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Old 04-27-2015, 01:24 PM   #196
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Up almost $600 on the day...RUT down almost 17 points...greed vs. fear now at a fever pitch...
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Old 04-27-2015, 01:55 PM   #197
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Fear won out...I'm out...details to follow...I kind of took it in the shorts exiting my verticals just now...tells me the market is going up from this point on
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Old 04-27-2015, 02:02 PM   #198
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Code:
Date	Time		Trade Description						Fees	Comm	Amount
3/30/15	12:41:51	BOT +3 BUTTERFLY RUT 100 MAY 15 1280/1230/1180 PUT @10.61 CBOE	-0.31	-18.99	-3,183.00
	12:43:19	BOT +5 IWM 100 MAY 15 123 CALL @3.92				-0.12	-13.74	-1,960.00
4/10/15	15:58:09	BOT +1 VERTICAL RUT 100 MAY 15 1230/1240 CALL @7.64 CBOE	-0.06	-11.49	-764.00
4/20/15	14:31:29	BOT +2 VERTICAL RUT 100 MAY 15 1230/1240 CALL @7.80		-0.12	-12.99	-1,560.00
4/27/15	13:32:01	SOLD -3 BUTTERFLY RUT 100 MAY 15 1280/1230/1180 PUT @16.55	-0.35	-18.99	4,965.00
	13:32:24	SOLD -5 IWM 100 MAY 15 123 CALL @2.54 CBOE			-0.18	-13.74	1,270.00
	13:54:36	SOLD -3 VERTICAL RUT 100 MAY 15 1230/1240 CALL @7.11 CBOE	-0.18	-14.49	2,133.00
											-------------------------
													+795.25
PaceAdvantage M3 Trading Tour 2015
_______________________________
January...+311.93
February..+755.51
March......-359.98
April........+239.98
May.........+795.25
-----------------------
TotalYTD..+1,742.69
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Old 04-27-2015, 02:30 PM   #199
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Since I'm not familiar with what you and barn are doing, have a couple of probably dumb questions:

1) Are the positions you have similar to standard options where you are buying to open and selling to close? Are there traders on the other side writing these instruments?

2) If yes, are you selling to close at market or putting in a limit order.

Just wondering as I have noticed that the options I hold (all LEAPS expiring in 2016 or 2017) always seem to trade down relative to the underlying asset throughout the day until just before close when there is a flurry of activity bringing the option price back up.

All this is on very low volume of course given the long expiration dates.
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Old 04-27-2015, 03:06 PM   #200
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I am trading options on the Russell 2000 (RUT)...specifically, long put butterflies in RUT and also buying IWM (Russell 2000 ETF) call options to bring Delta to 0....that's the opening trade. Then as time goes on (we hold for about a month), if delta starts to get out of whack, we might buy RUT call verticals or buy more IWM calls outright if delta is above 10...if delta moves below -10, then we would do the opposite.

They are fairly liquid as far as options go (IWM way more liquid than RUT)...I am buying and/or selling at any time I think is right...trading just like stocks or futures
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Old 04-27-2015, 03:36 PM   #201
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Guess I should have listened to greed...market did not move up like I thought after I exited...
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Old 04-27-2015, 07:50 PM   #202
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Quote:
Originally Posted by _______
Since I'm not familiar with what you and barn are doing...
Barn isn't either...he just thinks he is.
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Old 04-27-2015, 08:12 PM   #203
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Quote:
Originally Posted by _______
Since I'm not familiar with what you and barn are doing, have a couple of probably dumb questions:

1) Are the positions you have similar to standard options where you are buying to open and selling to close? Are there traders on the other side writing these instruments?

2) If yes, are you selling to close at market or putting in a limit order.

Just wondering as I have noticed that the options I hold (all LEAPS expiring in 2016 or 2017) always seem to trade down relative to the underlying asset throughout the day until just before close when there is a flurry of activity bringing the option price back up.

All this is on very low volume of course given the long expiration dates.
1. Yes. Yes. Options are zero-sum. For every option bought/sold there is an opposite trade.

2. Depends. With options it's not usually a good idea to buy/sell at the market because of the wide bid/ask spreads. It's better to try and find equilibrium around the mid-point. If you put in a market order you're going to take the worst of it.

The best plan is to enter your order above/below the midpoint and hope you can get slightly the best of it. But if you want to get filled quickly entering at the mid-point (or slightly away from it) will usually (but not always) get the job done.

Most of the action in almost all markets are at the open and the close. Exceptions of course, but I'm guessing that what you're seeing at the end of the day are traders taking or closing positions bring things somewhat back into line.
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Old 04-27-2015, 09:38 PM   #204
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Quote:
Originally Posted by barn32
1. Yes. Yes. Options are zero-sum. For every option bought/sold there is an opposite trade.

2. Depends. With options it's not usually a good idea to buy/sell at the market because of the wide bid/ask spreads. It's better to try and find equilibrium around the mid-point. If you put in a market order you're going to take the worst of it.

The best plan is to enter your order above/below the midpoint and hope you can get slightly the best of it. But if you want to get filled quickly entering at the mid-point (or slightly away from it) will usually (but not always) get the job done.

Most of the action in almost all markets are at the open and the close. Exceptions of course, but I'm guessing that what you're seeing at the end of the day are traders taking or closing positions bring things somewhat back into line.
Appreciate all responses. Completely identify with your first.

I guess my questions arise from the multi-leg nature of these transactions. I assume that you want to open and close them all at once to avoid exposure to market movement with just one leg. Can you actually use limit orders? If yes, how does that work with 2+ legs?

PA's comment on taking in in the shorts exiting his verticals is what made me wonder. I guess I'm assuming to exit all at once you have to place market orders. I can see why that would place you at a disadvantage.
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Old 04-27-2015, 11:23 PM   #205
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Quote:
Originally Posted by _______
Appreciate all responses. Completely identify with your first.

I guess my questions arise from the multi-leg nature of these transactions. I assume that you want to open and close them all at once to avoid exposure to market movement with just one leg. Can you actually use limit orders? If yes, how does that work with 2+ legs.
A butterfly spread is the combination of a long and short vertical. It takes on this pattern:

+2
-4
+2

Which you can break down into two individual spreads. One long & one short:

+2
-2

-2
+2

You can enter the trade as a butterfly, which I think is better than "legging in." Legging in can work if you're lucky, but it can also go against you.

You can exit the trade the same way you entered by simply selling the butter. Or, you can sell one leg of the spread at a time, or you can just sell one leg, long or short, and leave the other on. I've done both.

For example, if the long vertical part of the butterfly is profitable and will likely expire out of the money you can close out the short vertical, which is most likely losing money.

Quote:
PA's comment on taking in in the shorts exiting his verticals is what made me wonder. I guess I'm assuming to exit all at once you have to place market orders. I can see why that would place you at a disadvantage.
I think the verticals he's referring to are hedges that he added along the way. If the vertical hedges lose money the short puts in the butterfly probably made money, and vice versa. The vertical hedges help to balance the position.

His verticals lost money because the RUT went down, but had it kept going up they would have made money and helped to offset losses on the butterfly-helping to keep the position as delta neutral as possible, which in turn gives you time to profit from the time decay of your short puts.

Adding verticals as a hedge along the way are important to do in case the market spikes up or continues to trend up.

Had he not added those verticals (or IWM calls) and the market shot up the position could start to sink.

This is where understanding the Greeks comes in. The Greeks give you valuable information about your position and how you should proceed.

My last M3 profited $1500. The butterfly and all of the verticals lost money. The long IWM call hedges is where the profit came from. Other times it might be the opposite.

It's a balancing act. You are the juggler trying to maintain equilibrium.

If you want to exit all at once you can still use limit orders, you just have to be patient. You can sell the butters and then the verticals and then the long calls.

I've exited most of my trades in pieces. First I get rid of the short puts, and then the long puts and depending on which way the market is trending at the time the long calls. Or maybe the other way around. It just depends.

And on several occasions I've closed out everything but one of the vertical spreads which will most likely expire out of the money allowing me to extract maximum profit.

Mike may have a different philosophy. It's like horse racing and poker. There are different approaches that can achieve the same results.
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Old 04-28-2015, 12:24 AM   #206
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Originally Posted by _______
PA's comment on taking in in the shorts exiting his verticals is what made me wonder.
I say this because I first entered in a sell order at $7.35 to exit my verticals. And I ended up having to get out at $7.11 as the market started turning down on me. These verticals were the last part of my M3 trade that I was trying to exit out of. Getting out of the butterfly at the price I wanted took a little time, but eventually it came to me. The IWM calls were a cinch to exit at the current price (sold them just after the butterfly sell order was filled). They are the most liquid of the M3 components that I use.

It was the verticals that took forever...I lost $.24 trying to get out, and since I was exiting 3 verticals, I lost about $72 in profit, but that is sometimes the price of playing this game.

I'm also paying a boatload in commissions compared to some of the lower cost options houses out there...but I love the Thinkorswim platform at TD Ameritrade, so I am kind of stuck there until I find something better.
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Old 04-28-2015, 12:27 AM   #207
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Considering my profit goal per month is $1,500, I'm having a pretty crappy year so far. I hit my profit target more often than not last year, and I haven't come close once this year...but I'm still ahead, and that's all that really matters at this point.
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Old 04-28-2015, 12:33 AM   #208
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Okay. I won't say "got it", but I certainly have a better understanding.

Again, appreciate the time both of you have taken responding.
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Old 04-28-2015, 08:40 AM   #209
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Originally Posted by PaceAdvantage

I'm also paying a boatload in commissions compared to some of the lower cost options houses out there...but I love the Thinkorswim platform at TD Ameritrade, so I am kind of stuck there until I find something better.
I have ThinkorSwim, but I've never made a trade there. I've got 3K sitting there doing nothing. I can't bring myself to pay their exorbitant commissions. I was supposed to get 60 days of free trades, but I didn't realize it and they never once mentioned it. When I found out about it I contacted them but they said it was too late.

I also use TOS for my data feed on OptionVue. It seems to be somewhat faster than the IB feed.

I also use TOS for charts.

Point being, you can still uses TOS for lots of things but make your trades elsewhere. In fact, I'd go so far as to say that what you save in commissions using IB would more than pay for a year of OptionVue.

[A side effect of all these programs I have running is a memory drain. I have 6 gigs of RAM, but I'm running up against it. I'm looking to upgrade to a new PC with 16-32 gigs of RAM to combat this.]
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Old 04-28-2015, 09:55 AM   #210
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Email tom@thinkorswim.com

He's the founder...Tom Sosnoff...the guy from tastytrade...not sure if that email address is still active for him, since TOS was taken over by TD...but it might work.

Someone on here recently told me he still has a lot of pull at TOS and if you tell him your story, you might still get your 60 days free...

If anyone else has an email address for Tom, please PM it to barn32...the above email I was able to find via a google search...
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