Discussion Forum

So what is the trade. What are you buying/selling?

https://www.lovemoney.com/news/56013/property-vs-pension-investment-return?source=10000277&utm_source=newsletter
pensions v property- dumb luck.
Never seen a well managed fund produce anything other than terrible results,but every property I’ve owned has made money- I got lucky with tenants, and that is a lottery

Another way to think of binaries is like a spread-you sell one option and buy another in the same product- example -buy a 6800 put for 50,sell a 6700 put for 20, you now have a binary outcome at expiry- 1. the spread hits its max value of 100(profit=100 minus premium paid,(50-20=30) so you make 70 on a cost of 30, or 2. you lose 30.
But…… we can close out or adjust any old time along the way-that is for another time.
Don’t lose sleep over this…too late, I know you will.

Delta is the rate of change relative to the underlying,and gamma is the rate of change of delta- it is NOT linear. I’m not mad about this trade but I think it will serve to illustrate some valid points -market ‘timing’, choice of weapon, time horizon, opportunity cost.
The logic is sound the choices in my mind are a bit ugly but we can get a’feel’ for how things pan out-and if the market tanks and this trade makes 100, we learn nothing

Every market pundit/commentator will talk about fear and greed-these have to be managed-and I can honestly say my first serious trade(Feb-Mar 2003) stepping into the big time, I made a four figure sum and thought I was on the right track.
My second trade- George ‘Dubya’ Bush went to war with Iraq,and within a few days my losses exceeded that first trade 3 fold. I had sold calls,very cheaply.
Worse still, I went on holiday and had not read the matra ‘buy when there is blood on the streets’. War is great for business-it’s awful I know, but instead of denouncing profits we can do good things with those profits-at no time do we have to lose sight of our humanity. We aim not to make idle boasts-it is only right that we talk about our losses,our mistakes, and fallability-so others can benefit. No question is considered ‘stupid’ here.

Margin- the money or assets that are required to be placed in your brokerage account,against which you can trade,using it as a surety.
This may blow your mind,however……
If you have upside risk like in that particular trade,you could add………downside risk and you most likely will not need to increase margin. In fact the market can only go down to zero but in theory could go up to ∞ (infinity-but no further!)
So…. if you took this one trade,and only this trade for the whole year, you’d make 11%.
Somewhat better than the 1% you’d get on deposit

By the way-what the car salesman did-that is the same as shorting a stock-you sell something you do not own. Now who would do that? Why your very own broker would rent out shares to people who wish to short a stock. Whose shares are they renting out? Why yours of course! And you thought they were lying idle……
FYI- ‘Naked shorting’ is when people have not rented the stock, but have taken a short position-this is not like an exchange traded contract which is what we trade. Naked shorting is no worse than naked longs by the way-and in the US a trader who deposits $10,000 has $20,000 buying power-effectively unfairly increasing the price of stocks, in my view.

Typically traders like to fade moves-so there would be for example a big up move,which fizzles out, then everyone goes short(sells),then when that move runs out of steam,they go long. I have read thousands of words on this type of strategy- I’m still here,where are those guys? I hope they made their fortune, but it’s just not what we do-we have massive advantages which over time will become clear

This is not a trade I would usually take, but if it goes wrong there is always the chance to roll into the next month and wait for the market to come down, and trade adjustment is something that is key to what we try to do,
so next week we’ll see how the trade has done and make plans accordingly

Good one. My trade on Friday – shorted NOV 7350 call for 22.50!

Wow! I never know one could even buy reviews of systems…

Curiously as this trade has gained from today’s movement and in light of recent reserach courtesy of Tasty Trade,this trade made 50-so if you had closed out you would have made the expected 25% return.
Thus- a trade I don’t like has shown that when the profit is there for the taking, grab it with both hands. This trade may go on to make 100, but over time these only have alimited success rate so you might be happy with 25%.

We trade options as CFDs are really not helpful- a brutal palying field where > 80% get blown up -good luck

The targeted butterfly is not a bad idea. I like the risk/reward, it’s one of these strategies you could pay for with some spare change from a higher probability setup and not worry about it too much if it doesn’t work out.

On the market conditions, everyone always seems to go on about the Santa rally at this time of year, but in 2014 & 2015, it was pretty late showing up. In early December you seem to get more like the ‘Christmas Party Hangover’ effect instead and the market drops off – sometimes quite a bit. So I reckon your trade idea might be worth a punt and it could work with more or less any major index underlying.

There’s an interesting article about December performance for the FTSE here: http://stockmarketalmanac.co.uk/2016/12/the-stock-market-in-december-4/

Hi Richard-well here’s the thing- you can never know when the market will turn and take back your profits. How can anyone know? You just have to set a reasonable target – I sometimes have a maximum possible profit of 100 and will settle for 40-out of those possible 100s yes a couple have gone all the way,and some have gone to zero so fast as expiry looms and the market has its own ideas about whose money you have!
There is a school of thought that suggests random entry is as good as any and exit is everything. Van Tharp(Google him) has some words on that.
Some forex traders move their stop to break even to avoid losses-no idea why, and with options we can choose to close out a portion of a trade to give us a free trade-as with this put spread. By doing multiple lots -say for example you did 5 at 18.5, your cost is is 92.5, the market hits 47,you close out 2 and leave the remaining 3 to collect the maximum 100 or near enough.I won’t go into other strategies but you can take a chunk of profit and still have another profitable trade running,as option strategies allow us so much flexibility, unlike those poor souls trying to trade in one dimension. Delayed prices can be found on ICE-see the link in anotherpost here-you have to register,and then you get a dropdown of all the equity options as well as FTSE100. We love dialogue here, and hope to offer personal insights that others may find useful.

Remarkable result. How do you decide when to close the trade?
Are live prices available from iVolatility or ICE? What is the code for FTSE100 options?

now!!!! 144 and 96.5 I’ll let you do the math/s

Tonight’s prices 114 and 72.5= 41.5 on a trade that costs 18.5