Straddles - Trading-Lab

flyingpb · #1 04-11-2008, 03:30 AM

Now that I've humbled myself on straddles and strangles(See my previous post) I've been looking into them a little more. (Profit with Options by Lawrence McMillan).
Does anyone on here have much experience trading options with them.
(buying not writing)

aiki14 · #2 04-11-2008, 04:02 AM

Quote:

Originally Posted by flyingpb

Now that I've humbled myself on straddles and strangles(See my previous post) I've been looking into them a little more. (Profit with Options by Lawrence McMillan).
Does anyone on here have much experience trading options with them.
(buying not writing)

If you are asking whether anyone has had experience using long straddles and strangles, then yes. Are you looking for a scenario where employing these would be effective?
These are volatility plays, where you are looking for large movements in the stock price but are indeterminate on direction, earnings reports are an example. I use straddles on earnings reports, and on Phase 3 clinical trial announcements on pharma companies. You have to pick your spots, because the volatility can be priced in to the positions. Having a good idea of the Vega and Delta from previous data is of great value in these strategies.

flyingpb · #3 04-11-2008, 12:07 PM

OK

Is there a good chart to backtest options. I haven't found a good site that shows historical option prices.

Thanks

aiki14 · #4 04-11-2008, 01:50 PM

I seem to remember this topic being discussed in various forums with no good place dedicated to this type of info. My trading platform allows me to chart the options and the underlying, but if yours does not, it may be a problem obtaining the data.

flyingpb · #5 04-12-2008, 01:24 AM

Is it just my ineptitude, or are options harder to learn and research than just trading the futures.
I've been trading options in commodities for about a year now, (broker assisted) and still feel like I don't have a clue. I have a basic grasp of the Greeks etc, but my research methods are horrible. I can't backtest, if I miss a couple days of watching my positions, I have no clue what they did, only what they are at now etc. No two sizes are the same like stocks.
Would I be better off just picking a couple commodities and strictly trade the options on them for a long time or switch to trading the underlying instruments.

ProTrader · #6 04-12-2008, 08:56 AM

options and futures are notoriously known for being much harder to master than stocks. why did you pick options and/or futures over stocks? maybe leverage? I would rather trade a smaller stocks only account than a options/futures one.

flyingpb · #7 04-12-2008, 12:29 PM

My biggest reason to trade in the commodities options was because my business is weather related, so I spend a lot of time sitting around watching the wind blow etc. consequently I go down to the local Tent and Canvas shop and have coffee with the gentleman running it. He's trades in commodities. (Mostly options ) and has real good luck with it. So I spend a lot of time visiting with him. It seemed to be a lot safer trading the options than trading in the commodities futures themselves, so I decided to explore it. However, He is able to get up at 6 every morning and spend a couple hours researching the markets before going down to the shop. Then he spends the day puttering around the shop and watching the markets. My business doesn't allow me to set any good schedule, consequently I am all over the place researching.
Mainly I am doing it to learn. I started out with a $10,000 dollar account went down about 40% and now back up to about 20% down.
I also have a small stock account with TD. Ameritrade, that I dabble in, but that is like watching grass grow. I may switch more to a swing trade method there and see if it picks up.

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#1 04-11-2008, 03:30 AM
flyingpb Junior Member Join Date: Apr 2008 Posts: 12	Straddles Now that I've humbled myself on straddles and strangles(See my previous post) I've been looking into them a little more. (Profit with Options by Lawrence McMillan). Does anyone on here have much experience trading options with them. (buying not writing)

#3 04-11-2008, 12:07 PM
flyingpb Junior Member Join Date: Apr 2008 Posts: 12	OK Is there a good chart to backtest options. I haven't found a good site that shows historical option prices. Thanks

#4 04-11-2008, 01:50 PM
aiki14 Member Join Date: Jan 2008 Location: Philly Burbs, PA Posts: 82	I seem to remember this topic being discussed in various forums with no good place dedicated to this type of info. My trading platform allows me to chart the options and the underlying, but if yours does not, it may be a problem obtaining the data. __________________ I read somewhere that 77 per cent of all the mentally ill live in poverty. Actually, I'm more intrigued by the 23 per cent who are apparently doing quite well for themselves. --Jerry Garcia The idea is to try to give all the information to help others to judge the value of your contribution; not just the information that leads to judgment in one particular direction or another. --Richard P. Feynman

#5 04-12-2008, 01:24 AM
flyingpb Junior Member Join Date: Apr 2008 Posts: 12	Is it just my ineptitude, or are options harder to learn and research than just trading the futures. I've been trading options in commodities for about a year now, (broker assisted) and still feel like I don't have a clue. I have a basic grasp of the Greeks etc, but my research methods are horrible. I can't backtest, if I miss a couple days of watching my positions, I have no clue what they did, only what they are at now etc. No two sizes are the same like stocks. Would I be better off just picking a couple commodities and strictly trade the options on them for a long time or switch to trading the underlying instruments. Last edited by flyingpb : 04-12-2008 at 01:27 AM. Reason: reword

#6 04-12-2008, 08:56 AM
ProTrader Senior Member Join Date: Jun 2007 Posts: 109	options and futures are notoriously known for being much harder to master than stocks. why did you pick options and/or futures over stocks? maybe leverage? I would rather trade a smaller stocks only account than a options/futures one.

#7 04-12-2008, 12:29 PM
flyingpb Junior Member Join Date: Apr 2008 Posts: 12	My biggest reason to trade in the commodities options was because my business is weather related, so I spend a lot of time sitting around watching the wind blow etc. consequently I go down to the local Tent and Canvas shop and have coffee with the gentleman running it. He's trades in commodities. (Mostly options ) and has real good luck with it. So I spend a lot of time visiting with him. It seemed to be a lot safer trading the options than trading in the commodities futures themselves, so I decided to explore it. However, He is able to get up at 6 every morning and spend a couple hours researching the markets before going down to the shop. Then he spends the day puttering around the shop and watching the markets. My business doesn't allow me to set any good schedule, consequently I am all over the place researching. Mainly I am doing it to learn. I started out with a $10,000 dollar account went down about 40% and now back up to about 20% down. I also have a small stock account with TD. Ameritrade, that I dabble in, but that is like watching grass grow. I may switch more to a swing trade method there and see if it picks up.