Thank you everyone for your feedback and sorry I have not gotten
in here earlier. Yes we will send an official alert when the
system is closing out this current short trade. As for
looking at options contracts, I guess you just have to factor in
the premium you pay and add that into your cost basis so you
understand what your true position and loss/gain would be. I
might personally be biased to wait for another move lower if we get
one. Reason being is that the time premium will be out more
as well as then I could actually have the trade be net profitable,
otherwise if I sold now I might look at then selling an upside call
to defer some of the expense because it seems as though any strike
you buy above right now you will essentially be breaking even on
the trade in total in which case you could just close the trade and
be ahead. Anyone else with thoughts please share.
I agree on that one. The only reason to buy calls now (to hedge
the system position) would be if you're protecting a big move to
the upside soon. But of course, a move lower or choppiness in the
short term would make you lose on your premium. Like you said, you
might have to write another option to make back some of what you
lose in the premium.
I'm biased towards lack of volatility and choppiness during this
holiday week and early next week. If this scenario plays out, it
may not be worth it to buy calls. This has nothing to do w/ the
system trade, but I put on a short strangle strategy yesterday to
play my bias of lack of volatility (in the short term). I wrote the
ES DEC 02 1085 Puts and 1270 Calls.
Now if you very worried about the upcoming holiday you could
look at the Weekly SPY options. They will be less expensive
but will expire this and next Friday (depending which you choose)
so your not protected very long. They will also loose premium
quickly so the ones for next Friday by Monday will definitely be
down but does give you some coverage if you fear a short term move
but don't want to outlay the premium for the monthlies and don't
feel comfortable with doing spreads.
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Thanks for the feedback
Posted by tom on 22nd of Nov 2011 at 09:54 am
Thank you everyone for your feedback and sorry I have not gotten in here earlier. Yes we will send an official alert when the system is closing out this current short trade. As for looking at options contracts, I guess you just have to factor in the premium you pay and add that into your cost basis so you understand what your true position and loss/gain would be. I might personally be biased to wait for another move lower if we get one. Reason being is that the time premium will be out more as well as then I could actually have the trade be net profitable, otherwise if I sold now I might look at then selling an upside call to defer some of the expense because it seems as though any strike you buy above right now you will essentially be breaking even on the trade in total in which case you could just close the trade and be ahead. Anyone else with thoughts please share.
Tom, I agree on that one.
Posted by cw12 on 22nd of Nov 2011 at 02:45 pm
Tom,
I agree on that one. The only reason to buy calls now (to hedge the system position) would be if you're protecting a big move to the upside soon. But of course, a move lower or choppiness in the short term would make you lose on your premium. Like you said, you might have to write another option to make back some of what you lose in the premium.
I'm biased towards lack of volatility and choppiness during this holiday week and early next week. If this scenario plays out, it may not be worth it to buy calls. This has nothing to do w/ the system trade, but I put on a short strangle strategy yesterday to play my bias of lack of volatility (in the short term). I wrote the ES DEC 02 1085 Puts and 1270 Calls.
Thanks cw12 and Tom, for
Posted by frtaylor on 23rd of Nov 2011 at 09:00 am
Thanks cw12 and Tom, for good words of advice. Much appreciated.
FRT
Now if you very worried
Posted by tom on 23rd of Nov 2011 at 09:39 am
Now if you very worried about the upcoming holiday you could look at the Weekly SPY options. They will be less expensive but will expire this and next Friday (depending which you choose) so your not protected very long. They will also loose premium quickly so the ones for next Friday by Monday will definitely be down but does give you some coverage if you fear a short term move but don't want to outlay the premium for the monthlies and don't feel comfortable with doing spreads.