ETF Options Trading

ETF Option Position Modeling

etf-option modeling question: you are long the xyz at 48.00 then on 7-25-2008 with the xyz at 51.00 and volatility of 50% you buy 1 august 50 put at theoretical value. On 7-28-2008 you exited your xyz at 49.75 AND on 8-6-2008 with the xyz at 45.00 and volatility at 55% you exited your put at theoretical value - what are the following?

put cost

exit price of put

total trade profit-loss

http://www.etfoptiontrader.com/

Method Wins - Trader Loses

Did you trade during this period AND IF yes was it profitable?

I see 1 trade in particular that is often posted in the chatroom that could turn the period into a loss - what-where were your trades AND what was the setup combination?

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http://www.thetacticaltrader.com/emini-day-trading-07282008training.html

Emini Day Trading - Breakout Chasing

Breakout Chasing After Missed Trade

consider this chart as an initial reverse-breakout - meaning that there was not a base setup at the additional reverse AND then there was no retrace-break2 to enter in this area on what would be an initial base setup --- in light of this situation was there then a setup to enter the buy swing without breakout chasing AND IF yes what-where were the setups?

yellow dot - blue dot1: yellow dot exit after the yellow circle initial reverse. after the exit i would have liked to be able to buy the initial reverse price test-reject with mex flow up - left channel blue line break2 failure break WITH the left side diagonal to trade through after the break --- the setup didn't occur AND still flat on the left yellow line breakout.

blue dot2 - yellow dot2: the blue dot buy if done would have been a right side reject-breakout into the 52t pmd high-left blue line double top. i considered trying the trade at this location into the breakout trying to partial WITH the clarity of the initial risk area - nothing was done. i never considered the yellow dot - which is nothing more than a high breakout into the 701.70 6-30 high as resistance AND around 20 ticks higher than the initial reverse price.

green dot: left-right blue line failure break as a pmd failure-continuation of the 701.70 price - it is this price failure that i believe gave the acceleration after the breakout = +701.30f -702.50 partial of 12 ticks even at this point --- it was not necessary to risk a breakout chase AND daily price pmd high-swing reverse to still get into the move - like the yellow line-purple dot going into sell AND without triggering the green dot buy.

Emotional Freedom Techniques - Overcoming Fear Of Success

Emotional Freedom Techniques - EFT Discussion

Many people think they are suffering fear of failure when what they really have is fear of success. In fact, I think most are suffering from fear of success masquerading as fear of failure. On what basis do I say this? If I ask my clients or workshop participants to think about being successful and having achieved their goal, then ask them to step into the picture and feel how it will feel, they do not typically report feeling good, most say instead that they feel uncomfortable! They are often hit by massive feelings of anxiety and overwhelm, and tend to report all sorts of negative thoughts coming up such as “I don’t deserve this”; “I’m not good enough”; and so on. This is because they (we) have all sorts of negative associations to being successful. And this is what we want to treat using EFT. Ultimately, unless success - however we define it - makes us feel good, unless we are attracted towards it, why would we want to manifest it in our lives?

Many people, when I question them about their goals, do not really have a totally positive goal at all. What they have is a positive mixed with a negative. The negative is what they believe will come along with the success or that would be required in order for success to happen for them – and in their mind both the positive and the negative are linked together so you can’t have one without the other.

For example I recently spoke with a gentleman who said that if he were to become successful he would lose his marriage! Well if that were truly the case why on earth would he choose to become successful? I counseled him to look at creating a new version of success where he stayed in his marriage (since he really wanted to), as his current version of success was really failure. Like many people he had trouble seeing a new possibility because in his mind the choice was represented as an “either-or” conflict where one side had to win and the other therefore must lose; rather than a “yes, and…” where both sides can win.

Ultimately, if you have not achieved your goals then at some level you probably have similarly confused emotional and energetic connections. Seeking to create alignment so that all parts of us are pulling in the same direction has been a major part of my work with EFT in the area of peak performance. I’d like to outline here for you some ways of going about treating these blocks and barriers so that you can ultimately go for your goals without feeling blocked or feeling like part of you is holding back.

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http://www.tradingpsychology1.com/overcoming-fear-of-success.html

Emini Day Trading Setup - Volatility Compression

chart2A: red dot sell 667.80 - what was the setup done AND was it a method base setup?

red dot: the setup was a compression triangle breakout using a 668.00 centerline which was a left side price specific extended right - see this price as the 10:02ct low.

a triangle is characterized by higher lows and lower highs as volatility compresses - this trade was entered with market direction AND with addition room to trade through on the triangle breakout - it is base for the market condition-compression triangle breakout setup base.

additionally characteristic to this setup is the size of the breakout potential AND with it the potential to expand the trade partial profit size - in this case a 667.70 sell fill got a 665.50 partial = 22 ticks -vs- a minimum trade partial of 7 ticks.

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• Trading to Win Mindset
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The software will effectively teach you to manage the mental and emotional aspects of trading. You'll gain a positive mindset, and establish the new habits and confidence that will help you attain your goals.

http://www.tradingpsychology1.com/trading-psychology-mental-training.html

Emini Day Trading - Retraces Against Your Entry

one of the most difficult situations in trading is the first retrace against your trade entry AND whether you will be able to take the 'heat' - which often times causes you to exit right before the trade you entered goes to a profit.

after the period high what-where is the first initial base setup during this period AND was it profitable - IF no what-where was the next base setup?

yellow dot: this is the initial reverse on the break of the yellow line - IF you did this trade you were selling a lower high double top-floor pivot reject - diagonal line breakout with additional room below the breakout --- not base.

red dot: price reject with mex flow into-through the 2 left side channels from the diagonal line breakout --- this is initial base - was it a winning trade AND could the retrace be held where you are still short at the last bar of the chart?

IF you sold the reject bar low instead of waiting for the left channel breakouts you could have filled a base partial - so profitability was dependant on whether you entered into the breakout OR on the breakout.

could you hold the trade? this is the problem - the lower you entered after the breakout the less likely you could-would hold your trade - especially IF your exit was predicated on the fast chart reverse WHICH my guess is that someone went long there as well. consider the trade is trailed with a base partial AND with the 120t WITH no fast chart buy setup -vs- what i often see as channel breakout entries - no partial AND flat with a loss when the fast chart reversed.

120t blue dot - 52t blue dot: the 120t blue dot is a very good base setup - it is a right side reject-failure of the yellow line initial reverse-through the blue line WITH diagonal breakout potential after the channel breakout traded into --- i do not like selling the 52t blue dot as an area low triple bottom breakout WHEN a setup like the 120t blue dot was available.

period trades: sell the red dot location AND with a partial the total trade would not be a loss IF held with the 120t --- IF lose from a channel breakout entry OR go flat the red dot sell - the 120t blue dot is the re-entry.

Option Price-Position Modeling

Option Straddle

model the following: the underlying = 175.00 and volatility = 47.00% --- IF you buy a 175 straddle today at theoretical value what would the cost be - what would the value of the straddle be tomorrow IF there was a +/- 10% move in the underlying with no change in volatility - what would the value of the straddle be tomorrow IF there was a +/- 10% move in the underlying AND an 8% increase in volatility?

date1 column-175.00 row: you can see the 175.00 straddle had a theoretical value of 11.34 - calculated for an underlying of 175.00 AND volatility of 47%. this is the yellow line plot AND do note that the blue line is math to expiration - the straddle has no intrinsic value.

date2 column: you can see what the theoretical value of the 175.00 straddle will become on a 1 day move in the underlying AND an 8% increase in volatility. this is the purple line plot.

the modeling scenario was to figure for a 10% change in the underlying with an increase in volatility which would be +/- 17.50 points = 192.50 20.12 straddle value - 157.50 19.28 straddle value. you were also supposed to figure for a 10% change in the underlying BUT no change in volatility = 192.50 19.10 straddle value - 157.50 18.49 straddle value.

you can compare the 2 scenario straddle values above AND see the increase in value from an increase in volatility - the opposite is also the case where IF you would get a change in the underlying BUT a decrease in volatility - the straddle value will not increase as much from volatility going down.

is it possible to get a 10% move AND have volatility go down - absolutely AND from 2 situations: (1) volatility had gone up into an 'event' that the straddle was purchased ahead of - then went down after the 'news' was known (2) the 10% move was up AND with the up move volatility came down - which is a frequent case.

date2 column: consider the straddle was purchased for an 'event' BUT in 3 days nothing happened - the underlying stayed at 175.00 AND volatility decreased 4% - your straddle value would go from 11.34 to 8.85 from a combination of theta [option price decrease from time] AND the decrease in volatility.

IF the 'event' occurs giving a 10% move BUT with a 4% decrease in volatility = 192.50 18.25 straddle value - 157.50 17.88 straddle value --- compare these values to those above AND note the changes basis volatility and time.

Price Momentum Divergence

Price Momentum Divergence - Trade Setup Start Point

this chart period included 2 of my favorite trade setups - trades that have a price momentum divergence start point AND then give entry timing where there is a 'key' price reject with mex flow in the direction of the trade - through 2 breakout points WITH a left side diagonal past the breakout.

red dot sell: pmd high then a reject of the blue line at the blue square - 2 yellow square triple bottom break - trading into the left side diagonal-room to the floor pivot.

green dot: pmd low test of the floor pivot THEN a higher low reject of the floor pivot - 2 blue square triple break which is a failure break of the yellow-blue line - WITH a left side diagonal past the breakout.