Small ball QQQ straddles for newbies

[Crazy ayzo]

I wanted to share yesterday's trade... especially for other newbies looking to try a few low value trades.  I've been buying Thursday straddles for the following day expiration.  I also bought an HD yesterday.  I think recent options are underpricing how much this crazy market has been moving on many Fridays.  If you want to try it, I suggest you buy a tight straddle.  I've lost on most of my thursday directional bets.  

FYI.  The corresponding call is about to expire worthless, a loss of about $80.  It's approximately 100% return on a one day trade.  I should have gone big!

 

[Kim]

What was the trade?

[Crazy ayzo]

It was QQQ straddle opened late yesterday afternoon with today's expiration.  Actually, a tight strangle $174.5/$175

Purchased a Nov9 175 call for .81 and a Nov9 174.5 put for $1.01.  Total cost $1.82.  Sold it for $3.64.  One day trade.

My logic was that it has been very rare that the QQQ has moved less than 1.81 in a day of late.

 

I posted the graphic of the Put buy/sell.  The corresponding Call is still in my portfolio, about to expire worthless.

[Kim]

Good job, but please be aware that this is a very high risk trade. With only one day to expiration, the risk of 50-80% loss is real. Please do NOT go big with those trades.

[Crazy ayzo]

Fortunately the feeling of going BIG only hits me after closing a winning trade!  The caution always creeps back in when opening a new one.  Thanks for the advice.

[cuegis]

Any chance the idea came from here?,.........

 

https://www.tastytrade.com/tt/daily_recaps/2018-11-08/episodes/expiration-straddles-11-08-2018

[Crazy ayzo]

On 11/9/2018 at 1:09 PM, cuegis said:

Any chance the idea came from here?,.........

 

https://www.tastytrade.com/tt/daily_recaps/2018-11-08/episodes/expiration-straddles-11-08-2018

NO, but I just read the link now.  The link and backtest seems to contradict my one-off success.

[cuegis]

2 minutes ago, Crazy ayzo said:

NO, but I just read the link now.  The link and backtest seems to contradict my one-off success.

Good..stay with your method. Their back testing is always skewed, and curve fitted, to make whatever point they are trying to sell.

Trust your own experiences the most!

Edited November 13, 2018 by cuegis

[FrankTheTank]

Could you flip the Tasty Trade backtest around and instead SELL a straddle every Thursday with 1 DTE?  Seems like that would produce an average profit of $19-$20 less commission?

 

 

Edited November 14, 2018 by FrankTheTank

[cuegis]

9 minutes ago, FrankTheTank said:

Could you flip the Tasty Trade backtest around and instead SELL a straddle every Thursday with 1 DTE?  Seems like that would produce an average profit of $19-$20 less commission?

 

 

You could flip every Tasty Trade study over on it's head an make the reverse trade and probably profit.

Except you would never want to do anything that has open ended risk...like a naked short strangle, which they think is just fine!

And they have the studies to "prove" it!

[FrankTheTank]

5 minutes ago, cuegis said:

You could flip every Tasty Trade study over on it's head an make the reverse trade and probably profit.

 

  L O L

Edited November 14, 2018 by FrankTheTank