Hello
This thread is for educational purpose and nothing else.
Underlying:
- INFY (Closed today @ 3271.25)
Trade: Long APR Strangle
- Long APR 3000 put @ 33.70, IV 34.19, OI 1'625
- Long APR 3600 call @ 38.00, IV 32.20, OI 20'500
Risk:
- Limited: 33.70 from the put and 38.00 from the call = 71.70
Profit potential:
- Zero to unlimited
Level:
- Intermediate to advanced
End of day option matrix 19 Mar 2014:
- http://i57.tinypic.com/2pq0xv5.png
End of day charts 19 Mar 2014:
- Monthly: http://i61.tinypic.com/73i4d3.png
- Daily: http://i59.tinypic.com/33mc19j.png
Reason behind the trade:
Have a look at the monthly chart in the last few years. There are not many candles which have a range of over 600 points. On the other hand: The volume on this monthly chart still is very low compare to the other candles which made such ranges. Also all the next candles to the right side of those huge candles are small or in a range of 300 points. So we could buy an APR 3000 put and an APR 3600 call = Long APR strangle. If we want to short, we add and sell APR 3100 put and APR 3500 call = Long Iron Condor or we sell APR 2900 put and APR 3700 call = Short Iron Condor. According to market moves with a range of 100 - 150 point on a single day, we adjust our long options by moving the other side up (Put) or down (Call) to the next 100 strike level.
Trading plan:
- If market moves in either direction in one day over 100 and more points, we adjust the other side according to the whole move by rolling up or down the put or call.
- If market moves in either direction less then 100 points a day, we wait and analyze the situation.
- To protect our profit, we will test the selling of 50 point strike levels under the actual spot price.
Now lets follow this trade and see what can be done or what happen. I not can guarantee to update here every day, but as you have all numbers, just follow them and write them down.
Warning: This thread is only for educational purpose. Option and future trading can lead to huge losses. You are responsible by your self for what happen with any trade you do or implement or will be discussed here, as I do not share any profit or loss which can occur in this educational thread and trade.
Somatung
Edit:
To keep it on a normal level only the following three strategies are used in this thread:
- Long strangle: http://www.theoptionsguide.com/long-strangle.aspx (Neutral - bullish on Volatility)
- Long Iron Condor: http://www.theoptionsguide.com/iron-condor.aspx (Neutral - bearish on Volatility)
- Short or reverse Iron Condor: http://www.theoptionsguide.com/reverse-iron-condor.aspx (Neutral - bullish on Volatility)
This looks like this:
- Long otm Call + long otm Put = Long Strangle
Now we add the legs in what ever way it will be needed. Market is the boss, so we act according to his moves and volatility sentiments:
- Long otm Call + short less otm Call + short less otm Put + long otm Put = Long Iron Condor
- Short further otm Call + long otm Call + long otm Put + further otm Put = Short or reverse Iron Condor
This thread is for educational purpose and nothing else.
Underlying:
- INFY (Closed today @ 3271.25)
Trade: Long APR Strangle
- Long APR 3000 put @ 33.70, IV 34.19, OI 1'625
- Long APR 3600 call @ 38.00, IV 32.20, OI 20'500
Risk:
- Limited: 33.70 from the put and 38.00 from the call = 71.70
Profit potential:
- Zero to unlimited
Level:
- Intermediate to advanced
End of day option matrix 19 Mar 2014:
- http://i57.tinypic.com/2pq0xv5.png
End of day charts 19 Mar 2014:
- Monthly: http://i61.tinypic.com/73i4d3.png
- Daily: http://i59.tinypic.com/33mc19j.png
Reason behind the trade:
Have a look at the monthly chart in the last few years. There are not many candles which have a range of over 600 points. On the other hand: The volume on this monthly chart still is very low compare to the other candles which made such ranges. Also all the next candles to the right side of those huge candles are small or in a range of 300 points. So we could buy an APR 3000 put and an APR 3600 call = Long APR strangle. If we want to short, we add and sell APR 3100 put and APR 3500 call = Long Iron Condor or we sell APR 2900 put and APR 3700 call = Short Iron Condor. According to market moves with a range of 100 - 150 point on a single day, we adjust our long options by moving the other side up (Put) or down (Call) to the next 100 strike level.
Trading plan:
- If market moves in either direction in one day over 100 and more points, we adjust the other side according to the whole move by rolling up or down the put or call.
- If market moves in either direction less then 100 points a day, we wait and analyze the situation.
- To protect our profit, we will test the selling of 50 point strike levels under the actual spot price.
Now lets follow this trade and see what can be done or what happen. I not can guarantee to update here every day, but as you have all numbers, just follow them and write them down.
Warning: This thread is only for educational purpose. Option and future trading can lead to huge losses. You are responsible by your self for what happen with any trade you do or implement or will be discussed here, as I do not share any profit or loss which can occur in this educational thread and trade.
Somatung
Edit:
To keep it on a normal level only the following three strategies are used in this thread:
- Long strangle: http://www.theoptionsguide.com/long-strangle.aspx (Neutral - bullish on Volatility)
- Long Iron Condor: http://www.theoptionsguide.com/iron-condor.aspx (Neutral - bearish on Volatility)
- Short or reverse Iron Condor: http://www.theoptionsguide.com/reverse-iron-condor.aspx (Neutral - bullish on Volatility)
This looks like this:
- Long otm Call + long otm Put = Long Strangle
Now we add the legs in what ever way it will be needed. Market is the boss, so we act according to his moves and volatility sentiments:
- Long otm Call + short less otm Call + short less otm Put + long otm Put = Long Iron Condor
- Short further otm Call + long otm Call + long otm Put + further otm Put = Short or reverse Iron Condor