Recent Posts

Pages: 1 2 3 [4] 5 6 ... 9
31
Trading Ideas using Options Explorer / Re: Corn (ZCK19): 21 March 2019
« Last post by TradingAdmin on March 21, 2019, 06:16:35 pm »
Here we go...

Our Load Shedding cycle started at 17:00 - for those who do not know what that is, it means the Power Utility cut electricity for the entire suburb and surrounding suburbs for 2.5 hours, they cannot produce enough electricity to supply in the country's needs due to poor management.  I am on my mobile phone now.

I monitored the live market session and my trade went as follows:
  • I went Long 2 x ZC MAY19 Futures at 374.  (that is one tick above the high of the bar preceding the #2 point, a TTE entry for those familiar with this trading methodology)
  • I sold one of those two futures at 275 1/2, taking $75 profit.  I then set my stop loss on the remaining contract at 373 (the profit I took on the one contract giving me a stop-loss on the second)
  • At 377 I went Short 2 x ZC 380 CALL Future Options for 6 7/8 each, or $343.75 each (just took the market price for immediate entry)
  • With the options in place I removed the stop loss on the Futures

My final position looks like this:



Now we wait and see...
32
Trading Ideas using Options Explorer / Re: Corn (ZCK19): 21 March 2019
« Last post by TradingAdmin on March 21, 2019, 04:56:14 pm »
Something I have not mentioned, but quite important:

I can also enter the trade the other way around.  Instead of shorting the two calls, then place a break order to long the futures, I can first long the futures and if it fails to move up to my liking, then short the two Calls.  The advantage of doing it this way is the Calls are closer to being In-the-Money, thus more expensive, I receive more premium for them, which widens that trading range considerably!
33
Trading Ideas using Options Explorer / Corn (ZCK19): 21 March 2019
« Last post by TradingAdmin on March 21, 2019, 04:16:01 pm »
Today we look at Corn, the May contract.  This trade is quite an interesting trade.



I have been waiting for Corn for quite a while to turn around, start trading up.  We see a clear 1-2-3 low here.  If Corn breaks to the upside through the #2 point, then probability will favour an upwards move in Corn.  How do I get a part of that action?



This picture looks a little bit more complex than before.  Let me explain:
  • The pink line is the risk profile if I choose to simply buy a Call Option.  Premium is $225, I cannot loose more than $225.  But prices have to move up at least at the trend of the pink line.  If prices fall below that line I WILL loose.  So if you are absolutely certain prices will move up and continue to move up, then this strategy offers the lowest risk
  • The white lines are the risk profile if I choose to short a Put option.  The lower line drawn at a loss of $300.  Prices have to move up for me to make money, but I don't really care if they do not move up, even if they stay level I will still make my money.  Profit limited to the premium I received for the put option ($320)
  • The yellow lines are the trade I am actually interested in.  I short two Call options at a strike price of 380, premium of $225 each, which is counter-intuitive.  Why would I short Call options into the face of a rising market?  I then Long the futures.  The position shown will be the result.  Look at my loss lines - they are even lower than when I short a Put.  Now look at my break-even line at the bottom.  Corn does not have to move up, even if it moves a bit down I will still make money.  My profit region is quite big.  Of course I can now also loose if Corn moves to high - but this being a daily chart, it will take a long time for Corn to move that high, ample time for me to get out.

Why do I choose to do it this way and not just simply short a Put?
  • Because I can leg in as follows:  I short two Call options, can even short them in the money.  I then place a break-order to long the futures above the #2 point.  If Corn never breaks out pass the #2 point, my two short call options will make me money!
  • If prices do move past the #2 point, it will create the trade as shown
  • If Corn continues to move up, I can drop one of the two call options to create a Synthetic Short Put - the trade shown as white lines, but after making certain prices ARE moving up.
  • if prices just goes up a little and then reverses, I take profit on the futures; I am now short Call options which makes money of the market goes down!

In other words, the strategy above gives me a great many possibilities to manage the trade according to whatever the market throws at me
34
Trading Ideas using Options Explorer / Re: Cocoa (CCK19): 15 March 2019
« Last post by TradingAdmin on March 21, 2019, 09:09:06 am »
Update for Cocoa:



The move Cocoa did yesterday constitutes a breakout of an important point on the Cocoa chart (on both a Weekly as well as the Daily chart) - marked with the red arrow.  For me, this is a sell signal.

Our position is still in profit by $90, due to the nature of the strategy that we employed.  I would take that $90 and get out of the trade.  Just close all positions.  (I would do it outside regular trading hours)

The position graph on the left is interesting though.  If you think this is a false breakout, just stop running, you would like to give it more time, any move back into the range will quickly realise you some nice profits.  And then you have the weekend before you, two more days of time decay, you can easily make $300+ by Monday - IF prices moves back up.  A more conservative strategy might be to wait for the open and follow the market closely.  Any sign that prices will continue to drop, get out of the trade.  You will need to leg out: drop the loss making ones - May Short Puts, then the Jun Long Call; and then drop the profit making ones - May Short Calls and Jun Long Put - the downwards momentum will ensure you make some additional profits while unwinding the trade.  If prices trade back up instead, hold onto the trade, it will quickly give you >$200 and the weekend time decay will see it jump to $300.

HOWEVER - AND THIS IS IMPORTANT:  The strategy described above requires you to be online and in front of your computer when the Cocoa market opens, and to be watching the action unfold during the live trading session - and then to make some quick decisions.  My personal trading style see me only monitoring the markets on a daily basis, I do not follow the live trading sessions.  On my daily watch, this is a sell signal, the risk is too high, so I just get out..
35
Trading Ideas using Options Explorer / Re: Cotton #2: Friday 15 March 2019
« Last post by TradingAdmin on March 19, 2019, 10:41:37 am »
Update:  Tuesday 19 March 2019



The weekend saw us pocketing $100 on this trade, shall we hold out another day or two?

We posted three trades on Friday, all three over the weekend lost time, all three are under pressure to make up the loss in time in price movement - against the current trend.  Failure of prices to do that means we are making money.  In total, the weekend had netted us $320 in profits.  If you have a small account and trying to build an account, this is not bad growth over a weekend.  Large account holders could of course have traded more than one contract for better results..
36
Trading Ideas using Options Explorer / Re: Coffee (KCK19): 15 March 2019
« Last post by TradingAdmin on March 19, 2019, 10:36:39 am »
Update:  Tuesday 19 March 2019



The weekend saw as making $100 on this trade.  Let's hold on another day or two and see how it develops
37
Trading Ideas using Options Explorer / Re: Cocoa (CCK19): 15 March 2019
« Last post by TradingAdmin on March 19, 2019, 10:29:25 am »
Update:  Tuesday 19 March 2019



The weekend saw us making $120 profit on this trade, let's hold out another day or two and see how it develops..
38
Questions about Options Explorer / Re: What makes the Options Explorer so different?
« Last post by TradingAdmin on March 16, 2019, 08:48:35 am »
Hi BenFet,  it gets updated all the time.  Mayor upgrades saw us adding spreads (inter- and intra-market spreads) and options on those spreads, added a quandl download so you can view bar chart information in your analysis windows, added a trading strategy analysis tool, a different method to measure IV strength, etc.
The website lags a bit behind..
39
Questions about Options Explorer / Re: What makes the Options Explorer so different?
« Last post by BenFet on March 15, 2019, 05:27:16 pm »
Was Options Explorer updated and upgraded in recent years?
40
Trading Ideas using Options Explorer / Cocoa (CCK19): 15 March 2019
« Last post by TradingAdmin on March 15, 2019, 12:09:12 pm »
If you would like to trade a market that is going nowhere, look at this one:



I can honestly say I do not know where Cocoa is going, up or down, but it is no hurry to get there.  Luckily, using options these type of markets present us with ideal trading opportunities.  We simply use a combination of the two strategies we had for Coffee and Cotton above:



We short two Call options above the market and hedge with a long Call in the Jun options month, then short two Put options below the market and hedge that with a long Put.  Cocoa can take as much time as it likes to decide where it wants to go, but if it stays between 2080 and 2340 for the next 22 days we will make upwards of $600 from its indecisiveness - starting on this weekend where two of those days will expire and the market goes nowhere
Pages: 1 2 3 [4] 5 6 ... 9