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  • Gold Retraces 50% Of The 1999-2011 Bull Market [View article]
    I asked you a question about placing a trade on 20th June with August 7 expiration. So let me answer it for you.

    On 20th June, there was NO August 7 expiration. August 7 were issued on June 24. But I will go with you and assume, once again, "innocent mistake".

    Placing August 7 260/280 strangle on June 24 would produce 32% LOSS by yesterday close. The trade was briefly up by 3% 3 days after entering when TSLA dipped below 260.

    Any other one month setups you want to suggest?

    "theta decay is logarithmic"
    Of course it is. But it still happens one month before earnings.

    Take a look at your ULTA trade. The negative theta is currently 1.5% per day. IV increased only by 1.94 points for the calls and and 0.65 points for the puts, in 8 days. This was clearly not enough to offset the theta, and the trade is down 8%. This is typical behavior.
    Aug 6, 2015. 12:28 PM | Likes Like |Link to Comment
  • Gold Retraces 50% Of The 1999-2011 Bull Market [View article]
    "However with leg of August 7th TSLA bought by 20th June made good profit before the expiration."

    And how do you know that?
    Aug 6, 2015. 12:02 PM | Likes Like |Link to Comment
  • Gold Retraces 50% Of The 1999-2011 Bull Market [View article]
    I'm sorry to say, but you have just revealed your complete ignorance on this subject.

    "Expiration could be before, on or after .it just depends on the parameters."

    I cannot believe you just said that. The whole point of the strategy is to buy options that expire AFTER the event!!!!!! Why would options that expire before the event have any IV spike??? The IV spike is caused by anticipation of big after earnings move. The IV spike happens only to options that expire AFTER the event. Doing 260/280 strangle with Jul31 expiration would lose 70%+.

    "Of course each day that passes by there is bound to be theta decay but that does that mean profits will not be made ?"

    So why do you advocate placing it a month before earnings? The whole point is that you want the IV spike to offset the theta. But IV spike doesn't happen a month before earnings!! It usually starts around 7-10 days before earnings. So right now you just burning theta, without any compensation from IV spike!!!

    So lets say the trade is down 15% after 2 weeks and then recovers and makes 30% in the next 2 weeks, for the final result of 15% gain. What does it mean? It means that by entering 2 weeks before earnings and not a month, you could make 30%!!
    Aug 6, 2015. 10:59 AM | Likes Like |Link to Comment
  • Gold Retraces 50% Of The 1999-2011 Bull Market [View article]
    "BTW yes I do have my own IP."

    Even assuming you do have your IP, but describing the TSLA setup you won't be revealing this IP because you will be describing WHAT was the setup, not WHY you did it. See the difference? But again, I know exactly why you won't do it..
    Aug 6, 2015. 09:25 AM | 1 Like Like |Link to Comment
  • Gold Retraces 50% Of The 1999-2011 Bull Market [View article]
    "You should not be making such statements when you do not have complete information. For the pair you suggested, you may plot its trajectory from say June 20th for different expiration dfrom say 4th Week of July and hopefully you might rephrase your views."

    Why you keep saying that I don't have complete information?? I have all information I need. And why would I do expiration of 4th week of July when earnings are in August?? But once again, I will be the first to admit being wrong if you provide me ONE single setup where entering a month or earlier before earnings could produce any decent gains. But we know by now that you wouldn't do it, hiding behind this IP BS.

    "You very well know in this strategy the main objective is gain from volatility while mitigating theta burn ..so as I said earlier every parameter must be aligned very well ...time being the most important."

    Exactly.. but volatility doesn't start to rise a month before earnings, so you just suffer from the theta burn in the first two weeks of the trade. Just look at your ULTA and QIHU trades. IV is basically unchanged so far, and the trades bleeding theta every day.
    Aug 6, 2015. 08:58 AM | Likes Like |Link to Comment
  • Gold Retraces 50% Of The 1999-2011 Bull Market [View article]
    I'm using OptionNet Explorer (ONE). It's great and reasonably priced. TOS gives you end of day data only, with ONE you can go 5 minutes intervals. A lot of cool features as well.

    Yes, I can see the pattern here.. pretending to know some "secret" stuff, hiding behind "intellectual property" BS..
    Aug 5, 2015. 11:37 PM | 2 Likes Like |Link to Comment
  • Gold Retraces 50% Of The 1999-2011 Bull Market [View article]
    intellectual property.. right. Whatever makes you feel good.

    The TSLA trade was up 2% for a single day. Rest of the time it was down, 25% at some point. So no matter when you opened it you could not close it for a decent profit.

    "It is so because you do not have duration information neither do you have information when it could have been closed."

    In fact, I have all the information. Ever heard of backtesting? If you have a backtesting software, you can track the trade day by day (hour by hour in fact) and see how it performed during the whole month.
    Aug 5, 2015. 10:54 PM | 1 Like Like |Link to Comment
  • Gold Retraces 50% Of The 1999-2011 Bull Market [View article]
    Seriously? So now you pretend to have some sort of "secret formula"? This is a really lousy excuse.

    Okay, let me do it for you.

    260/280 strangle could be opened for 20.07 a month ago. Today it closed at 16.45. That's 18% loss.

    You want to try different strikes? Go ahead.

    You see, I operate with numbers. I never hide behind this secret formula BS. There is no "other person's information." Only pure backtesting to put the odds in your favor.

    Does it work all the time? Absolutely not. But 90% of the time, opening a strangle 7-10 days before earnings is better than a month. I prove it to you with hard numbers, and you hide behind this "edge" excuse, without providing any numbers.
    Aug 5, 2015. 08:37 PM | 3 Likes Like |Link to Comment
  • Gold Retraces 50% Of The 1999-2011 Bull Market [View article]
    My point was that TSLA is not the best candidate for a strangle.

    I invite you to show me how "A very robust and profitable strangle could be constructed on TSLA a month ago and make very good % gain." As I mentioned, a TSLA strangle entered a month ago would lose 15-20%, depending on timing and strikes. If you have evidence to show otherwise, I would be interested to see it. I operate with numbers, not theories.
    Aug 5, 2015. 06:35 PM | Likes Like |Link to Comment
  • Gold Retraces 50% Of The 1999-2011 Bull Market [View article]
    There is no such thing as almost complete safety.. Straddles are not completely safe as well. And I'm not talking about risks such as pre-announcement. I'm talking about entering at the wrong price, wrong stock, wrong timing etc.

    For example, you advocating entering strangles a month before earnings, but similar TSLA strangle that you closed today for 6% gain after 2 days of holding, would lose almost 20% if opened a month ago. Some strangles would lose as much as 30-40%.

    200 trades were executed over 2+ years period. That's around 5 trades per month. Believe me, they were all very well selected, after careful backtesting.

    My point was to show that you cannot just select a stock, enter a strangle and "hope" it works. Some stocks are terrible for that strategy, this is why we are basically shorting near term strangles by doing a calendar.
    Aug 5, 2015. 03:42 PM | Likes Like |Link to Comment
  • Gold Retraces 50% Of The 1999-2011 Bull Market [View article]
    This specific setup is exactly to take advantage of IV skew changes. This is one of our most consistent and profitable strategies. We have been trading it over 2 years, executed over 200 trades with winning ratio over 75%. it is also one of the safest strategies - the maximum loss was around 25%.
    Aug 5, 2015. 01:34 PM | Likes Like |Link to Comment
  • Gold Retraces 50% Of The 1999-2011 Bull Market [View article]
    The earnings calendars we do have very specific parameters. For high IV stocks like TSLA, they are very resilient even to big moves. few cycles ago we had 190/200 double calendar, the stock moved to 220 and the trade still made 25%.

    All trades have some kind of bias. When you do a strangle, you are betting that the stock will move. No strategy will work under any conditions, and no strategy will work 100% of the time. What we do is playing probabilities, by looking at previous cycles and seeing what worked the best.

    For some stocks, straddles/strangles work the best. For others, calendars have a better chance. TSLA is among the best calendar candidates, the 100% winning ratio proves it. Has nothing to do with infomercials.
    Aug 5, 2015. 11:55 AM | 1 Like Like |Link to Comment
  • A Good Option Strategy: Exploiting Earnings - Associated Rising Volatility [View article]
    I'm not sure there is any point for all this discussion and the comparison. If your portfolio underperforms, I'm sure you will find thousand excuses why it happened (oil didn't perform as expected, overall market correction, timeframe too short etc.)

    This whole discussion started when you wrote "Fundamental investing always outperforms what you guys are doing, playing the odds :)" So I suggested that you select whatever long strategy you want (stocks, options etc.) and we compare.

    I still din't get a response to my question how you made 20% in 2008 without shorting, as the market recovered only in 2009. Same for 2000, as the crash lasted 3 years.
    Aug 5, 2015. 11:35 AM | Likes Like |Link to Comment
  • Gold Retraces 50% Of The 1999-2011 Bull Market [View article]
    Well, our 100% winning ratio and 30%+ average return provides evidence that calendar is a great strategy for this stock. You cannot argue with numbers.

    Of course timing and good entry point is everything. This is why we are doing expensive backtesting to find the optimal timing and price.
    Aug 5, 2015. 11:09 AM | Likes Like |Link to Comment
  • A Good Option Strategy: Exploiting Earnings - Associated Rising Volatility [View article]
    You still don't get it.

    My point is that you can have as much experience and expertise as you want, but there are forces stronger than you. If we get a market correction, your long options portfolio will be toast.

    Now, we are talking about few different aspects here.

    I'm running marathon in a sense that my strategies are well backtested, repeatable and have an edge. But I'm also running sprint in a sense that those are short term strategies.

    If you have a long portfolio of stocks, and the market corrects, maybe you don't care. You just buy good companies cheaper, and hope the market recovers (lets assume it does, which is not a fact). Of course with stocks portfolio, you have no chance against my options portfolio. But then you say this is not apples to apples comparison, and you are right.

    So now we replace your stocks with long options, and you say you will outperform my non-directional strategy. But now you are running sprint too because options have expiration date. So now you are taking much higher risk because you are dependent on short term market fluctuations. See my point?

    I suspect that you are right and there is no point to compare to compare performance. If you lose at the end of the year, you can always say that the timeframe was too short and you are running marathon, not sprint.

    So if you REALLY want to compare performance, here is my suggestion:
    start an instablog here on SA, dedicated to tracking your portfolio. When you make a stock purchase, select also an option trade. Then track it, for whatever timeframe you select.
    Aug 5, 2015. 11:03 AM | Likes Like |Link to Comment
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