PaulCao

Hi SBatch, Thanks for clarifying IB's stance, I believe this means if you use Direct order to route your orders, then they won't use this discretion to SMART route your order depending on the best payment they can receive (but still has to be the NBBO)? My biggest issue with options trading is not necessarily the broker's routing but figuring out the true mid price - sometimes, the mid for a spread is distorted because "Joe 1-lot" has already bid up the price for one of the legs; I wish options software could look at the whole entire volatility smile of a options series across a single expiration, smooth out the outliers and create true mids for your spreads, But that would be too fair for the market-makers (which until recently IB was with TimberHill before they sold it to Two Sigma), so I won't hold out my breath, Thanks, Paul

Hi, I came across this article: http://www.reuters.com/article/us-exchange-data-idUSKBN17L2PU My understanding is that the exchanges want to make more money; and want to distinguish the folks who use quotes on a display-screen (e.g., ToS or TWS) versus polling or streaming via an API; and suspect the recent change in the IB quotes subscription is due to this, I know that people here have sourced their data from historicaloptionsdata.com or IB API; this rule will most likely affect professionals who get their quotes from Bloomberg, RealTick or some other kind of professional OMS/EMS and data vendors, but am curious for retail who collect data, if you guys know if this is going to be a big deal too? Best, PC

Hi edboc, I don't have the exact statics. So I'll give a bad estimate, for my 45DTE RUT or SPX iron condor, I think I get 40% overall return on margin on these trades. (I try to enter a 45DTE RUT or SPX iron condor when VIX is high (ideally above 15), with total credit initially collected of about 40% of margin and try to close at about 35% gain on credit or 25% on loss; so basing that I lose 50% with average loss of 25%, win 50% with average win of 35% for 8 total iron condors this year; 8 * 0.50 * 0.35 - 8 * 0.50 * 0.25). For my jumbontron calendar trades, I think I get also get 40% overall return on margin on these trades. The edge is small here, only probably 1%. I'd say I probably can get 15% at 60% time and lose 20% at 40% of other time. However I do these trades religiously every week and average about 2-3 of these calendar trades per week. So it's a grind where I entered about 2-3 of these trades every week or 40 roughly of these trades, so grinding them out for 40 trades; (40 * 0.60 * 0.15- 40 * 0.40 * 0.2) = 40%. (For my short-term calendar jumbotron trades, I try to enter a 2 week to expiration calendar on liquid and big ticker-size AMZN, GOOG, LNKD etc. when the stock is in the middle of support of resistance range and with no catalysts (e.g., AMZN stabilized after earnings). . So I usually use up to about 40%-50% in my portfolio; so it matches about 17% YTD on my portfolio prior to 8/21 or $5.1K on $30K account; this is of course, before 8/21, where I've lost about 10% since then (5% on VIX call calendar due to my incompetence/overconfidence at over allocating a trade that "will never lose," 5% on iron condors and calendars being taken out). So in short, I think others can do much better; e.g., SteadyCondors have a much record managing the iron condors and Kim's earning calendars have a greater edge (because it is more forgiving than a calendar entered in a normal period). Also meetings during the day prevent me from adjusting quickly say when the stock gaps higher due to an analyst upgrade or some other unexpected news. Best, PC

Hi rygittins, I like to sell primarily premium; primarily involving short-term calendars on "jumbotron" stocks (reference to TastyTrade's "Shadow Trader") and also delta 15ish 45DTE iron condors on SPX or RUT (I think trade that TT's Liz & JNY likes to put on), It has been particularly challenging environment of late, my short term calendar trades entered prior to 8/21 has surprisingly broke even (due to the rapid expansion of vol); however, on my SPX and RUT iron condors, my initial put side has been taken out and I rolled down aggressively the untested call side such that I might get some serious whipsaw now if the market decides to go back up, That being said, I'm still sticking to selling premium especially in this environment. Aside from possibly being stubborn, egoistical and unwilling to change, I manage the risk primarily on position sizing and adjustment and rely on TT's oft-repeated "maximizing the number of occurrences" or being maschiostically willing to be mechanical to enter trades or take a loss when premium selling takes a huge hit, One thing I do different from TT's dogma is I don't do the inverted, when my calendar or iron condor get tested, I roll down (or up) my untested side and also if RUT or SPX is within 10pts of having one of my side being taken out; I look to buy a option hedge to cut my delta down by 70%; and close the trade for a loss if the market keeps moving against me. Versus Liz & JNY who pretty much just roll down untested and hold their breached side; and even go inverted if they have to. I try to limit my loss at 10-15% on losers (of course, keyword on try; the market dictates my loss); I try to close my winners at 20%-25%. And try to limit against gamma risk by trying to close/roll out before the last week DTE or that Monday of, I also open my calendars sometimes at half size, so I can tack on another wing should the stock move against me to give me more room to adjust, None of these things helped against a huge market move like 8/21, but I take it as an inevitable part of selling premium; have to get use to a slow and steady grind up followed by huge dips; and on the fly adjustment to keep theta positive and gamma low when things go out of whack. I'm in the same shoes as you are, slowly trying to repair my portfolio now and seeing how I can take advantage of the elevated vol now for the rest of the year, With all of this being said, I'm curious if Tom Sosnoff is going to bring back Karen the Supertrader now and ask how she fared the "mini-crash", Best, PC

Hi, Echoing the comment earlier, it all depends on low you think the market is going to go, whether orderly or going to have the same kind of free-fall we had earlier this Monday, If think going to be taken down orderly, then sell call spreads if the market is going to down steadily, If going to crash, then probably have to pay the premium for the puts, My personal opinion (which is honestly more likely to be based on sheep-herd mentality and incorrect) is that the market is going to dip in an orderly fashion; but my opinion is very biased as I'm following TastyTrade where the pundits there (e.g., Tim Knight, Tom Sosnoff) are bears. So I'd be more inclined to sell call spreads too a this point with vol relatively high, But let's suppose if SPX dips down below Monday's level say, below 1880-1900ish; and I don't want to sell calls again because the market is in what punditry's "oversold territory," I'd look to see how far I can go out on a broken wing butterfly biased on the down-side, Best, PC

Hi Vancouver, Slightly tangential to your original trade, but I always wondered how to play earnings season by selling iron condors and holding them past earnings, This is entirely opposite to Kim's way of trading straddles and calendars and selling before earnings, However, I'm wondering if you can sell iron condors, split out your trades like to avoid individual company risks, if you make good enough educated guesses with good position sizing, if you can eek out a profit with the winners and as few catastrophic losers as possible if you trade this with significant number of occurrences. e.g., TastyTrade's Iron Condor trading way (first minute): Curious if anyone trades in this manner by selling vol and betting that the underlying won't move beyond the expected move? Best, PC

Hi, With VIX at 12.03, I entered a VIX August/November 16 put for 0.60 credit, I believe this is a high risky trade as the trade only leaves about 18 calendar days for VIX to spike but I want to get a feel for the VIX put calendar (as opposed to putting on a VIX put spread), I anticipate a loss for me on this trade and/or might have to roll the front month to September in the next 2 weeks, Best, PC

Hi Edwin, Thank you for setting up the meet up. I'm also located in the Greater Boston area, Coincidentally, I planned already to be near your meet-up spot this Saturday (for the Lowell Folk Festival), So I'll try to make it your networking event if I can this weekend, Best, PC

Hi, Gold is hit pretty hard this week (China slow-down, US dollar becoming more attractive with prospects of raising interest rates more plausible). http://www.bloomberg.com/news/articles/2015-07-20/gold-leads-commodities-mess-that-has-many-investors-smarting GVZ (gold volatility) is at 19 from the earlier lull of 14. Any one here have thoughts about setting up a bull put spread, iron condor to capture the rising vol. Or think this is like catching a falling knife? Best, PC

Hi, So I took a look at the SO's model portfolio and saw that it is 100% allocated to calendars, Which is great because I love selling premium, However, I know that Kim used to trade lots of earning straddles and was curious why we haven't traded more straddles lately esp. given how VIX had a lot of crush back to 12. Perhaps it's because I have bias towards selling premium, but I get nervous about being too short vega; so I get more relaxed when the portfolio has also balancing trades like straddles that will hedge the loss, if the market does go sharply in one direction or another, I remember Kim used to do some long-term earning straddle, like buy MSFT or CSCO one month or two month prior to earnings; there'll be small losses piling up on those straddles but the thesis was that they are hedges and also bought very cheap when VIX is low, So just wanted to ask whether we are doing more calendars just because it's been more successful this year or if the performance with straddles have been more mixed, Best, PC

Hi OptionEnthusiast, Thanks for the heads up! Looks like CBOE love weeklies as they drive up exchange commission but their greed is hopefully also the traders gain. In my personal experience, VIX calendar trades have worked out pretty well over the past 1.5 year - albeit with some stress because usually the entry calls for high volatility situation (e.g., Greece, Swiss de-pegging from Euro, ISIS, etc); but the thesis has been tested (so far): that the volatility and uncertainty from markets abroad does not materially change the "gilded" economic recovery in US, with VIX returning back to 12 after the media frenzy. So if your margin can withstand the irrationality of the market for some weeks, you can attempt to close after VIX drops back to 12. My biggest issue with VIX is that the trade is extremely commission intensive; as anyone who has traded VXX (which is the synthetic 30-day mix of the closest and 2nd closest-to expiring VIX futures), usually one has to trade a lot of contracts and add the multiplier if you are doing complex spreads. So VIX calendar (when VIX spikes), VIX put bull spread (when VIX is under 12) or VIX broken wing butterfly, So looking forward to CBOE's weeklies on VIX! Best, PC

Hi, I'm really curious about the way VIX is going to go in 2015. If VIX can go up with the Fed really tapering instead of talking about it to 16-20 on a regular basis, I think iron condors can be a good way to trade again. The problem with these guys who trade weekly condors IMHO is: 1) They don't seem to buy hedges when SPX bumps up to their wings. 2) They trade weeklies with the intent of holding to expiration, where the spread is extremely sensitive to delta and credit is low so your wings are narrow to start with anyways. So counting down the days and praying that the market doesn't fluctuate; not easy living in my opinion. I think the approach of buying condors/calendars with 30 days of expiration with the intent of closing absolutely one week prior to expiration is better; and with hedging to cut your delta by 75% when you're close to your wings. You end up with less "dramatic" winners than your weekly newsletter results, but I personally sleep better and think your win/loss ratio ends up better in the long run. Of course, everytime I look back on how much "money" left on the table on a previous spread if I held it one more week to expiration, I remind myself the reverse scenario of also times when I could have lost that much and much much more had I done the same thing. Or at least that's how I rationalize how no money was left on the table. Best, PC

Hi, I just want to confirm what Yowster is describing about the liquidity on VIX trade, It took me two days to get out my VIX Jan/Feb 17 and 18 calendar spread with a submitted price at the mid; I was able to get 0.35 additional credit per contract from my original debit of 0.35. In the end, I think Yowster's original trade was better as it would take advantage of both VIX's rise and fall away from the median of 16-18. Luckily, provided VIX calendar spreads works on time-decay with VIX staying steady or declining, so I had the patience to get out at a good price, Best, PC

Hi, I entered into a Jan/Feb. 18 and also Jan/Feb. 17 VIX calendar spread with VIX at 18 (now it's at 20); my thesis is also that VIX will drop down below 15 around January time. But I also anticipate paper loss on my current trade as VIX might keep its momentum going forward in the short-term with price of oil dropping, CIA torture report etc. Best, PC

Hi, Another thing I'll add is a major advantage of using IB TWS over WebTrader is that sometimes when you enter a multileg trade with 2 or 4 legs, it is easy to mess up your legs especially with WebTrader clunky interface resetting the expiration dates what-not; nothing is worse then entering into a trade that you didn't intend, having it fill and trying to get out of it with more commission and unfavorable spread (I'm sure some of you have had similar experiences as me...) On TWS, when you're closing a position, it'll tell you if you own the position or not on the order, so it's a good way to check for errors. Best, PC

Hi, Just adding my $0.02 and hoping to get everyone else's take. So given today's action, we might have a "soft" support level at where Dow/SPY bottomed out on this afternoon before bouncing back. But I'm not convinced that it's a real bottoming, being very cautious, I wouldn't be surprised if there was another major 2-3% dip from that point in the indices before we truly bottom out. This is purely based on sentiments I've gathered from the "experts" voicing their opinions on WSJ, CNBC etc; on Monday, SPY has broken from their original "technical 200-day MA" and VIX broke out likewise from its resistance. So whether Yellen or ECB issues some words of encouragement, or earnings season show some positive signs, we might see some consolidation but given the market jitter, any other catalyst like Ebola/ISIS/Europe triple dip will probably send the market down again for the next bottom. Best, PC

Hi Chris, Given the recent slide for GLD and SLV, I think I might structure a broken wing butterfly for either ETFs to give it some room to slide down further if the trend persists and cap the P/L on the upside. From what I understand, precious metals have been going down on a slide due to the attractiveness of dollar with the prospect of the Fed tapering and interest going up (although the Fed has been coy with the timing of when the interest rate is gonna go up). Since interest rate hasn't been hiked up yet and the uncertainty of the impact looming, I'm still a little bit bearish on GLD and SLV despite its depressed price, But I'm not an expert at all on this subject matter but wanted to give my $0.02; others who are more knowledgable on this can comment and enlighten further, Best, PC

Hi, I want to share some weekend reading that I think any option trader would enjoy. I came upon this 2002 New Yorker article written by Malcom Gladwell profiling Nassim Taleb's "black-swan" fund, Empirica and Victor Niederhoffer who is a known SPX seller - so you can already see how these two men smash heads (buying straddles vs. selling iron condors and calendars). To be honest, I never liked Malcom Gladwell nor Nassim Taleb's public spectacles and thought both of them to be more showmen than professionals, but Gladwell does a really good job in his profile to give away not so much trading insight but human insight into the profile characters' mindsets as traders. It is a very long reading, but I think it's worth your time just to get a chuckle on how you might relate to the characters and their emotions in times of trouble; here's the article: http://gladwell.com/blowing-up/ I'd love to hear your guys' feedback on the article. My take is that I am more like Victor Niederhoffer in that I love the selling premium part of options trading being that it has the illusion of being predictable and steady. I came upon SteadyOptions after I have of course being disciplined by the market and came to begrudgingly accept that there is value in buying options. I like having both approaches balanced in the SO portfolio although I'm still biased towards the theta-decaying trades. Would love to hear your guys' opinion? Do you see earning straddles as the way to make money and the iron condors/calendars as simply hedges in case the market doesn't move, or vice versa? Are you a option seller or buyer at heart, or prefer the balanced approach? Best, PC

Hi Marco, Thanks for the detailed explanation especially with the hedgers and delta-neutral speculators. This also makes sense I think for why SPY and SPX option series, option premium is usually more expensive on the put side vs. call side because there is more demand by mutual funds to hedge the downside of their portfolio than directional speculators and hedge funds for the upside of the market, Best, PC

Hi Hany, I definitely would not recommend a Chromebook for trading via IB platform, This is actually what I do but my reason being that I'm a programmer who have rooted my Chromebook to use Ubuntu Linux (instead of ChromeOS); and even then, I don't even use my Chromebook to run IB TWS natively but instead use it as a remote desktop client to log onto my Amazon Web Service virtual machine in the cloud to remotely access IB and ToS; my reasons for doing this convoluted way is because I have a lot of my stuff in the cloud, so I'm just using my Chromebook as a dumb remote access screen, If you'd like a cheap laptop, I'd definitely recommend something that's a low-end Window laptop than a Chromebook; Chromebooks are cheap and nice for surfing the web and doing everyday stuff like e-mails, music but not so good for specific stuff like coding, graphics design or trading, Best, PC

Hi luxmon, Just wanted to check in to see if you found the video course to be any of value? Best, PC

Hi, My plan is to keep my long term investment in ETFs but further contribution to accounts will be in money market; and when the correction comes, I plan to dollar average SPY with the saved cash all the way down. I am too stupid to predict the market, so have to use dollar averaging if it means that I might not be able to time the bottom optimally. Best, PC

Hi Kim, Can you shed light as to why you are closing SteadyOptions to new members? Is it because any of the following reasons, - Difficulties in getting good fills as there's more people chasing the same earning trades, opening and closing at the same time - Membership roster has reached a good point and you want to focus instead on trading your strategy - SteadyCondor and the Anchor trades taking up your administrivia timeslot (although they are traded and managed by Chris and Jesse) - Just for the benefit of your existing members? Best, PC

Hi, Looks like I spoke too soon when VXX only dropped 4% this morning, it's down 9.84% on the day, UVXY is down 19.76% for the day, congrats again to all those who shorted, esp. on leverage, Best, PC

Hi, VIX is now in its usual contango (but flatter than usual) shape now. Congrats to all who have shorted VIX, Best, PC