Is consistent option income possible?

[luckyd1976]

how are the positions holding up? I like the long put exposure, but why limit vega by spreading?

Book (left with)
1 IC
7 BPS

Closed out most of my Call Side of IC's
+12.7% Cash Value for JUL10 exp

I dont run the vega(s) at all. The only greeks I'm concerned with are the Deltas.

 

[GTS]

Thanks, we'll see if 1000 holds next week on the sp.

 

[luckyd1976]

how are the positions holding up? I like the long put exposure, but why limit vega by spreading?

Do you actively manage by Vega???

I honestly had to look up vega
"A 1% move in the historical volatility of the underlying stock has a very small effect on the theoretical value of the option, which is why this information is usually monitored only by institutional investors with millions of dollars under management. Individual investors seldom carry enough volume in a given option position to be affected by changes in Vega."

 

[luckyd1976]

New Positions for AUG10

SPY AUG IC
114/112/92/90
NC $0.44

DIA AUG IC
107/105/88/86
NC $0.38

IWM Aug IC
69/67/51/49
NC $0.37

QQQQ Aug IC
49/47/38/36
NC $0.35

 

[luckyd1976]

Book
5 IC
4 BPS

From Jun 3rd, 2010 - AUG10 EXP
+17.6% Cash Value


And After the JUL10 Exp I'll be able to write some more NetCredit's.

 

[GTS]

I wouldn't discount the affects of vega but with ic's it is largely neutralized. Keep up the good work.

 

[scose-no-doubt]

So can one of you actual traders explain to me why you can't just collect premiums on ridiculously otm strikes?

 

[GTS]

No reason why you can't...primarily on the put side.

 

[scose-no-doubt]

Sorry, I should have been clearer. Would doing that carry very little risk or is there something that I am overlooking?

 

[luckyd1976]

Sorry, I should have been clearer. Would doing that carry very little risk or is there something that I am overlooking?

There are many different ways to collect premiums. Naked(s), Credit Spreads, Condors, Butterfly(s), etc... I prefer the Condor and Net Credit Spreads over the Naked Puts/Calls. I just dont like the risk profiles. Would it work just collecting premiums of OTM plays, YES. Eventually if you dont manage it right, it will come back and bite you big time.

 

[luckyd1976]

Book
7 IC
1 BPS

From Jun 3rd, 2010 - AUG10 EXP
+19.7% Cash Value

 

[scose-no-doubt]

I don't knwo what that means. can you explain?

 

[luckyd1976]

I don't knwo what that means. can you explain?

Sure.
7 Iron Condors
1 Bullish Put Spread

+19.7% cash return since June 3rd. AUG10 Expiration

 

[midita]

i think it need a massive amount of luck to make consistent income from option trading.

 

[anley]

i think it need a massive amount of luck to make consistent income from option trading.

No you don 't. You need to apply yourself for at least 2 years and I mean really apply yourself. Most aren't willing to put this kind of work in but then ALL successful option traders have.......

 

[luckyd1976]

8 IC
1 BPS

+21.2% cash return since June 3rd. AUG10 Expiration.

 

[luckyd1976]

8 IC
1 BPS

+21.2% cash return since June 3rd. AUG10 Expiration.

Closed out my AAPL BPS for alittle of a loss

Opened 2 new Iron Condors (CME NCredit 1.40 and PCLN NetCredit 1.40)

10 IC

+23.1% Cash Return Since June 3rd. AUG Expiration.

 

[luckyd1976]

10 IC

+23.1% Cash Return Since June 3rd. AUG Expiration.

Today was my first Major adjustment needed in a long time.
The DIA trended to fast +7% in a week toward the (2% away from ITM) Call Side IC. So I had to close out the leg and reset

From the DIA AUG 107/105/88/86 ---> DIA AUG 112/110/94/92.

New Cash return since June 3rd. +18.2% for AUG Expiration.

 

[daveyc]

Hello,
just wanted to get some feedback on these trades entered yesterday and today on EEM.

double calendar spread, selling august and buying jan at 38 puts and 40 calls. 4.45 debit

iron condor 34/35/43/44 for .23 credit

 

[luckyd1976]

Hello,
just wanted to get some feedback on these trades entered yesterday and today on EEM.

double calendar spread, selling august and buying jan at 38 puts and 40 calls. 4.45 debit

iron condor 34/35/43/44 for .23 credit

Not a big fan of the Calendars, can you explain alittle more in why you choose those strikes?

IC looks ok to me.
It's alittle to close to ITM for my tastes.
I would have maybe done the 46/44/33/31 NCredit @ .18

the 44 is protected before ITM by the 4 pullback resistence 40.24, 41.13, 42.69, & 43.40
and with the downside supports of 36.76, 36.59, & 35.21 you've got some slow down protection before ITM. Yes you sacrifice the return 23% via my 9% but given the extra distances and protection before ITM my 9% has a better chance of coming through than the 23% needing adjusted.