***Official*** 2011 Stock Market Thread

[IHateMyJob2004]

Lothar,

I agree with the analysts this time. I agree with them about 50% of the time.

Knowing what i know about analysts though, I bet you it is listed under Groupon's "risks" somewhere in the paper work they have filed thus far.

 

[Azurik]

Gah, bought back the RMBS shares that got called last week in the $18.30-$18.35 range. The calls I sold and the higher price I bought resulted in virtually a zero net gain/loss.

Oh why oh why did you run up late Friday RMBS? And why did rumors come out that Italy's PM would resign causing the markets to lift up pre-market. Gah

 

[Miramonti]

Gah, bought back the RMBS shares that got called last week in the $18.30-$18.35 range. The calls I sold and the higher price I bought resulted in virtually a zero net gain/loss.

Oh why oh why did you run up late Friday RMBS? And why did rumors come out that Italy's PM would resign causing the markets to lift up pre-market. Gah

If you broke even that's awesome, considering where the stock probably was when you sold the calls, and that they expired in the money. The futures were up after the close on friday too (qqq@58 and spy @126.5ish iirc). It's always nice when things go in the wrong direction yet aren't costly.

 

[Azurik]

If you broke even that's awesome, considering where the stock probably was when you sold the calls, and that they expired in the money. The futures were up after the close on friday too (qqq@58 and spy @126.5ish iirc). It's always nice when things go in the wrong direction yet aren't costly.

I know, nothing to really complain about... just lost potential is all.

I bought Nov $14 monthly put options as protection... no covered calls currently.

 

[Imp]

Essentially checked out of the market this morning. I have about 1/15 of my money still in.

Writing is just on the wall... I'll play with some XOM and MSFT in the meantime.

 

[The-Noid]

If you broke even that's awesome, considering where the stock probably was when you sold the calls, and that they expired in the money. The futures were up after the close on friday too (qqq@58 and spy @126.5ish iirc). It's always nice when things go in the wrong direction yet aren't costly.

Futures finished the Friday late session down 4.75 handles afaik...

 

[FelixDeCat]

If I owned a stock that had the potential to explode upward, I would not sell calls unless I was selling "in the money" calls to finance "out of the money" calls just in case it explodes upward so I dont miss out on the upside while capturing the difference as income.

 

[Miramonti]

Futures finished the Friday late session down 4.75 handles afaik...

Spy after-hours closed @126.15, qqq closed @58, both up from regular hours. (I have it in my software, but don't know where to get after-hours online.)

 

[Miramonti]

If I owned a stock that had the potential to explode upward, I would not sell calls unless I was selling "in the money" calls to finance "out of the money" calls just in case it explodes upward so I dont miss out on the upside while capturing the difference as income.

He explained that above, where it was just a short-term strategy. The jury asked for 11/8 off, so selling 11/4 calls against some of the position was actually a pretty sensible move imo.

 

[Azurik]

He explained that above, where it was just a short-term strategy. The jury asked for 11/8 off, so selling 11/4 calls against some of the position was actually a pretty sensible move imo.

That's exactly what I did, and I sold more covered calls this morning (Nov 14 $19). One jury has a big case of the flu so no session today, and tomorrow they already agreed upon having the day off. That leaves only 5 hours on Wednesday and Thursday to deliberate (they don't work Fridays).

I plan on buying back my calls on Wednesday morning (unless the jury can't convene again).

The only thing that will dampen this strategy is a settlement... which I don't think is going to happen now until after the decision (if they are any). Even if that happens, I have stand-alone shares not tied to calls.

 

[The-Noid]

Spy after-hours closed @126.15, qqq closed @58, both up from regular hours. (I have it in my software, but don't know where to get after-hours online.)

DATE TIME OPEN HIGH LOW CLOSE VOLUME sma50 sma200 ema50 VWAP

11/04/11 08:00 PM 126.1200 126.2000 126.1000 126.1500 44,280 125.4567 125.2383 125.6153 124.9343
11/04/11 07:50 PM 126.0500 126.1500 126.0500 126.1100 35,109 125.4263 125.2267 125.5935 124.9343
11/04/11 07:40 PM 126.0400 126.1100 126.0100 126.0500 22,117 125.3933 125.2164 125.5724 124.9343
11/04/11 07:30 PM 125.9500 126.0400 125.9100 126.0200 25,643 125.3575 125.2071 125.5529 124.9343
11/04/11 07:20 PM 125.9400 125.9800 125.9000 125.9500 34,464 125.3267 125.1981 125.5339 124.9343
11/04/11 07:10 PM 125.8700 125.9500 125.8600 125.9400 18,607 125.2969 125.1896 125.5169 124.9343
11/04/11 07:00 PM 125.7600 125.9300 125.7600 125.8700 40,451 125.2673 125.1813 125.4996 124.9343

Stupid trades to get pulled that far from VWAP. If you want the minute quotes and exchanges let me know...

ES did not finish there and closed at VWAP in the 30 minute extended session.

 

[Miramonti]

If I owned a stock that had the potential to explode upward, I would not sell calls unless I was selling "in the money" calls to finance "out of the money" calls just in case it explodes upward so I dont miss out on the upside while capturing the difference as income.

Also, what would you hope to get by selling a call spread like that?

It's creating a short position against long stock. If the market rallies, there is no profit until the out of the money call goes 'in the money', where the loss on the call spread is maximized, where one can finally profit from the long shares (as soon as it rallies enough to cancel out the loss on selling the call spread.)

Selling, for example, a 17/19 call spread with the stock at 18 is roughly the same position/risk as buying the 19/17 put spread.

I would be surprised if selling in the money calls 'finances' anything either. The position earns interest, but I'd have to assume there are margin requirements for the spread as well (which may or may not be more than buying the call outright.)

(/edit: unless you are referring to a 'ratio spread', selling 1 'in-the-money' call and buying >1 out of the money call. That's a totally different P/L graph.)

 

[Miramonti]

DATE TIME OPEN HIGH LOW CLOSE VOLUME sma50 sma200 ema50 VWAP

11/04/11 08:00 PM 126.1200 126.2000 126.1000 126.1500 44,280 125.4567 125.2383 125.6153 124.9343
11/04/11 07:50 PM 126.0500 126.1500 126.0500 126.1100 35,109 125.4263 125.2267 125.5935 124.9343
11/04/11 07:40 PM 126.0400 126.1100 126.0100 126.0500 22,117 125.3933 125.2164 125.5724 124.9343
11/04/11 07:30 PM 125.9500 126.0400 125.9100 126.0200 25,643 125.3575 125.2071 125.5529 124.9343
11/04/11 07:20 PM 125.9400 125.9800 125.9000 125.9500 34,464 125.3267 125.1981 125.5339 124.9343
11/04/11 07:10 PM 125.8700 125.9500 125.8600 125.9400 18,607 125.2969 125.1896 125.5169 124.9343
11/04/11 07:00 PM 125.7600 125.9300 125.7600 125.8700 40,451 125.2673 125.1813 125.4996 124.9343

Stupid trades to get pulled that far from VWAP. If you want the minute quotes and exchanges let me know...

ES did not finish there and closed at VWAP in the 30 minute extended session.

Isn't what you pasted showing what I said, SPY closed at 126.15, up from the regular hours trading close?

 

[The-Noid]

Isn't what you pasted showing what I said, SPY closed at 126.15, up from the regular hours trading close?

Yes you said you didn't have software...

Again you said futures that is not SPY or QQQ. Futures finished nowhere near 1261.50 equivalence...

 

[The-Noid]

Also, what would you hope to get by selling a call spread like that?

It's creating a short position against long stock. If the market rallies, there is no profit until the out of the money call goes 'in the money', where the loss on the call spread is maximized, where one can finally profit from the long shares (as soon as it rallies enough to cancel out the loss on selling the call spread.)

Selling, for example, a 17/19 call spread with the stock at 18 is roughly the same position/risk as buying the 19/17 put spread.

I would be surprised if selling in the money calls 'finances' anything either. The position earns interest, but I'd have to assume there are margin requirements for the spread as well (which may or may not be more than buying the call outright.)

(/edit: unless you are referring to a 'ratio spread', selling 1 'in-the-money' call and buying >1 out of the money call. That's a totally different P/L graph.)

Let's take these one at a time.

17/19 spreads puts and calls is a box spread. Box spread is an arb position that earns the RFR and people often quote them as a profit/loss when in fact they forget to take into account there is different decay in puts and calls. Not roughly. Has to be THE SAME otherwise there is an ARB to a fully hedged position.

As for the credit spread, for P & L and margin requirements it would be counted as a covered call and the purchase of an option not as a credit spread unless you were option level 5 or 6. Anything 4 and below which I assume the majority of people on this board are would count that as sale of a covered call and purchase of a spec option. Payoff should look very similar as well. There should be no margin requirements beyond holding the underlying. You can use the cash to buy lottery tickets if you want. Payoff graph for P & L would be two graphs transposed on each other.

 

[Miramonti]

Yes you said you didn't have software...

Again you said futures that is not SPY or QQQ. Futures finished nowhere near 1261.50 equivalence...

Ok, I see...I meant I didn't have a link to show you what I was referring to. ;

Yes, I mentioned futures with the assumption that they would essentially be the same close as the etf's...bad assumption? Do you have what the futures time/sales looked like in that span, like you showed for SPY.

 

[The-Noid]

Ok, I see...I meant I didn't have a link to show you what I was referring to. ;

Yes, I mentioned futures with the assumption that they would essentially be the same close as the etf's...bad assumption? Do you have what the futures time/sales looked like in that span, like you showed for SPY.

Yeah I will grab them after the bell...

 

[Miramonti]

17/19 spreads puts and calls is a box spread. Box spread is an arb position that earns the RFR and people often quote them as a profit/loss when in fact they forget to take into account there is different decay in puts and calls. Not roughly. Has to be THE SAME otherwise there is an ARB to a fully hedged position.

A box is a position-neutral spread that as a whole is an interest rate play (don't know what RFR is) and that is the only risk. As a spread, it's quoted <par, ie a $10 box might trade for $9.94 depending on carry term, because the cost of carry would be $.06 until expiration. As position, it's neutral risk because it buys the synthetic underlying at one strike price (+call, -put) and sells the synthetic underlying at another strike price (-call, +put)...0 delta and 0 premium risk. The purchaser lends at the respective interest rate, the seller borrows at the respective interest rate.

As for the credit spread, for P & L and margin requirements it would be counted as a covered call and the purchase of an option not as a credit spread unless you were option level 5 or 6. Anything 4 and below which I assume the majority of people on this board are would count that as sale of a covered call and purchase of a spec option. Payoff should look very similar as well. There should be no margin requirements beyond holding the underlying. You can use the cash to buy lottery tickets if you want. Payoff graph for P & L would be two graphs transposed on each other.

I don't know what "option levels" are, perhaps because I haven't traded options for quite a while...so I'll take your word for it. I'm assuming it's a system for how margin's are established by brokerages from what you're saying.

 

[Miramonti]

dupe

 

[The-Noid]

A box is a position-neutral spread that as a whole is an interest rate play (don't know what RFR is) and that is the only risk. As a spread, it's quoted <par, ie a $10 box might trade for $9.94 depending on carry term, because the cost of carry would be $.06 until expiration. As position, it's neutral risk because it buys the synthetic underlying at one strike price (+call, -put) and sells the synthetic underlying at another strike price (-call, +put)...0 delta and 0 premium risk. The purchaser lends at the respective interest rate, the seller borrows at the respective interest rate.

"Risk Free Rate."

I read what you were doing wrong as well...too many screens open...

5 let's you play banker bringing in credit, full credit strategies, generally no options on synthetics or CBOE indices. Generally 250k+
6 let's you play market maker or sell naked options on futures and synthetics. Generally $5MM and above.

Depends on the house. 5 is often the highest level and you can write any complex strategy at that point. Generally speaking anything under 5 and you can't play banker entering the sale or credit side of the spreads or naked options.

 

[FelixDeCat]

Also, what would you hope to get by selling a call spread like that?

Are you stoned or something? Stock closed at 18. The 18s are paying $1.03 each. The 19s cost .35 cents each. You sell the 18s on your position and keep the 19s as insurance if the stock explodes.

The difference of .68 cents each is the income, with insurance. :ninja:

 

[Miramonti]

Are you stoned or something? Stock closed at 18. The 18s are paying for $1.03 each. The 19s cost .35 cents each. You sell the 18s on your position and keep the 19s as insurance if the stock explodes.

The difference of .68 cents each is the income, with insurance. :ninja:

Here is your quote:

If I owned a stock that had the potential to explode upward, I would not sell calls unless I was selling "in the money" calls to finance "out of the money" calls just in case it explodes upward so I dont miss out on the upside while capturing the difference as income.

When you posted this, the stock was around $18.

18 calls were at the money.

17 calls are the nearest in the money.

Wtf, so which is it? lol

 

[FelixDeCat]

Here is your quote:



When you posted this, the stock was around $18.

18 calls were at the money.

17 calls are the nearest in the money.

Wtf, so which is it? lol

Oh, I see. Well whatever makes me look good is the correct answer. :awe:

 

[Miramonti]

Oh, I see. Well whatever makes me look good is the correct answer. :awe:

Version 2.0 was the better answer, selling the 18 calls, because they were/are mostly premium right now (ie selling the 18/19 call spread.)

 

[Pliablemoose]

In and out of GMCR, 1500 shares @ 70.48/71.25



(two more trades closer to that $200 iTunes gift card on eTrade)