AMZN Nov 16 1490 strangle

[Crazy ayzo 7]

Kim,

Question: I bought an AMZN Nov 16 1485/1490 strangle when the stock cratered on Tuesday.  It's up considerably in only a day.  Can you help me look at the exit of this trade more analytically?  I'm torn between selling at open, setting a modest gain credit from here, or swinging for the fences and holding it close to close.

PS.  I stumbled onto Steady Options looking for options training only about a month ago... I was totally new to options.  The idea of trading volatility was new to me.  I made a small fortune trading QQQ strangles this month!  I also protected my long positions with puts, sold calls on several of me long positions... all in, I've covered the cost of Steady Options for the next century in my first month.

[Kim 7,513]

As with all straddles/strangles, the biggest downside of buying when IV is high is the risk of IV collapse. Of course if you get a big move, the gamma gains will more than offset the vega and theta losses. But if the move is not big enough, and your position is close to expiration, you have negative theta and negative vega working against you. So I would consider it as high risk high reward trade.

As for trade management - personally I prefer to close both legs. If you close only the winning side (calls in this case), you are taking directional risk and betting on reversal. The only exception is when there is very little value left in the losing side, so it might not even be worth it to close it. 

[akito 184]

18 minutes ago, Crazy ayzo said:

all in, I've covered the cost of Steady Options for the next century in my first month.

I'm a little confused. You're saying that you made at least $124,500 this October? 100 * $1245 (the discounted yearly SO fee) = $124,500. That's a big jump from your "first ever strangle" you opened last Thursday and closed last Monday (only 3 days ago). (which is already basically the end of the month) https://steadyoptions.com/forums/forum/topic/4893-nov-9-qqq-strangle/

Your post says you bought 10 QQQ strangles with the " Nov 09 '18 $172.50 " call for -3.18 debit and the " Nov 09 '18 $167.50 " for -3.15 debit on Thursday, Oct 25. You then say you closed your put for 5.25 credit last Friday, Oct 26, and closed your call last Monday, Oct 29 for 2.25 (this one is seen in the screenshot above). That is only a $1170 profit from that "first ever strangle". So you're saying with this additional AMZN strangle, you've gone from $1170 of profits to $124500 of profits? only in the course of a few days? Again, I am genuinely curious about the numbers here.

[Crazy ayzo 7]

No, I was on the sidelines with a lot of cash for the last two years since selling my company.  I finally said FK it, I can't wait for ever and put $2.5 million in the market at the end of September in high beta stocks.... as you know October was the worst month for the Nasdaq since 2011.  I ended the month even.  Most of my gains were in selling calls against my long positions, buying long term puts to hedge my long term positions.  I also got into about half my positions by selling puts vs. buying the shares directly. W/O doing any options trading and protection I would have been down massively.

The biggest value I've gotten from the education is the idea that I no longer have to guess the direction of the market.

My current thesis is that I'm going to buy straddles or strangles on QQQ and high beta stocks when ever there is an extreme movement unrelated to the underlying symbol.  I'm also going to go long with 1yr plus calls when a stock tanks.  I did this with AT&T this week, it's up 33% in a couple of days.

 

PS>  I sold my AMZN straddle at open for a pretty nice return in only 2 days

[Crazy ayzo 7]

Here's another nice QQQ Straddle from this week...  30% in less than a week.  It's not exactly a "steady trade" since I staggered the sale dates.

[Kim 7,513]

6 hours ago, akito said:

I'm a little confused. You're saying that you made at least $124,500 this October? 100 * $1245 (the discounted yearly SO fee) = $124,500.

He got a nice discount for signing up for the next century. Only $24,500 instead of $124,500. And he can transfer it to his children and grandchildren. But please don't tell anyone...