Options trading question

[Optionstrader]

No sh*t Sherlock?

Recently a lot of trolls in MM. Isit some spam accounts.

No his real name is johsua and he has written a book

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[Optionstrader]

No sh*t Sherlock?

Recently a lot of trolls in MM. Isit some spam accounts.

Indeed he was a trader for banks

Sent from Asus ASUS_Z00AD using GAGT

 

[Optionstrader]

Sent from Asus ASUS_Z00AD using GAGT

 

[iperiodic]

Indeed he was a trader for banks

Sent from Asus ASUS_Z00AD using GAGT

Haha i know who ST is, Im talking about the troll who's been rude to him. ST's book was the first investment book I read.

 

[scholar88]

Hi Optionstrader, are you a full time options trader? Seems you look like a very experienced options trader from your username.

 

[iperiodic]

Hi Optionstrader, are you a full time options trader? Seems you look like a very experienced options trader from your username.

ur username seems like you some top scholar also.

 

[scholar88]

ur username seems like you some top scholar also.

Your name sounds like (I period) every month..

 

[iperiodic]

Your name sounds like (I period) every month..

exactly my point, when did username indicate experience in trading.

For example you're having your 'views' by typing random gibberish pretending to be an expert while doubting the rest of the professionals.

 

[scholar88]

exactly my point, when did username indicate experience in trading.

For example you're having your 'views' by typing random gibberish pretending to be an expert while doubting the rest of the professionals.

What? I do not understand what are you referring to? What doubting professionals, pretend to be expert? I completely unaware what are you talking about. 2 different stuff yet u can link it together?

How is your example related to the "usename" teasing? I was just merely teasing about your hilarious username, and you get angsty and defensive out of the sudden?

Are you angry about having period every month.. Mood swing probably for this week, its okay, I understand.

So solemn and serious for what, cannot even take jokes? Just saying about username only what?

 

[sAVaGEmP5]

Show me the money lolol

 

[scholar88]

Show me the money lolol

Talking to?

 

[iperiodic]

What? I do not understand what are you referring to? What doubting professionals, pretend to be expert? I completely unaware what are you talking about. 2 different stuff yet u can link it together?

How is your example related to the "usename" teasing? I was just merely teasing about your hilarious username, and you get angsty and defensive out of the sudden?

Are you angry about having period every month.. Mood swing probably for this week, its okay, I understand.

So solemn and serious for what, cannot even take jokes? Just saying about username only what?

You can't even comprehend what options trading is after studying it, even asking ST for his credentials.

Typing a load of rubbish and your rubbish 'strategy'. Utter bull.

 

[scholar88]

You can't even comprehend what options trading is after studying it, even asking ST for his credentials.

Typing a load of rubbish and your rubbish 'strategy'. Utter bull.

Hahaha, still angsty about your username? Aiyo, I can understand, I'm really just kidding about the "I period" every month..

Don't take it to heart. Chill, dude.. Don't be too petty, I apologise for the username teasing can?

 

[Perisher]

scholar88, many users have reported your post as trolling.
Do keep in mind that money mind forum is for more serious discussion and try to keep to the topic.
Let this be another warning.

Also, try to keep it chill everyone. Thanks.

 

[Queen77]

Warrant Premium

Hi All,

I wonder if this thread is still active. I want to buy warrant on index, but how to calculate the premium? Is premium = Offer price shown on the platform?

And if i sell in the market before expiry, my broker told me the settlement will be (my buying price - selling price x quantities) = Profits before any charges.

But i also heard that another method is (settlement of index - Exercise level) / warrant per share x FX rate

Im confused lol

 

[ashethen]

Can't believe an options trading thread can be so funny.

Hi All,

I wonder if this thread is still active. I want to buy warrant on index, but how to calculate the premium? Is premium = Offer price shown on the platform?

And if i sell in the market before expiry, my broker told me the settlement will be (my buying price - selling price x quantities) = Profits before any charges.

But i also heard that another method is (settlement of index - Exercise level) / warrant per share x FX rate

Im confused lol

You should do your proper research before stepping into warrants/options. Go read a proper book first instead of relying on forumers who could be trolling

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[Shiny Things]

Hi All,

I wonder if this thread is still active. I want to buy warrant on index, but how to calculate the premium? Is premium = Offer price shown on the platform?

And if i sell in the market before expiry, my broker told me the settlement will be (my buying price - selling price x quantities) = Profits before any charges.

But i also heard that another method is (settlement of index - Exercise level) / warrant per share x FX rate

Im confused lol

I think you might be a bit out over your skis as well. Answering your questions in order:

1) That depends on the quotation conventions of the market and the warrant you're trading. The total premium for some warrants might just be the offer price; for others, it'll be the offer price times a multiplier. Ask your broker.

2) Both are correct. If you sell before expiry, your profit is (sell price - buy price) * quantity * multiplier. Just like if you'd bought and sold a stock. If you hold a (cash-settled) call warrant to expiry, the payout is (index - strike) * quantity * multiplier, with a floor at zero.

 

[ipaq4444]

JFC mate we're not a paid service here. You can wait more than an hour and a half before posting a followup. If you want like 90-minute turnarounds I charge for that.

Anyway, oh man there is a lot going on here. Let's get started.



Nope, you probably shouldn't.



In order: Maybe. Maybe. Buyer, but reasonable people disagree. No. That's not even a question. No. Sure there is. Yes, penny stocks are risky. No, that's dumb. Depends whether you're net long or short.



Futures are inherently zero-sum. Think about this: if you buy SPX futures, you have to buy them from someone. And if you make a profit, that someone that you bought them from is going to make a loss.



Mate, you have literally no idea what you're talking about, do you? (Also, a Triple Top Breakout sounds like something nasty you'd catch from a wild night out at the Lookout or the Midnight Sun. I think there are antibiotics for that.)


So here's the deal, and I'm going to stop making fun of you now.

Options are just another way to express your view on an underlying.

If you think the underlying is going up—whether that underlying is a single stock, a stock index, a currency, a commodity, an interest rate, whatever—the easiest way to express your point of view is just to buy the underlying.

Options let you express a more nuanced view on what the underlying's going to do.

If you think the underlying's going to rocket higher: you buy some low-delta calls. Small premium, maximum bang for your buck if your view is right.

If you think the underlying's going to go a bit higher, but not much: buy some 1x2 call spreads. Little to no premium, nice profit if your guess is right, but potential losses if you're wrong and the stock goes up a lot.

If you think the underlying's going to fart around in a range and then explode higher: buy a calendar spread (sell front-month calls, buy back-month calls). Pay some premium upfront, but less than you'd pay for the naked calls; the tradeoff is that if it moves before your short strike rolls off you're going to make less than you would have otherwise.

There are a squillion kinky-sounding variations on these strategies, as well. Collars! Strangle spreads! Strips and straps! Straddles! The point is that options let you express a more nuanced view than "it's going up" or "it's going down". If your view isn't more nuanced than "it's going up", then there's no point farting around with options; you'd be better off just trading the underlying.



Sure, you can sell naked options, I used to do that all the time when I did this professionally. The question is: how big are your balls, and how diligent is your risk-management? You're getting into the sort of area where you can't just set a stoploss order and go to bed.



There are no hard-and-fast rules here.

Let's use call spreads as an example. We'll look at the options on the CLN7 crude futures, since that's what you were talking about. Right now, the futures are trading 47.83, and the near-the-money options are trading as follows:

48 strike: 0.66
48.50 strike: 0.50
49 strike: 0.32
49.50 strike: 0.21

If you buy the 48-48.50 call spread, you'll pay 16 cents for a maximum payoff of 50 cents. That's a 3:1 payoff ratio.

If you buy the 48-49.50 call spread, you'll pay 41 cents for a maximum payoff of $1.50. That's a 3.6:1 payoff ratio, but with a lower chance of paying out (because the futures are less likely to reach 49.50 than they are to reach 48.50).

If you're going to do stuff like this, you need to ask yourself "where do I think the underlying's going to end up?". And then "OK, based on where I think the underlying's going to end up, what options strategy gives me the risk-return tradeoff that I want.


See below regarding "repair strategies". Basically they are a lie that charlatans tell to options naïfs.



Stop fixating on "repair". If a trade goes against you, you don't "repair" it, you don't double up to catch up; you close out of the trade and move on. Doubling up to "repair" a loss-making options position is what got Dave Bullen and Luke Duffy in half a billion dollars' worth of trouble.



Well yes, this is true by definition, because options can only ever end up expired or exercised; there's no third way.



Well hey, if someone was offering me any option for zero, my answer would be "I'll buy them all, how much do you want to sell me?".

Seriously though. If you've got a bunch of options that are basically worth zero, a good mental trick I learned is to write them off: mentally mark them at zero. (We used to move these into the "strip" book, because we were "stripping them out" of the position.) Don't hedge them; just ignore them entirely.

If the underlying moves back close to the strike price, and the options suddenly have value: woohoo, windfall gain! Sell 'em and pocket the cash. If they end up expiring, you've written them off anyway and accepted the loss.

Short options, on the other hand: yes, pay the five cents to buy them back. There's nothing worse than being short a truckload of low-delta options that you thought were basically dead, then having them come back to life as spot rockets toward the strike and cost you six or seven figures to close them out before they blow you up. Trust me on this.

Also, options usually trade in nickel increments (five cents).



Again, personal preference.



Mate this is gibberish, I don't even know what you're saying here.

Firstly, there are also "bull call spreads" and "bear put spreads".

Secondly, crude is not a one-way market. Over the last couple of decades it's gone from $12 to $150 to $20 to $50.

Thirdly, remember what I said above about "options are a way to express a more nuanced view on the market"? Iron condors (you don't need to capitalise it) are a way to express a view that "I think the underlying is going to be rangebound for the next week, month, three months, year, whatever".


Yes, that's the idea of short straddles and short condors and any other vol-selling trade. If you think the underlying's going to be rangebound, selling options lets you profit from that view—with the tradeoff that if you're wrong, and the stock is volatile, you're going to lose money, probably more than you put in.



Don't be a lunatic. No. Never put all your eggs in one basket, whether that basket is an option or a stock or a bond or even just sticking it in the bank.



Are you high?



No, seriously, are you high? This is not how diversification works. Diversification is for things that you're going to buy and hold, not for futures positions which are inherently things that you trade.



Mate, seriously, I have no idea what you're on about here. This is word salad.



OK, I will clarify your doubts by saying you should stay well away from options. You're welcome.

Anyway. PM me if you want some actual advice on this stuff from someone who did it professionally.



That's not a "repair" strategy, that's "double up to catch up". "Repair strategies" are lies that are sold to newbie options traders to persuade them that options are somehow a sure-win strategy.

If the stock drops from 140 to 120, your 100-95 put spread will have gone from (let's say) 50 cents to $1.50. You'll be locking in a $1 loss on the 100-95 put spread, and hoping that the 90-85 put spread expires worthless and bails you out.

The other thing is: what happens if there's a huge gap down, like SNAP, HTZ or YELP did just this week when they released earnings? If AAPL gaps from 140 to 95, your put spread will have gone from 50 cents to $4.00 or so, and you've just incinerated most of your capital. What do you do then?

Thank you Sir

 

[Blackout-19]

Hi, can some of you experienced traders continue this post? Thanks!!

 

[cyanide14]

You should do your proper research before stepping into warrants/options. Go read a proper book first instead of relying on forumers who could be trolling

Any good books to recommend to read?