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Expert technical analysis of financial markets by JC Parets

[Options] Taking a Flyer on Chinese Content

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Chinese content? What?

Look, I don’t know. I just follow Price. They are all just letters and numbers to me. If it trades, it’s liquid, and there’s a good technical setup — that’s all I need.

It just so happens that this particular company is engaged in creating Chinese internet content. Ok.

But man oh man do I like the potential reward-to-risk setup here so let’s get straight to the point… [Read more…]

Vega Risk is Real

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I tweeted that earlier today as I was feeling my position value decay away for no conceivable reason as the market was coasting sideways.

I felt helpless as my index options position was melting away, far beyond the level my theta risk suggested it would in a quiet market.

It turns out, the quiet market was precisely the reason.

It was a stark reminder to me: Long Vega also entails risks that I need to be aware of.

Most people, myself included, tend to worry about getting caught short volatility (short vega) in a market environment where volatility is rapidly rising. We’ve all heard the stories of traders holding naked short options that were overleveraged into a volatility spike. Those stories make the headlines. And rightfully so.

So it’s easy to forget that being long volatility can be just as painful when volatility is grinding lower as VIX certainly was today: [Read more…]

[Options Premium] A Developing Analog

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The Bull has been rolling. Have you noticed? Judging by the response I got from an innocent little bullish tweet last week during the midst of a mild pullback for stocks, you’d think I’m insane for thinking stocks have a chance to go up.

So many angry people looking for lower prices.

Maybe they’ll be right someday? Chances aren’t zero.

Meanwhile, I’ll just keep paying attention to price and relative strength which is an excellent guide to point me into winning trades in any direction.

So for today’s trade, we’re going to ignore the digital assaults on our senses by the angry bears and get analog in our approach to riding this bullish wave.

[Read more…]

[Options P2P] Adjustment to EFA Position

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We’ve adjusted a position in the Paid-to-Play portfolio today:

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We rolled our adjusted EFA Feb17 64/72 Strangle to an EFA March17 67.50/74 Strangle for a .34 cents net credit.

Essentially we did two trades: closed the February strangle and established a new March17 strangle at the 67.50/74 strikes for a .34 cents next credit all-in. Our new GTC order to close this new March Strangle at a profit is .50 cents.

Here is today’s short video where I review our portfolio and place these adjusting trades:

If you have any questions on this trade, please send them here.

You can view all trades and cash flow for this P2P account on our cash flow tracker found here.

~ @chicagosean



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