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Options-strategy

Using Put options in SPXU to trade the SPXDisclaimer All TRADING involves high risk and YOU can LOSE a substantial amount of money, no matter what method you use. All trading involves high risk; past performance is not necessarily indicative of future results. For Educational Use Only – Not To Be Utilized As Trading Advice Strategy ----------- SPXU is inversely correlated to the SPX. Trade SPXU weekly put options for cheaper premiums and expecting a larger move. Purchase the weekly SPXU put options contract to trade upside in SPX. (A short term trading strategy to reduce capital outlay) Use Level 2 Tape Reading to see the supply/demand of the market, including the Pros ----- Less capital outlay so much more efficient There is a tracking error in the SPXU which can help in getting a better price into the put option (the option pricing will change based on the buyers and sellers in the options market). This can help in time delay for trade setup before the move comes into the SPXU instrument. SPXU provides (-3x) exposure to a market-cap weighted index of 500 large- and mid-cap US companies selected by the S&P Committee. This -3x exposure can help speed up the change in price of the underlying, which can help move faster towards breakeven and above into profitability in the options contract. Cons ------ Options have an expiry date so some timing does come into question. There could be a change in the negative correlation between SPXU and SPX due to tracking error. The trade does not move enough in the direction of the put in SPXU over and above the breakeven that the premium Premium decay in the option for short-term options which can result in Theta decay. Put options tend to move slower (shorter deltas) than call options (larger deltas). Summary ------------ This strategy is only meant for reducing the capital required to get exposure to the SPX via leveraged instrument such as option.
AMEX:SPXUEducation
by ashpat86
Nifty Levels & Strategy for 17/Nov/2022Dear traders, I have identified chart levels based on my analysis, major support & resistance levels. Please note that I am not a SEBI registered member. Information shared by me here for educational purpose only. Please don’t trust me or anyone for trading/investment purpose as it may lead to financial losses. Focus on learning, how to fish, trust on your own trading skills and please do consult your financial advisor before trading. NIFTY Nifty was all set for gap-up however Poland missile attack issue gave opportunity to bulls to add new long positions at opening as well as in 2nd half. Profit booking is happening at higher level. Overall trend is bullish and now risk:reward is getting better in Nifty compare to Bank Nifty. 18300 with max OI in put is likely to act as a big support. Trade level by level & wait for right opportunities. Over trading should be avoid. Big players have turned neutral and keeping watch on Poland issue development which is capable of swinging market in either direction. Please note that index is getting managed at higher level and profit booking is going on in stocks. STAY LIGHT & KEEP POSITIONS HEDGED. GET INTO TRADE ONLY WHEN YOU GET GOOD SETUP WITH MINIMUM RISK:REWARD 1:2 & SMALL SL. TREND IS ALWAYS YOUR FRIEND. OPTIONS WRITERS ARE REALLY MAKING GOOD MONEY WHO REALLY UNDERSTAND THE UNDERTONE OF THE MARKET. RETAIL TRADERS SHOULD TRY TO LEARN OPTION WRITING BY DOING VIRTUAL TRADES & KEEP ANALYZING THE PROFIT & LOSS FOR CLEAR & BETTER UNDERSTANDING. Please find below scorecard, PCR update & options statistics for your reference: NIFTY SCORECARD DATED 16/NOV/2022 NIFTY IS UP BY 6 POINTS Name Price Previous Day Change % Change Nifty 18410 18403 6.25 0.03% India VIX 15.10 14.64 0.47 3.18% OPTION STATISTICS BASED ON 17/NOV/2022 EXPIRY DATA Max OI (Calls) 18400 (Open Interest: 8620000, CE LTP: 52.25) Max OI (Puts) 18300 (Open Interest: 7878550, PE LTP: 20) PCR 0.95 (PCR is in sideways to mild bearish zone) Nifty Calls: ATM: Short Buildup, OTM:Short Buildup, ITM:Long Liquidation, FAR OTM:Long Liquidation Nifty Puts: ATM: Short Buildup, OTM:Long Liquidation, ITM:Long Buildup, FAR OTM:Long Liquidation
NSE:NIFTY
by manishmgupta
For Bitcoin, Investing and Hedging Go Side-by-SideBITSTAMP:BTCUSD Bitcoin (BTCUSD) fell below the psychologically important $30,000 level in the beginning of June, after it briefly reached $31,800 on May 30th. In early May, the leading cryptocurrency touched bottom around $25,000 amid the US stock market selloff. Extreme price volatility is the trademark of Bitcoin throughout its history. Crypto investors’ optimism is short-lived, as the worst is not yet behind us. At $29,850, current Bitcoin price is -57% off the all-time high of $69,215 on November 8th, 2021. A 1-year chart clearly shows an unstoppable downtrend. The Russia-Ukraine conflict is ongoing. China’s Zero-Covid policy and lockdowns slow down its economy and cloak up global supply chain. US inflation and gasoline price are at record-high, even after two rounds of Fed rate actions. On top of these, we never know when Elon Musk might send a tweet and spook the crypto market. Long-term investors may “Buy and Forget” about the daily volatility and hope to see $100K Bitcoin in a few years. For Crypto asset, you don’t want to forget about it completely, as you might not remember how to retrieve it later. I have the unfortunate experience of losing a few ETHs when my iPhone 7 suddenly died. The unique word-combination required to unlock my wallet sits quietly in a safe in Wuhan, where I have not been able to return to since COVID first broke out there in January 2020. For investors holding Bitcoin asset, hedging the downside risk is critical to successful investment. Usually, investors could lock in the price by shorting Bitcoin Futures. However, most of us do not want to give away the upside potential, so this strategy is not ideal. I suggest buying CME Bitcoin Put Options instead. A Long Put gives you the right to sell at strike price during the life of the Options (American) or at contract expiration (European). When Bitcoin Futures trades below the Strike, you could exercise the options and pocket the price difference. Profit from options trade helps offset the loss incurred by holding the Bitcoin asset. Let’s use the case below to illustrate: (1) On May 30, you buy an out-of-the-money Put with a Strike of 29000 on June 2022 CME Micro Bitcoin Futures. The option premium is $60 per contract. (2) At contract expiration, Bitcoin falls to 28000. You exercise the Put and receive a Short Futures position on CME Micro Bitcoin. (3) You immediately buy back a futures contract to close out your Short position. This trade earns you $1,000, which is the difference between market price and strike price. Minus the $60 premium, your options trading profit is $940. If you use the $60 as a cost base, your investment return will be 1567%. What if Bitcoin rises above the Strike? Your investment in Bitcoin asset will increase in value. The premium you paid upfront is the maximum loss from the options trade. I consider this a low-cost insurance contract for protecting my Bitcoin asset. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
COINBASE:BTCUSDShort
by JimHuangChicago
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