market direction

[oildaytrader]

asked the mods to set the thread so people on my ignore list cant post. see you round oildayretard

I do not need to post on your thread or forums, any way good luck with your thread

 

[wackypete2]

asked the mods to set the thread so people on my ignore list cant post. see you round oildayretard

Testing...
OK, I'm not on the ignore list :clap:

Peter

 

[N Rothschild]

updates coming later tonight but i cant get in my trading platform until tomorrow lunchtime! for some reason my ip has changed when the net went down so im locked out! only certain ip can access my platform

 

[rawrschach]

tsk tsk some lack of robustness there to rare events, ironic given your trading methodology

=p

 

[N Rothschild]

i deal over the phone with my broker anyway, just need some info thats in my charts!

 

[cr6196]

to get this thread back on track, i had a question about options positions, ive been looking at something similar for a while...i know this has been referred to earlier but when u go long underlying and buy a put, for example, do you fully hedge your delta?
if you were looking for price to fall and you went short the underlying and bought calls in a rising market, the sp500 for example, wouldn't it be cheaper to buy puts and long the underlying, as implied vol is cheap due to the market rising, and end up with same delta?
there is probablly something obvious i'm missing...but as i say i do something similar in taking countertrend positions and i am wondering about risk.

 

[N Rothschild]

becuase these are posistion trades time is not a luxury we have. so long options arnt the greatest strats. if you had puts and long the underlying looking for a move down, come experation your posisiton would be break even wouldnt it?

 

[N Rothschild]

everything as is for this week i think.

corn - long
pound - long
euro - long
live cattle -short
es - short (probably the riskiest of the bunch to be fair)
10y - long but kind of in the same boat as the sp
copper - short
crude - long
naty gas - long (buy it all)

post charts later or 2morow if i can be bothered!

alot of these markets have been in consolidation mode for the last few weeks but this is what happens when you get turns in the market, hopefully see some better moves soon.

 

[robster970]

I'm interested in your short ES. I was on the long side for ES from Tuesday last week, watched accumulation and expected a breakout on Friday. All it turned out to be was a grind up for 2 hours after lunch telling me there was a truckload of selling going on at the new high in a way I've not seen this year.

I ended up short fading the 'not-breakout' and new high and am quite happy with this right now. Interested in why you think your short is risky.

I think there will be congestion through to 1225 area as looking on the weekly, this is a key level btw. I'm not sure it will break it though as I would expect greater confluence of good economic indicators to justify the shorts covering and going long at this level.

 

[N Rothschild]

becuase we have been here before in the sp's. 1220 is a good level i agree but it looks like we are back to the grind as i was concerned about last week

 

[robster970]

You seeing the grind in other mkts? Do you think things are generally slowing down?

 

[N Rothschild]

the grind is something that seems pretty localised to the s and p, if any market is gona prove my thesis wrong its the spoo lol. just treading carefull considering the shorts that have been burned in the last year. i do like shorts from 1220 though!

 

[N Rothschild]

to get this thread back on track, i had a question about options positions, ive been looking at something similar for a while...i know this has been referred to earlier but when u go long underlying and buy a put, for example, do you fully hedge your delta?
if you were looking for price to fall and you went short the underlying and bought calls in a rising market, the sp500 for example, wouldn't it be cheaper to buy puts and long the underlying, as implied vol is cheap due to the market rising, and end up with same delta?
there is probablly something obvious i'm missing...but as i say i do something similar in taking countertrend positions and i am wondering about risk.

just to add i really dont know that much about options, just enough to cover my ass..my broker is the options person! hit up martinghoul if you wana ask about options, he seems to know his ****. not gona pretend i do!

 

[rawrschach]

So what do you do exactly, regarding options? Say you buy the underlying, what kind of put would you want to buy, regarding strike price? (I know literally nothing about options so if I sad something stupid tell me)

 

[N Rothschild]

buy an at the money put/call. this isnt always suitable due to some markets the bid/ask spreads are huuuge or the options prices are just stupid. copper is a good example of this!

 

[meanreversion]

The further the strike is from ATM (at the money), the higher the volatility you will be paying (on the put side). This is due to the risk reversal, or the skew in vol between puts and calls. In equities, this always favours the puts.

There is no "right" or "wrong" strike to buy, but typically people prefer low delta options to protect an underlying position as these are less expensive (from a premium perspective, NOT vol perspective).

I'd steer clear of options unless you fully understand the concepts behind them. If nothing else, bid/ask is quite significant. It's hard enough to get trades directionally without adding another dimension (time).

 

[wackypete2]

When buying options alone time is not in your favor. It's constantly against you. The further out of the money you buy the less likely your chance of being profitable from it. However when using options as a hedge time is a much smaller factor. Even if the option expires worthless you still own the underlying instrument and it's possible to still be profitable. The strategy is sound since you are setting a maximum loss (cost of option + loss incurred if excercised). I would urge anyone wanting to try options to read a few books first.
As a disclaimer, there are traders who don't like hedging with options (myself included) because they don't want to pay the premiums, however that's a trading decision, not an affront to the strategy.

Peter

 

[meanreversion]

The only way to know what will work for you is to backtest various ideas. However, this is extremely difficult with options. So the alternative solution is to 1) read some books and 2) learn on the job.

Options are priced extremely efficiently these days, so you're not going to find a bargain. If it's cheap, that's because there is a reason.

 

[N Rothschild]

3) solution is to have your broker do it all like i do!

 

[meanreversion]

You have a lot of faith in your broker.. ! Let's hope he is in no way connected to oildaytrader.