re: Options Trading Thread

Glad to see my serial downvoter is still around!

I figured to throw flyers on some stuff I wouldn’t mind buying at the price anyway then selling covered. Gotta have it to sell it. Small potatoes to start and catch the rhythm, I’m pretty good about not catching knives so not to worried about axing myself out before I get going

For the short side or the long?

Something you all may find interesting:

quote:

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Bloomberg

A Risky Trading Strategy Is Growing in Popularity in 2022's Wild Market

By Lu Wang, November 1, 2022, 2:45 PM EDT, updated at November 1, 2022, 4:15 PM EDT

It happens in a flash: The S&P 500 turns on a dime, and piranha-like options traders pile into short-dated contracts in a dash to harvest a quick advantage.

Tuesday reprised a pattern that has been visible for months. As the S&P 500 reversed a 1% gain in a violent session right before the Federal Reserve meeting, the turbulence fed a trading frenzy in options that expire within the next 24 hours. Such contracts dominated the ranks of the most traded, making up half of the index's total volume.

Once a popular playbook for day traders seeking quick profits on meme stocks, the risky strategy appears to have grown more popular among retail and institutional investors alike. During the third quarter, S&P 500 options expiring within one day accounted for more than 40% of total volume, almost doubling from six months ago, according to data compiled by Goldman Sachs Group Inc.

The rush reinforces concern that derivatives can amplify moves in underlying assets, potentially creating market dis-locations. At the same time, it reflects a Wall Street era where stock investors are so keyed to minute-by-minute news flows that intraday volatility builds on itself.

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I traded the daily/weekly SPX option spreads for a couple of years (2019 til last year). And I don’t believe that I’ve ever dealt with more stress while trading than during that time. I encountered some wild swings back then. I cannot imagine what it would be like now, what with these crazy 1-2 standard deviation moves intraday.

Retail is still doing the retail thing. But what some of the institutional traders have been doing is playing the options market makers. Because the market makers are forced to hedge their positions, the big boys put on size in options and force the market makers’ hands, knowing that they’ll be hedging. Pretty slick… as long as it works. But it’s only a matter of time before the market makers make adjustments and shut that game down.

In the meantime, that foolishness creates wild swings in the underlyings. There was an article about it on Bloomberg or CNBC. I’ll see if I can find it again.

Is PayPal puts too smooth brain for their earnings


Feel like they gotta be bad

Good play if you made it

Dude you still lookin good, that thing’s toast into the open at least. Don’t be too greedy but get em for every nickel you can

Pretty amazing market action across the board today. I’m hearing that there’s a lot of algo driven trading pushing it up though. My SPX short call verticals went from bright green to light red today (still not in danger so far though). The short put vertical side of the short SPX iron condors are bright green now.

Let’s see what happens to the newer positions in DIS (naked short puts), SQ (covered calls), RTX (naked short puts) all expiring tomorrow. As of right now, SQ goes away and RTX and DIS don’t get assigned. But I’m content to take on DIS at 90.