomorrow.

Does that (not so well worded) explanation make sense?

That's great. I had sold calls on Friday. Early in the trading day, I purchased those back with a 60%ish capture of those premiums.

I sold again at the end of the day Monday. Captured around 50% of the premium of those. Will sell again on a rebound day.


My NFLX is still making me work for though. Got a 442.5 that ends friday and the there is still about $400 in premium! It's getting close to that 442.

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VIX is now a touch above 18!

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Whew, I'm tired of rolling! The pull back has allowed me to close or at least get back OTM on a lot of positions I had. I actually got impatient a few weeks ago, and took some losses(that in hindsight) I didn't have to with the recent pullback. Live and learn, deploy more capital.....

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Live and learn, deploy more capital....

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VIX pulled back on that late rebound, but still above 15… almost 16. Yeah, now we can put more of our capital out in the field to work!

WYNN and DIS report today. The IV on WYNN is about 43%, but the IV percentile is only 20% - expected move +/-5.72. The IV on DIS is almost 39% and the IV percentile is 56% - expected move +/-5.15.

I don’t have much conviction one way or the other on WYNN, but since I still have some DIS that got assigned to me off the last earnings report, I’ve sold 8/11 covered calls at the 95 strike (15 delta). Looking/hoping to (finally) get Mickey Mouse out of my back bedroom!