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2020.10.14 – SESSION 16 – GO ASK A TRADER

8 replies, 6 voices Last updated by Sherri Locke 8 months, 3 weeks ago
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    • #16625

      Sherri Locke
      Keymaster
      @KDAKSj4ux
      Going to The Trading Triangle LIVE 2016Ultimate Income Trader Workshop

      The video index of this session is posted and ready to view. Enjoy!

    • #16549

      Sherri Locke
      Keymaster
      @KDAKSj4ux
      Going to The Trading Triangle LIVE 2016Ultimate Income Trader Workshop

      The recording of the GO Ask A Trader session from earlier today is ready to view. Enjoy!

    • #16542

      David Wagner
      Participant
      @david@hazelnutfoundry.com
      Points: 226
      Rank: Newbie

      Hi John,

      Question along the same theme as Andre’s…  I recently heard a story about a trader who suffered a catastrophic loss due to unanticipated pin risk on a simple vertical spread. On expiration day they were assigned the short leg after market close (during the 1.5 hour exercise window), while the underlying was collapsing during after-hours trading. They didn’t have time to respond and ultimately the losses from assignment far exceeded the “maximum risk” of that vertical spread.

      Hearing this has rattled me a bit. I’ve always thought of vertical spreads as a relatively safe, risk defined, “can’t lose more than ‘x’” sort of strategy. But more importantly, it’s made me aware that there are dynamics in options trading that aren’t common, but may pose significant risk if ignored or not understood. Can you shed light on other similar risks that professional traders are attuned to, but the novice retail trader may not even know exists?

      Thanks,
      David W.

    • #16539

      John Locke
      Keymaster
      @john-locke
      Going to The Trading Triangle LIVE 2016Locke In Your Success CoachAPM2Trade JournalsUltimate Income Trader Workshop
      • Steve G
      • A couple additional ROCK and general options trading questions:
        • How scaled down can the ROCK be traded so that I can start with a smaller size until I build my skills (I do better trading live in small size to learn that I do backtesting)
        • Would you enter a ROCK (or pretty much any trade) at normal size prior to the election because a Trump win would likely mean an expansive up move (as it did in the prior election) and a Biden win would likely mean an extensive down move due to a fear of higher capital gains taxes and a less business friendly environment.  I would also expect overall IV to drop after this binary event’s answer is KNOWN – unless of course the results are contested, then IV could spike even higher.

      At the end of the day, I am trying to make of sense of whether our current higher IV status is a great entry opportunity or a situation to be avoided until the binary even passes?

      I have attempted at times to sim trade the Rock, but P&L swings seem very large at times, so you need a much stronger ability to take drawdowns during the trade than you might with something like the X4-v14 – do you find this to be true, or was I somehow sim trading it wrong?

      Also – I have attempted to create a VEN diagram or flow chart showing all of the ROCK steps, but just have not been able to lay it all out into a flow chart format, have you done anything like that in the past for the ROCK or any of your trades.

    • #16538

      Pierre Antoine CHAPELLE
      Participant
      @paqueuc@hotmail.fr
      Points: 318
      Rank: Freshman

      Hi John,

      On 10/08/20, I put a RUT + 10 Nov Put 1520 / -20 Nov Put 1570 / +10 Dec 1610. while the RUT was at 1625. At entry, my delta was +7. My vega was + 500.

      On the 10/09, I was down $2900 while the RUT ended at 1637. The IV lost around 4 points during that time frame. My delta was -15.

      On the 10/12, I started gaining around $1500 for the major part of the day while the IV was loosing 2 more points. Then by the end of the day, I finished down $500 more while the IV gained 1 point (down 1 point for the day), the RUT was at 1649, my delta -18 and I’m still under the tent.

      The IV skew curve doesn’t look particularly strange. It seems like the Nov / dec is in little contango (as of 10/12 closing).

      It seems to me like this drawdown is mainly due to the IV drop. But I was wondering if the election could also play a role ? The Vix Future is at the top on November before decreasing on December. Could the November options hold more value through time decay than the December ones while I don’t manage to clearly see it on the skew curves ?

      Thanks John,

      Best,

      Pierre Antoine

    • #16522

      Andre Pare
      Participant
      @Bironique@hotmail.com
      Points: 92
      Rank: Newbie

      Hi John,

      My question might seem weird but I wonder what happens to options when markets close for an extended period of time as they did in 2001. I know it doesn’t happen often but being a possibility I wonder what would be the consequences if I happen to have option contracts that expire during the period markets are closed. Am I losing everything if I’m long options or keeping everytghing if I’m short? Are the last closing prices the ones use to settle the contracts,…

      Thanks,

      Andre

    • #16505

      Adrian Viana Fuente
      Participant
      @termiadri06@gmail.com
      Points: 845
      Rank: Freshman

      Hi John.

      Talking about “Planned Capital” for a strategy. Why do you generally recommend not approaching its limit?.

      For example, in the “M3.4U” strategy, I have a 30.000$ Planned Capital but I usually feel comfortable exceeding the 25.000$.

      Thx.

    • #16437

      Sherri Locke
      Keymaster
      @KDAKSj4ux
      Going to The Trading Triangle LIVE 2016Ultimate Income Trader Workshop

      In Canada there are issues with brokers and the way margin works. Can you please go over some ways to handle these issues?

    • #16411

      Sherri Locke
      Keymaster
      @KDAKSj4ux
      Going to The Trading Triangle LIVE 2016Ultimate Income Trader Workshop

      We highly encourage all participants to post their questions and topics to be discussed in the REPLY TO text box below at least 48 hours in advance of this meeting.

      Click here if you would like to request a mini coaching session.

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