10 replies to this topic

[NAV]

I have a countertrend buy at 1:00 Est. If SPX cash tardes below 1436, this signal will be invalidated. I am taking some risk here, bought some Sep SPY calls aorund 144.70. If 143.81 goes, i will dump those calls at market. Very low confidence signal.

[OEXCHAOS]

I just went long at 145125. Stop just moved up to 144825. I'll let you know where I exit. It'll be below the highs, though. M Cripes, I got a 2 minute call while posting and the market is up significantly from where I started. now we're nearing my target. Just snugged my stop up to 145150. I can see this thing falling 30 or rallying 25. I'm not bullish enough to rid things out. M

[OEXCHAOS]

Me gone! Enough profit to buy a beer and whine about setting a target 1.5 point too high. Still no harm, no foul. I'll take it. Mark

[NAV]

Mark, I woudn't have taken this trade, but for my system, which is pretty darn good. I still don't know whether this trade will be a winner or loser. Judging by the posts on this board, looks like no one is prepared for a rally or positioned in that direction. Maybe they are right. Just an observation..... My worry is always waiting for that last leg which never comes. So if the system says buy, just do it !

[hiker]

I am now positioned long SPY...not leveraged. FWIW based on 1437 SPX prior .618 retrace holding on several tests intraday. upside keeps getting sold near 145 so this will have to give way for anything meangingful

[arbman]

Judging by the posts on this board, looks like no one is prepared for a rally or positioned in that direction. Maybe they are right. Just an observation....

Except for Airedale, he is long in the futures. I am also long without leverage. I am looking to buy some calls if the implied volatility comes down a bit, you can not realize a profit with the IV so high in calls and I don't have the guts to go into the futures since I can loose quite a bit with another large gap down. The calls would keep any losses limited to their premiums and I can sit on them for sometime when the initial pricing is favorable, it is too hard to do so for me in futures...

- kisa

[NAV]

Judging by the posts on this board, looks like no one is prepared for a rally or positioned in that direction. Maybe they are right. Just an observation....

you can not realize a profit with the IV so high in calls - kisa

Not true. IV is high, but not that high. IV on Sep OTM SPY is around 23%-25%, which is not way beyond historic volatility. If you directionally right and there's a large move, i can't see why you cannot make profits. Yes the IV differential w.r.t to historical volatility can chop off a few pennies out of your profits, but no so much as to eat a bulk of your profits. And any move here would be a large one - up or down ! The larger the move, the effects of IV tends to be marginal.

Edited by NAV, 10 August 2007 - 01:57 PM.

[arbman]

OK, if the move is large enough, yes of course you can profit from it. But if you wait a few days for a retest of the lows, you might of course miss the lowest entry, but you will most likely also get much cheaper implied volatility premiums, instead you will also avoid another dive lower. It is all in the level of comfort, imho. On the other hand, if you buy the calls now and it retests, you will be sorry for seeing the premiums erode by the retest (in the risk premiums) even though you were right about the exact bottom when it came... For now, I prefer to stay away from leverage for a day or two. If a large move up comes, yes I will be missing it, but with 300+ new lows, a retest is very very likely, if not lower... This was my point and has been my experience several times before... - kisa (in fact, if you are really expecting an abrupt reversal higher, the futures would be the way to go free of the risk premium instead of the calls)

[arbman]

SPX needs to move above 1460 first today to talk about any upside... I am out, maybe next week, but OEX P/C option positions are not comforting here. The equity P/C is also crrazy, somebody bought 250k options in the last hour...

[NAV]

OK, if the move is large enough, yes of course you can profit from it. But if you wait a few days for a retest of the lows, you might of course miss the lowest entry, but you will most likely also get much cheaper implied volatility premiums, instead you will also avoid another dive lower.

It is all in the level of comfort, imho. On the other hand, if you buy the calls now and it retests, you will be sorry for seeing the premiums erode by the retest (in the risk premiums) even though you were right about the exact bottom when it came...

For now, I prefer to stay away from leverage for a day or two. If a large move up comes, yes I will be missing it, but with 300+ new lows, a retest is very very likely, if not lower...

This was my point and has been my experience several times before...

- kisa



(in fact, if you are really expecting an abrupt reversal higher, the futures would be the way to go free of the risk premium instead of the calls)

I see what you are saying. My trading style is different. If i am wrong directionally, i just get out.