Kelly Park

As often as I have to do it, you would think I would get used to displaying my ignorance. Alas, no, but I will again anyway. How do I group my chart to the order window? I open my chart by the icon at the top of the page in TWS.

Can some IB guru tell me how to chart a multileg trade in IB? I can get stocks and individual options charted and there seems to be a way to chart straddles, spreads, RICS and such, but I haven't been able to figure out how to have multi-leg deals charted.

I don't think I have seen a discussion of using calendars for post earnings IV collapse. I thought the potential large move in the underlying would hurt them even more than a wide IC. But if that works, I'm interested in understanding that play also. I just hate to not use what seems to me to be the most predictable move in the market (post earnings IV collapse, if there was a pre-earnings IV rise) for some kind of trade.

BTW, I'm not advocating the first part of the strategy. I think we do that better already. But I am intrigued by the second part, playing the IV crash.

I would like to see some more discussion of this strategy. As deeply as SO delves into the IV rise prior to earnings, I have felt that we should be taking full advantage and playing the IV collapse also. With backtetsing to determine the strategy with the highest likelihood of success, I think we could then improve that success rate by playing only those stocks that had a significant IV rise prior to earnings (which we know from tracking our pre-earnings trades). Basically, I think we can turn many of our winners into doubles, and offset our losers much more effectively. Has anyone already done some backtesting of short ICs through earnings? Kim, Chris, I'll bet you have already looked into this.

Sorry, Thaze. I've had it happen to me too. Stop loss orders are so TOUGH to deal with. It seems like it takes more analysis to figure out an approiate stop-loss than it does to find good trading candidates in the first place. And they so often trigger on a quick bounce and not the dramatic crash we set them for. Frustrating!

I like the thesis, Eric. I'm following you on this one. I'm in the Oct 12.5 call at 1.13. I also decided to try a bit more ocnservative Dec 11 Call at 2.50. Less time value, less theta, lower commissions. Won't be as good ROI, of course, but wanted to compare the two.

Just for me, the duration depends on my thesis of overall market conditions and for that stock. I just want to have some fairly low Theta time for my thesis to be correct. Like Hnason said, you want to be close to 1.00 delta, to capture as much stock mvement as possible, and have as little time value as possible. To get close to that, but not pay too much, I look for about .90 delta.

I commonly buy DITM, long dated calls on stocks that I think will be rising for some reason. I don't think they are less risky at all, since (as you say) you have theta to contend with, they are time limited (so you have to be right, at the right time), and their are affectively leveraged (their % gain or loss is greater than the underlying). I guess the reason some think they are less risky is that they are cheaper than buying the stock, but I think that is a dangerous misunderstanding of options. But if you address the risk by using appropriately smaller position sizes, then buying DITM calls allows you to diversify more by having positions in more stocks. And you can still sell covered calls against them, as I typicaly do. BTW, my typical DITM call is 6-12 months out, with a delta of about .90 and I plan to sell them with at least 2 months until expiration.

I haven't had it happen to me, but I always worry about having the short leg of a calendar excersized early. Especially since most brokers don't seem to recognize the long leg as the hedge to the short leg. Have you had that happen Chris? Do you handle that the same way as the other early excercises? (Beg to close the long leg yourself.)

Any thoughts on buying the SEP 665 straddle and selling the 660 P 670 C. Currently at 4.70 midpoint. Small movement to have gain near expiration

It is Kim's interest in improving and expanding upon the current SO trades that gives me hope for long term success with SO. In my first few month I have only gained a few percent overall. Mostly, I need to keep improving my trading, to get closer to the model portfolio results. But it is also encouraging to have the site administrator (and other members) keep working to improve the trading strategy and add new types of profitable trades. I have not seen any other site that seeks to go beyond its current trading strategy. I really see SO as evolving into a comprehenisve portfolio, well beyind just pre-earnings IV trades.

I haven't tried this myself, but I recently read a pretty comprehensive analysis of profit target/stop loss settings for S&P 500 stocks. The study found the optimum return with a 7% stop loss and 20% profit target settings. Baically, the strategy recommended by the anlysis was to use some fundamental analysis to choose stocks, some technical analysis to choose entry points (what kind was not the point of the article), then set 7% loss and 20% gain sell orders when the stock is bought. I would think that a 7% trailing stop would be at least as good and potentially better.

Thanks, Scott. I guess I'll just have to not lose money, eh?

When I was having my PDT issue a couple of weeks ago, I submitted my "reset" request, then realized it would still take too long, so I just added some funds to the account. Does anyone know what happens now, if I do another trade that meets the "day trade" definition? Will the reset cause me problems now, even with over 25K in the account? Basically, I think we all need to be ready to do day trades, since sometimes these SO trades hit profit targets the same day. (And some of us have been known to make the occasional mistake that needs immediate undoing!)

This is odd looking. Even the Sep monthly is at .57 midpoint.

I'm curious what Augen meant by: "The foolish retail investor who tries to sell time decay on weeklies in order to make the quick buck" Does that mean he would think the calendars we do are foolish? Or the folks that do the same weekly trade with covered calls? I'm not certain what aspect of that trade he feels is foolish.

Thanks, Scott. I don't mind adding $ to my account, I've already requested the transfer, but it takes forever to get from Fidelity to IB and even longer for them to credit it. And their "reset" takes 5 days. So I'm gonna get hurt on the couple of calenders I have with short weeklies I need to roll this week. "Poor, poor pitiful me."-Linda Rondstadt.

Does anyone know what other ramifications there are to being tagged as a PDT, besides needing 25K in your account? Doe sit affect IRS treatment? Since just opening and closing one RIC on the same day triggers it, I need to understand it better.

Well, the 2008 market meltdown may have been fueled by highly correlated, automated trading, but the fire was lit by a massive mortgage writing frenzy and the resulting land and development bubble. I know land and development better than the market too, but I'm still sitting on beautiful coastal lots in Florida that are worth less than a quarter of what I still owe on them!

Thanks, DShaver. Sorry you last all that work, but I appreciate it. It occurs to me that the accelerated time decay just before the weekend could have something to do with why I don't like the earnings trades that end late in the week (when trading weeklies). I expect theta to be high then, but it still seems to surprise me how much gamma it can offset.

Thanks, Scott. I knew there had to be a way, but never quite tumbled to it. Does anyone know if there is more to being listed as a PDT than just needing 25K in your account. Doesn't it affect IRS treatment of your gains? I don't want to day trade, but entering and exiting a RIC in the same day, either to take a quick gain or cut a loss, is quite possible.

Been following this discussion with much interest. I would like to assist with the monitoring, but I confess to having gotten a bit confused in the early part of the forum and never quite got it sorted out. This is selling a butterfly (I think of getting a credit as selling and paying a debit as buying) early Thrs and selling mid-Fr, to capture "weekend" time decay, right? Then, maybe, buying another butterfly for the last couple hours of the week when, presumably, the "weekend" time decay has already occurred and gamma is the major factor. Did I get that right?

Well, maybe y'all can figure this one out. In IB, I always use OptionTrader/Combo to setup my multileg trades, because it is the only way I know how to do it so far. When I mouse click the options I am interested in, they populate the combo order form, but IB decides whether it is initially entered as a buy or sell of each leg. I change it, if I need to. Usually, the first leg I choose is entered as a buy, then the next is a sell. It then alternates. But recently, they are all entered as sells. It would be nice to set this, so it is consistent, but I don't know how. Today, IB decided to do it backwards from usual and I did not catch it, so I ended up doubling my HPQ position, instead of closing them. I caught the error as soon as it filled. (Filling immediately is what got my attention.) So I did a sell order for all of them and fortunately was able to get out at the price I had originally intended. Later in the day, when I went to enter another sell order on another position, IB rejected the order, saying that I was a Pattern Day Trader and needed more money in my account. How in the heck did I get to be a PDT with one quick reversal of an erroneous order? And will they really keep you in a position that is time limited becasue of an administartive issue. Fideloty has told me that they will NEVER keep you from closing a position, only opening a new one.

I switched my preference in IB from SMART to Highest Rebate about a month ago and have not noticed much difference. My average commissions are down, due to less overall exchange fees. I haven't noticed any particular change in speed or ability to get fills. I don't have enough trade volume to make this definitive, but my average per contract has come down from .84 to .77, including exchange fees. What I do notice is that my highest fees are always trades on PSE. If there were an option to exclude one exchange, I would try excluding PSE to see if it reduces my ability to get fills.