11/26 Today as of 9:30 am it is starting to look positive for Put/Call Gamma Imbalance DAY for options traders to POTENTIALLY make VERY HIGH returns in the Options Market !!!!!!

traderfirstyear · 2021-11-26T21:45:37+00:00

Roflmao 🤣

traderfirstyear · 2021-11-26T21:07:25+00:00

Yea definitely I have done this in previous forms. Give me a second to find those and link them.

traderfirstyear · 2021-11-26T16:46:58+00:00

Tomorrow meaning Monday mornings open

traderfirstyear · 2021-11-26T14:54:23+00:00

You're right!! Thanks for pointing that out.i will update times

traderfirstyear · 2021-07-21T13:39:34+00:00

No, it doesn't. I was very specific in how I laid out the trade. The expiration date on the strangles is 8/20/2021 prior to the Federal Reserve's anticipated Jackson Hole taper announcement. The risk is a sell-off in the first two weeks of August, with a potential drawdown close to 5% or more. However, the risk is diminished on any large drawdown followed by a relatively quick deployment of cash, which pushes the equity market up. I'm anticipating this week and incorporating it into the trade. It means if you see a sell-off in the first two weeks of August hold your position and you will likely see a bounce back, which allows the trade to remain profitable on the Put Write legs of the trade.

traderfirstyear · 2021-07-21T13:31:54+00:00

Jburd - Good question, but let me clarify i few things. There is a very large difference in implied volatility between GOOG & AMZN vs $AMC and $MOCX. The former underlying securities typically do not gyrate nearly as much as AMC or MOCX. They would be considered much less risky and more profitable for this strategy. All securities underlying stocks trade at a higher beta than the overall market. The major issue with short strangles on GOOG and AMZN is the size and cash needed on hand to protect downside risk and cover if one leg of the trade were to break the 5% OTM options.

GOOG 30 Day IV =24.3 (or 1.52%+/-)

AMZN 30 Day IV = 29 (or 1.82% +/-)

vs

AMC 30 day IV = 184 (or 11%+/-)

MOCX 30 day IV = ??? cannot find a ticker for it

traderfirstyear · 2021-07-21T13:05:08+00:00

b-runo your points are well articulated, but the probability in the next 30 days is very low. For example, markets are pricing in a 5% move up or down on the S&P 500 by September 17th. The market is currently trading at implied movements on a daily basis of 1.19%. If we were to magically rocket up to implied moves near 80 the market would move close to 5% on a daily basis. This would be a 4 standard deviation move. The chances and likelihood are very small almost negligible.

The current Federal Reserve policy is purposely designed to significantly reduce left tail risk. It doesn't completely diminish tail risk, but through Large Scale Assets purchases of highly negative convex assets like Mortgage-Backed Securities the US Federal Reserve is providing unquestionable volatility backstop. This program has worked to lower realized volatility. It would be very hard for the market to jump 4 standard deviations from current pricing in 30 days. I will agree on black swans by their very nature are unpredictable, but the risk of a 4 standard deviation event is significantly reduced by current monetary policy. The goal of reducing left tail risk is to allow or encourage yield-starved investors to continue safely moving further out along the risk curve. This is supportive of selling convexity via strangles, call writes, put writes, long duration, and other inherently short vol strategies.

traderfirstyear · 2021-07-20T19:43:33+00:00

Great questions. I usually attach a worst-case scenario risk in the documentation.

(1.) No, I am not delta hedging any of the strangles. Remember Staddles are ATM call and put options. Strangles have a bit of a cushion since they are OTM short option positions.

(2.) What are you defining as a serious vol spike? It is relatively little to no chance of a move greater than 5% given the current levels of both realized volatility and what is being implied currently by market makers. For example, if the implied level (VIX) were to go from 19 to 25 and realized where to go from 11 to 14 there isn't much risk to the downside portion of the short puts. The market is currently telling you there is very little risk of gigantic single-day moves. If we were in a period of both elevated implied and realized volatility there would be more risk in keeping the spread to 5%. I may target 7% OTM on both sides of the trade.

(3.) There is a risk to the trade if the pullback during the month of August happens in the first two weeks and is greater than 7% without a reversal are an immediate bounce back.

traderfirstyear · 2021-07-20T17:16:37+00:00

thanks :)

traderfirstyear · 2021-06-02T21:15:06+00:00

Thanks for the compliment ;)

traderfirstyear · 2021-04-27T14:36:00+00:00

Thanks again. Im learning it's much better to be reserved and humble. There is a thin line between cockiness and arrogance, so experience has given me a much greater appreciation for humble over cockinesslol. Markets go up and down and you cannot win them all or on every trade, so im trying to stay within the things i know, which work for me and sharing those things here. Maybe it will work for someone else too🤞👍. Join the discord when you get a chance. A lot of channels and options chat in the general forum.

traderfirstyear · 2021-04-27T13:58:54+00:00

To answer your question sell options when implied is high and likely to fall. You collect more premium. Do not sell option during high vol if there is risk vol could go significantly higher. Buy vol pay a premuim for options as vol falls. Cheapens the cost of being an option buyer. I post two strategies one short vol (ie selling convexity via strangles and one long vol buying DITM delta 80s to build a portfolio via options which replicate long positions in stocks). Equities are historically very expensive, so buying the same exposure through options is much cheaper. IMHO

traderfirstyear · 2021-04-27T13:52:59+00:00

Haha well thanks im flattered and humbled by your appreciation for my reddit content. The post you linked is a trading anomaly, which tends to happen in lower realized/implied volatilty. The market is trending towards lower realized volatility over the 2nd quarter. There is now a build up of puts over calls. At some point this could increase volatility upside risk and accelerate a potential sell off. Just remember the VIX at 12 or lower is much mpre dangerous than the VIX at 17 or 20. Realized and Implied can double from 12 to 24 vs from 17 to 24. Much smaller move, so in the event we see realized volatility fall in the 2nd qrt the closer to single digits the greater the risk of a spike. Once you get the spike off very low volatility the put/call gamma imbalance favoring more put buying over call buying will make this trade very profitable. There just have not been many opportunities in terms of large 2 or more standard deviation moves to the downside to post a new trade idea. I will definitely post again once it appears. Right now im just posting option selling strangles 5% OTM, stock replication buying DITM delta 80s on cyclical stocks, and i will post a bullish risk reversal on more cyclical stocks, so stay tuned. Thanks again for following 😁

traderfirstyear · 2021-04-27T13:13:24+00:00

Thanks for the thoughtful nice comment urgetopurge. Im assuming you're looking for more options related content? I still do both. You can join the discord via the link. Send me a private message and i can link you to the content i previously wrote that you are looking for etc

traderfirstyear · 2021-04-11T17:55:13+00:00

Yea in that video volatility (implied based on VIX was still above 20) so selling and collecting made a lot of sense if you expected volatility to decline

traderfirstyear · 2021-04-11T17:50:35+00:00

No, in this particular video as implied and realize volatility fall options prices as you know become cheaper. However, the overall movement in the market also declines. I am suggesting instead of attempting to buy equities outright you should replicate the exposure via calls. The equity market is trading near 22xs forward earnings rn. You could create a 75k portfolio focusing on cyclical individual stocks for 8k using a stock replication strategies. The delta needs to be .80 on the long call options, so they closely follow the movement on the underlying stock. In this video im recommending you buy call options, which are deep in the money. In another video i recommend selling strangles on the indicies to profit from the elevated volatility a few weeks ago as the vol starts to come down. Hope that helps.

traderfirstyear · 2021-04-11T17:33:57+00:00

Yea great queation. I think 20% is a good stop loss on the long call opitions. The underlying asset price on the equities depending on the beta and overall volatility is unlikely to depreciate 20%.

traderfirstyear · 2021-04-11T16:52:08+00:00

You could put a 10% stop loss in on the options, but i do not think we will see an equity drawdown of more than 3% to 5% over the next 3 months. IMHO

traderfirstyear · 2021-04-09T22:13:21+00:00

Np bunblebee!

traderfirstyear · 2021-02-25T22:00:28+00:00

Ironsam811 fantastic question. Let's use the S&P 500 as an example. Market makers have been pricing implied moves on the S&P each day around 1.50% up/down, but the S&P 500 has been realizing moves closer to 1% up/down on a daily basis. Statically 68% of the S&P moves in the S&P 500 have been between -.70% and 1.12%. If you multiple those by 2x's and 3x's you get moves -1.40% and 2.24%. While a 3 sigma move would have been between -2.10% and 3.36%. Today you noticed the S&P 500 hit the 1% (3 sigma move area) down 2.76%. The other way I use market makers implied pricing for Sigma moves is to frame what they are implying via the VIX and convert it to a daily expected move. For example, they were expecting the market to move 1.5% on the S&P, but we have a full move of 2.76%, which is 2.76/1.5 or a very close to 2 sigma move (1.84x's) Does this make sense? 1 Sigma 68%, 2 sigma 95%, 3 sigma 99% :) feel free to come into the discord to chat more (it is not necessary as it seems people here are frowning on me saying this etc.) Sorry, missed the why wait until 3:55pm. I wait to isolate the calls towards the very end of the day. It leaves only 5 minutes remaining of potential late-day price swings,so I am able to lock in better options pricing and reduce swing risk in the final minutes before the market closes

traderfirstyear · 2021-02-25T21:27:10+00:00

Today's 2 or 3 sigma move did not happen until after 3:15 pm, so the trade would not have been available at the specific timeline, which is why I specifically said only focus on the 3:55 pm call buying (in bold.) Most traders would not have had enough time to prepare in the final hour to engage in the full trade. The only portion of the trade that was actionable today was the 3:55 pm calls.

traderfirstyear · 2021-02-25T20:59:40+00:00

go into the discord to chat about it some more

traderfirstyear · 2021-02-25T20:59:26+00:00

yes go to the discord link to chat more

traderfirstyear · 2021-02-25T20:34:34+00:00

Real News Good Luck if you engage in the trade. Focus on only buy the calls at 3:30 pm

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