anyone trying shorts??

Up here at 845 ES....S&P is holding back this rally today...where the HECK is my plus or (hopefully) minus 8 - 10 range? has everyone gone to 24 hour trading???

makes me wish I'd held on to my SPY calls KOOL-MAN! Always appreciate your charts and analysis !!!
MM

Monkey,

Do you trade OTM options often? I noticed ES was around 934 and you bought 95's I was wondering was there any special reason you bought 2 strikes out if you don't mind me asking to why you bought those OTM calls was there any special reason? I too bought calls I picked up the 93's around 934 on the way down and some 94 on the way up @ the close.

Hey Joe,

I look at the option chain of different strikes and their prices ... looking at the current prices and difference from strike to strike (point by point on SPY) going up if I'm looking at buying calls. I've traded options quite a bit in the past and used to "monkey" around with Optionvue quite a lot taking into account the current Vega and Delta ... then got used to eyeballing it I guess. Then my strike is based upon that “one” strike that seems the best with what I'm expecting the "underlying" to do price-wise within the timeframe I'm expecting it to happen.

I know this sounds like a seat-of-the-pants analysis, but it's worked for me. Additionally, I'm watching all of the puts/calls in the chain intraday ... and for some reason, a strike will pop up on my mental radar as one that will be the best choice ... including my observation of Implied Volatility over time and at the particular time I want to take a directional position. Jeeez, I hope I'm describing this well enough for you to make sense.

I don’t trade in-the-moneys very much at all. I’ll take 1 to 3 strikes out of the money on the SPY. And those, if I’m right on the underlying’s move, will get jacked up with IV prem percentage-wise for a better percent return. Also, and this is the biggest MENTAL component for me – the DELTA. If the underlying moves in my favor, the option is progressively increasing its price … and if the underlying goes against me, the option price is losing less and less.

I’ll just give an example … The SPY is trading at 95 … I buy 95 calls … my delta is .5 … and if the SPY moves to 96 … my call’s gonna make more money than I’ll lose were the SPY to move down a point to 94 instead. I know I’m stating the obvious here that you already know. But I like how the out of the money’s get jacked up with IV if I’m right on my trade … yet they don’t suffer quite as much if I’m wrong and the market moves against me.

I usually enter an SPY trade during the session when the market’s calmed down and the options have settled down in price. I attempt to enter in the direction that I expect the market to move and keep a tight stop based upon the underlying’s price move … because I’m entering WHERE the SPY should not move against me by much at all and only worry about waiting for when it moves FOR me. This is something I cannot do trading the ES outright in some cases. That’s when I go to the SPY options. And I enter them based upon a daytrade that I may choose to subsequently hold for 2 or more days for a bigger swing move.

Back to your original question of why I go out of the money so far sometimes. I hope I’ve described some of the reasons earlier … but it also has to do simply with viewing the option chain prices during the day … almost like tape reading I guess. And I ain’t right all of the time. But my win/loss % is much higher than trading the ES outright.

It probably is just a psychological thing where I found out over time where I could make consistently profitable trades … and settled into that. I guess that my time using Optionvue back in the 1990’s probably helped with this.

All right another options trader. I am almost always in a SPY option trade, and I too find it easier than out right ES, swing trading that is, because when your wrong it usually takes longer to show in the option and they tend to slow down once they get away from the entry. I think I'll start another thread tomorrow about which is better OTM or ITM. When ever I get ready to buy some puts this next go around I'll buy half OTM and the other half ITM and see which moves better and which if either are better imo. It really depends on what you are expecting, as these past 8 sideways days would have murdered a OTM call or put..anyways rambling on, I'll be looking forward to talking more options in another thread as my extent on options is buying ITM calls/puts. I have been burnt so badly on OTM, I bought 250 OTM (3 or 4 strikes) SPY puts a long time ago and watched the ES fall 35 points and those puts expired worthless and had I bought ITM I would have made over 50,000 (I was over extended anyways in a small account). And since then I don't trade OTM probably has to do more with the physiological than actual results, I just assumed the problem was it was to far out and the market took longer than the amount of prem the options was worth as Vix has a ton to do with options pricing. btw do you write options? If so have you ever been exercised?

Joe, you said: "find it easier that outight ES, swing tading that is, because when you're wrong it usually takes longer to show in the option and they tend to slow down once they get away from the entry" ... that makes a huge difference for me too, psychologically. I'll start it as a daytrade but with a swing trade in mind. And even tho I go OTM ... often it may be just a tad ... like if SPY is trading 94.50 sometimes I'll buy the 95 or 96 strike. I'm looking at the ES knowing it has to move 10 points for every 1 SPY point when I analyze what I'm looking for. It's storming like CRAZY here in Dallas and power just went out ... gotta log off and shut down. Good stuff Joe. Also, had a buddy bot some QQQ puts just slightly OTM by maybe a point or two ... and the QQQ dropped a point by the next day and his options were trading at the same price ... so yeah, it can get goofy at times. And I may be "off" on trading OTM's vs. in the money's. It would be a good comparison. I guess I tend to be looking for a quick and larger magnitude move when I hop in so they don't suck the prem out like in a range such as we're in on the daily ES chart currently. And I've never sold options naked ... some spreads heare and there and adjusting positions and combining puts with the underlying in an overall position. Gotta run and unplug everything before my UPS battery juices out on me.

just got backin..Sept has a gap at 38.75...so my bias will remain short untill that fills....rollover day and lower volume on open in Sept ...so could get tricky..

volume building at 44.50.....september..no push of 60 minute high or low...YET!!!!

projection down ...5 min is 939.50, 15 min could be 937.50... cycle low due 12:30-35 time frame

thanbks cool...I have "air" at 40.50...so those are all real close and the obvious first target for me...then 60 minute lows.........challenge is that ledge at 45.50 so selloff may be a tough

I should also point out that this appears to be a wave 4 , with eventually wave 5 expected to peak some where around 953? Of course any thing can happen but once again i see a possible triangle forming on the 5 min chart. If so then we are in wave d up right now! if its a normal a-b-c correction then c=a at 939.50! this will be interesting.

Just about perfect - perfectly wrong that is!