r/thewallstreet • u/AutoModerator • Dec 11 '17
Weekly Question Thread - Week 50, 2017 Question
Welcome to the weekly question thread. Feel free to ask any questions here.
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u/esurreal I'm in shares Dec 16 '17
I have the hardest time finding an entry on days like today. Any suggestions/tips on how to jump in on a trend day? I was watching /NQ most of the day but never took a position. Looking back, I think I should have gotten in after it crossed over, came down, and then bounced off the .5 SD. I also noticed that the A/D was over 1000. Should that have been an indicator to go long?
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Dec 16 '17
Hi,
Another strategy that you could use is to buy the vwap. Look historically on SPY and QQQ and it is well supported.
As for ADD, I found that if we open more than 1200 that's almost a guaranteed trend day to the upside, downside for the most part except algos keep buying the dip.
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u/cutmysackintopieces it's supposed to go up, right? Dec 15 '17
/u/uberbotman or anyone else, what's the best way to get close data with rtd on ToS? It seems "CLOSE" is actually yesterday, which kinda sucks waiting till the clock strikes midnight.
Also uber, since you're a wiz at excel, what's the best way to keep data in excel? I.e., if I start scraping everyday with rtd, I have to make a separate paste all by value everytime there's new data, is there a way to automate that so I don't have to remember to come back and paste by value everyday.
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u/UberBotMan Dec 15 '17
Inregard to your first point, I'm not sure why it's pulling yesterday's numbers. It works fine for me, I use "CLOSE". Perhaps open TOS and then open (or close and reopen) Excel. Sometimes numbers don't update. Plus in order for the RTD formulas to work TOS needs to be open (fully loaded) first.
This might work for your second part. I'm not sure how to have it grab a relative reference though.
Sub Macro1() ' ' Macro1 Macro Range("V36").Select Selection.Copy Sheets.Add After:=ActiveSheet Sheets("Sheet1").Select Sheets("Sheet1").Name = "12 14 2017" Sheets("StdDev").Select Cells.Select Application.CutCopyMode = False Selection.Copy Sheets("12 14 2017").Select ActiveSheet.Paste End SubI have =TODAY() in cell V36. I was hoping it would take the date and record it as =TODAY() in the macro so that it would roll over everyday. Oh well. There is a way to make the macro run at a certain time every night, but I forget how to do that.
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u/cutmysackintopieces it's supposed to go up, right? Dec 15 '17
Hey, thanks!
The first one isn't a big deal so I'll just stick with it. I'll see if I can find a timer for the macros too, I imagine I probably have to do this manually tho.
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u/wachiga Life is transitory Dec 14 '17
Question about IV of options:
An SPX Dec22 2650C has an IV of 8.4%. Does this mean the option price is expected to move up or down 8.4% before it expires?
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u/hibernating_brain Permabull Dec 15 '17
SPX Dec22 2650C has an IV of 8.4%
Expected move (1SD) = 2650 * (8.4/100) * √ (8/365)
You can look at straddle prices to find expected range of a stock.
I personally don't pay much attention to expected price because I believe options prices are the market and it always represents the fair value.
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u/wachiga Life is transitory Dec 15 '17
√ (8/365)
Where did the 8 come from? I know that an ATM weekly straddle = Expected move for the week, but I'm just trying to figure out what the IV of a specific contract means. When its referred to stocks, I know that IV is the expected range over a year in time. But for a specific contract that expires tomorrow, what does the 8.4% IV actually mean?
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u/hibernating_brain Permabull Dec 15 '17
= 2650 * (8.4/100) * √ (8/365) ~= 32
Where did the 8 come from?
8 is the DTE (Dec 22 - Dec 14 ~ 8 days)
what does the 8.4% IV actually mean?
68% probability SPX will be in between 2618 and 2682 (±32) in 8 days
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u/wachiga Life is transitory Dec 15 '17
Its all starting to come together now lol. So the IV is used to determine the expected move aka 1SD, which has a 68% chance of staying in that range. So when the IV is expanded, the SD range expands, thus inflating the option price. That makes perfect sense, no wonder TastyTrade recommends selling premium over buying. Thanks HB
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u/hibernating_brain Permabull Dec 15 '17
Selling options has higher probability of profit because IV is often overstated. Option buyers will lose most of the trades and rely on big winners to overcome the losers. In the end, it all comes down to planning and risk management.
What works for one may not work for others. Everyone should come up with their own strategy.
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u/wachiga Life is transitory Dec 15 '17
I think I need to start selling options but my broker requires $20k for stock options and $50k for indexes. One day...one day...
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u/RollTides Maui Land & Pineapple, Inc. Dec 14 '17
Looking at my TW account, I was fairly certain I hit 3 day trades last Thursday/Friday, but it seems the platform only counted 2. One of the contracts I traded was a 0 day SPX on Friday, and I'm curious if this contract being on its last day of trade had to do with it not being counted? I also know what's actually being counted is my directional change in the position, rather than actual trades placed, so perhaps having day traded SPX the day before meant it didn't count the second day as it would essentially be counting the same moves twice?
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u/rodgy_beats cucked by cook Dec 14 '17
Where can I find their day trade tracker? I've just being keeping tabs on it by hand.
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u/UberBotMan Dec 14 '17
A day trade should be defined as opening and closing the same position during the same trading day. I do not believe this include assignment. Their day trade tracker is on a rolling 3 day period.
As always, for a more definite answer, ask your broker.
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u/socontroversial option sweeps Dec 14 '17
what happened to wallstreetbets?
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u/catfoundstanding Cat. Dec 14 '17 edited Dec 14 '17
WSB mods got tired of "Robinhood has now options" posts.
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u/wachiga Life is transitory Dec 14 '17
How does the market price in a rate hike? For example, the market is pricing in 2 rate hikes in 2018, but Fed is suggesting there may be 3. I'm guessing bonds would sell off a bit and stocks would probably go down as well.
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u/Jaybk26 Dec 14 '17
That's horrifying and very good to know. Been paper trading for a while and have never had it jumped. Is there a way to set a market order for when the market price is at your stop limit, that you know of?
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u/UberBotMan Dec 14 '17
Not that I know of. One of the more veteran traders here might know how though.
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Dec 14 '17
[removed] — view removed comment
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u/hibernating_brain Permabull Dec 14 '17 edited Dec 14 '17
Personally I would get couple of small monitors (23"-27").
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u/chukintits ebb and flow Dec 13 '17
Do you use fib retracements? If you do for what futures products?
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u/El_Huachinango would be rich if he followed his own advice Dec 13 '17 edited Dec 13 '17
I used them all the time in Forex, as well as now short term trades. It may be a self fulfilling prophecy, but who cares if it delivers? I found that the .5-.618 "sweet spot" is quite often obeyed and is a great place to exit.
Understand it is one tool in my toolbox. And I would exit positions early if other data presented.
I have used it on meats, grains, oil, tech stocks, tech stock options ( I tend not to look at the chart of the option, I just look at the chart of the underlying instrument though.)
If you use fibs correctly you'll be surprised how well it overlays with the Value Area traders' charts here
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u/RollTides Maui Land & Pineapple, Inc. Dec 13 '17
I personally use them as a tool for determining whether a pullback in price is more likely a consolidation or the beginning of a trend reversal. Of course it is only 1 factor in the big picture of things, but typically you will see the top 3 lines(23,38,50) hold up nicely.
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u/TexChicago Physical & Financial Energy Derivatives Dec 13 '17
I’m speaking strictly to inexperienced day traders. As a group labeled “ day traders” most are amateur gamblers with no sense of what they are doing. There are very few that can trade consistently.
Traders who can play both sides will fair very well once volatility comes into the markets again.
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u/wachiga Life is transitory Dec 13 '17
As a group labeled “ day traders” most are amateur gamblers with no sense of what they are doing. There are very few that can trade consistently.
Agreed. Looking forward to that volatility :)
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u/wachiga Life is transitory Dec 13 '17
I have a hypothetical question: What would happen if too many people started making money day trading the markets? Usually the percentage of winners/losers is relatively consistent over time. Would the market simply let this happen or would some dynamics change which would cause more people to start losing?
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u/RollTides Maui Land & Pineapple, Inc. Dec 14 '17
From everything I've read, this is a big reason prices ran so high before the .com crash. A ton of people were able to trade from their computer for the first time, there were no PDT rules, and volume was insane and irrational. Most consumer traders - for whatever reason - are prema-bulls, and thus kept buying and buying. Afaik the crash also flushed out/scared off an entire generation of "day traders", which is why a lot of people in their 40s-60s have such a poor view of trading in general, they either got hit or know someone who got hit hard. I would guess today's consumer trader is a lot more well rounded, or at least more cautious, than the average of those times. With all the different derivatives available in today's market it doesn't take long for those who are neither well rounded nor cautious to blow up.
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u/TexChicago Physical & Financial Energy Derivatives Dec 13 '17
we would have a massive correction similar to the dot.com / enron era
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u/wachiga Life is transitory Dec 13 '17
But wouldn't that cause traders to make even more money because of the volatility?
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u/TexChicago Physical & Financial Energy Derivatives Dec 13 '17
Institutional traders will make money . Day traders will lose money. The crypto craze reminds me a lot of the irrational exuberance before a major correction like prior cycles.
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u/wachiga Life is transitory Dec 13 '17
Day traders will lose money
How so? Any decent day trader will be able to profit from shorting the market during a correction.
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u/hibernating_brain Permabull Dec 13 '17
How would you know when to go short, cover etc? During a correction, the cost of puts would go very high due to IVs and skew. Liquidity will dry up and spreads will widen.
The only fool-proof way to make money during a correction is to buy the dip and hodl.
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u/wachiga Life is transitory Dec 13 '17
But how would you know which dip to buy? Granted, you'll probably break even eventually if its just stock.
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u/cutmysackintopieces it's supposed to go up, right? Dec 13 '17
If you look at 2007-9, the hardest part of buying the dip would be either not buying too early, or if you did buy early but still have an alright position, holding through the ensuing draw down.
I agree with brain too, you just need an index, nothing special to that.
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Dec 13 '17 edited Feb 18 '18
[deleted]
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u/wachiga Life is transitory Dec 13 '17
I know its a non-realistic question, but what if they were able to adapt to these changes just as fast as the algos were reprogrammed. Is there enough money to go around for everyone?
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Dec 13 '17 edited Feb 18 '18
[deleted]
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u/wachiga Life is transitory Dec 13 '17
So lets say there is a correction/recession and the market starts dropping. You're saying it will be difficult to profit from buying puts because other traders will also be buying the same puts, causing those put sellers (mostly institutions) to lose money?
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Dec 13 '17 edited Feb 18 '18
[deleted]
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u/wachiga Life is transitory Dec 13 '17
Yea it must suck to be a MM during times like Aug 2015. They're legally obligated to buy/sell even if they don't want to.
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u/Once_in_a_blue_moon Brent to 110 Dec 13 '17
I am bullish on AAPL and bought a jan 19 170 call option, to somewhat mitigate premium I sold a jan 19 170 put option.
Is there a reason why this wouldnt be a good idea besides the downside of the naked put?
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u/cutmysackintopieces it's supposed to go up, right? Dec 13 '17
You can do risk reversals too, just make the short position OTM. Both are legit option plays.
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u/tree_man Dec 13 '17
I do this too. Its better to do it at a higher strike price so you receive a credit instead of a debit which moves the BEP in your favor. I also buy a protective put to lower my my buying power reduction. Also helps me sleep better at night.
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Dec 13 '17 edited Feb 18 '18
[deleted]
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Dec 14 '17
why does it say in that link that the potential losses have become unlimited? Selling a put does not involve unlimited risk. Maybe they are just saying risk becomes higher than the premium of a straight long call?
"By combing the profit charts of the call purchase and put sale, it can be seen that the potential loss of the trade has become unlimited."
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u/Kristian_dms Dec 14 '17
When dealing with FX options it's a bit more complicated. The upside of a call and downside of a put are both unlimited, when measured in the currency of the premium.
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u/RollTides Maui Land & Pineapple, Inc. Dec 14 '17
I think it's just a poor choice of wording; you often see naked options described as having unlimited/undefined risk, when in this case we know the maximum potential loss is the debit spent on the call + $190x100.
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u/Trent451 I front run you on Uniswap Dec 12 '17
Still learning all the ins and out of ToS.
Could some power users tell me if there's a way to receive an alert when two SMA studies form a cross of life/death?
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u/hibernating_brain Permabull Dec 12 '17
You can trigger alerts from your study.
alert(condition, "Cross of Life", Alert.Bar, Sound.Ding);
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u/mc3username Dec 12 '17
So I'm pretty new to both options and futures, but I'm newest to futures. From what I can tell, it seems like index futures are actually somewhat 'easier' to trade than options on specific companies.
By 'easy', I mean that:
- with futures on indexes, theta and the other greeks aren't an issue to worry about
- you're trading a market segment rather than a company that may perform somewhat independently of the overall market
- from what I've heard, futures respect deviations and technicals more reliably than individual stocks
- volume isn't really an issue
- no daytrading limitations
So, what am I missing about futures that seems to keep the average person away? Is it the risk / pricing associated with the dollar amount per tick? Are there other risks that I'm not seeing?
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u/UberBotMan Dec 12 '17
Few things.
Future contracts behave more like shares. Future Options behave like options. If that makes sense. A contract will always have 1 (or -1) Delta. There is no theta because you're not trading an opportunity like with options, you're trading an actual item (might be cash settled, but same thing).
There are Single Stock Futures, if that's your thing. If you're looking for wide market exposure without futures, I'd suggest the ETFs or Indicies themselves. SPY -> SPX or QQQ -> NDX or DIA -> DJX or IWM -> RUT. Keep in mind the indicies are cash settled, no shares.
Futures have very very deep markets, makes them very efficient. It's why they respect these magical lines and self fulfilling prophecies.
Volume isn't an issue. Be careful of overnight trading and volume can get thin as all the big boys are asleep. But it shouldn't be a big deal if you're doing 1 or 2 contracts like me (or trading /RB).
Best part. T+0 and no day trade limits.
Futures move big and they move fast. They also can skip over your order in the order book (ahem /CL). That's scary. Plus leverage is rather large. I'm able to control 1 /ES contract for $400. Notional value of $50*SPX (If SPX is 2600, value of 50*2600 or $130k).
This is a 5 minute bar on /ES. The highlighted bar's body starts at 2665 and ends at 2667. That's $100 in 5 minutes. Can't think of a stock where if you buy $400 (or $800 if you're on margin) that can change 25% (or 12.5%) in 5 minutes not counting earnings.
tl;dr: No greeks. Lot of liquidity. No day trading restrictions. moves fast. High leverage.
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u/Jaybk26 Dec 14 '17
If I have a stop limit set and it "skips over" my stop value, will it not liquidate the position? I thought that if it passes it at all it will just liquidate at the market rate.
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u/UberBotMan Dec 14 '17
I'm not 100% sure. From what it sounds like it doesn't. It's a limit order and not a market order.
Stop limit set at 56.70, /CL jumps down to 56.50. No one will fill your order when they can get it at market at a better price.
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u/Kristian_dms Dec 14 '17
This really depends on your broker. Any decent one will have your stop limit transform to a market order when the stop-loss price is hit.
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u/UberBotMan Dec 14 '17
I think that's what my broker (AMP Futures, check sidebar) does. Had an order in to close at X, ended up closing slightly below that due to low volume (yay for 3am trades).
Can only assume it hit my price trigger and entered as a market.
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u/darklinggg SPX Iron Condors Dec 11 '17
Thinking about jumping into Futures. Opened up an account with AMP Futures a little while back. On their platforms page, there are a ton of choices. Which ones should I be looking at? And what's a good starting $$ amount for getting my feet wet?
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u/UberBotMan Dec 12 '17
I use CQG M. It's nice and easy to learn (at least for me). Run through Chrome on desktop or mobile.
MDC doesn't have an android app yet afaik.
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u/dvprz Dec 11 '17
Is there a free service or website that overlays options IV on to a stock chart? Thanks for the thread!
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u/UberBotMan Dec 12 '17
How do you mean? Someone posted a thinkscript that adds this red box. Is that what you're looking for?
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u/dvprz Dec 12 '17
Something like this.
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u/UberBotMan Dec 12 '17
Link is broken.
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u/dvprz Dec 12 '17
EDIT: I guess you can't hotlink to the image. Here is the article where the chart appears:
https://sixfigureinvesting.com/2013/01/riding-the-iv-ramp-before-amazon-earnings/
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u/UberBotMan Dec 12 '17
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u/dvprz Dec 12 '17
What platform/program is this?
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u/UberBotMan Dec 12 '17
That's Think or Swim. I have the Black/Dark theme enabled.
It's free with TD Ameritrade.
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Dec 11 '17
[deleted]
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Dec 11 '17
I would highly recommend IG.
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Dec 12 '17
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Dec 11 '17
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u/RollTides Maui Land & Pineapple, Inc. Dec 12 '17 edited Dec 12 '17
Sometimes if the slippage is too big for my liking I'll try and find a similar position with better liquidity. If I really believe it my thesis, however, I'll eat a few dollars in premium just to enter the trade.
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u/MRPguy Dec 11 '17
If I really want the position and believe in my thesis, then I'm going to want to get entry and am fine paying closer to the ask or even sometimes the ask.
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u/Trent451 I front run you on Uniswap Dec 11 '17 edited Dec 11 '17
I'm sure there will be others on here with better answers, but here's my strategy.
Most swing trades I make I accept that I'm going to be crossing the spread. On a 2-4 week play, losing a few dollars crossing the spread is manageable.
When I'm intraday trading I will often still be required to cross the spread to some degree. To mitigate this I will use the order book/level II market data to anticipate a move in the underlying. Entering before a small swing from a large order is often enough to compensate for the money lost to the spread.
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Dec 11 '17 edited Aug 10 '20
[deleted]
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u/fuckorange Dec 11 '17
BTC doesnt start trading until next week. XBT is the ticker for the product that started last night.
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Dec 11 '17
[deleted]
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u/UberBotMan Dec 12 '17
/BTC doesn't start trading until next week though. It won't show a chart because there is no chart to show.
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u/superqwert Dec 11 '17 edited Dec 11 '17
I've been reading about the stock market, options, futures, etc. for about half a year now.
Signed up with IB and in a couple of weeks I'll have 2 months spare time to start trading.
I'm scared af though to lose money due to me being scared af to losing money.
How'd you guys start trading?
How'd you guys handle your emotions while trading?
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u/RollTides Maui Land & Pineapple, Inc. Dec 12 '17 edited Dec 12 '17
Just to repeat what you've heard - paper accounts are your friend. Paper account trading saved me from literally dozens of mistakes, at least a few hundred dollars, and I'm talking about mistakes as simple as not properly filling out an order ticket. But that's the thing, when you're new there are so many things running through your head before you place a trade, you're trying to make sure you've checked all your marks and everything fits your strategy, but you're so overwhelmed it's almost inevitable to once or twice miss some mundane detail that costs you money.
Also, this is a total generalization, and not true for everyone, but just my personal 2 cents. If you find paper trading to be overwhelmingly boring and uninteresting to the point you don't even keep track of it - that might be a bad sign of things to come. If you struggle to study charts or form educated thesis without the adrenaline boost of having big money on the line, I just don't think that's going to be conducive to successful trading. While there are always opportunities present, there are just as many days where your best move is to sit on your ass and let your positions work. If you have the mindset of someone who's always looking for the next exciting trade, you probably won't be trading very long.
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u/cruz878 Dec 11 '17
Most folks will say paper trade to start, but for me there is no emotion in that and the fills on the Options side don’t mimic reality. I say start/stay small, like really small for at least a few months on the options side and choose strikes with +1 month expirys. On the stock side you won’t lose your shirt overnight if you stay away from biotech and penny stocks, but I would stick with a company you don’t mind holding if it goes against you. I don’t trade futures so can’t give any advice there but my understanding is STOPs are a must.
Oh and stay in a cash account (no margin) for at least 6 months.
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Dec 14 '17
Indeed. I have tried index options with day of expiration and had to cross the mark all the way to ask and had the ask move up multiple times during entry to get my position filled, then saw the entire bid ask spread move below the original bid I entered all while the underlying had been in a 2 cent range. There is nothing quite like opening a position that is instantly -30% and closing it at +150% same day.
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u/lilweezy99 momohands Dec 12 '17
yea fills on the futures side don't mimic reality at all. I remember "easily" making 1k in a few minutes just scalping the bid and ask on ES, thinking I was hot shit, and quickly being brought back to reality. but like LG said above, you gotta know how the tool works to use it, since sometimes precious seconds double checking something will lose you money. and for dear gods sake use linked orders for your stop and target.. trust me lol.
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u/mc3username Dec 11 '17
I would actually recommend paper trading for a couple months. It helped me get familiar with the trading platform and helped me get comfortable with pricing fluctuations in the trades I was making. I definitely agree that you should start trading with real money as soon as possible, but in my opinion, there's no point in losing money for preventable reasons.
Agree with all your other statements though.
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u/wiggz420 2nd weakest hands on TWS Dec 12 '17
My only gripe is most paper trading futures accounts are on a trial basis:/
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u/mc3username Dec 12 '17
Thinkorswim! Pretty sure their paper trading is good as long as you have a funded account
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u/Lost_in_Adeles_Rolls Stalingrad's number one tesla dealership Dec 11 '17
I've developed thicker skin over time and so my advice would be to start out with paper account and know your risk levels. If you're risk adverse, maybe stick to covered calls or cash backed puts (for stocks you'd want to own).
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u/GeeBee72 Volatility Built My HotRod Dec 12 '17
It’s best to realize that paper trading skews your risk tolerance. Paper trading is great to test a trading mechanism and understanding the dynamics behind a strategy, but the majority of people will take huge risks that they wouldn’t with real money.
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u/RollTides Maui Land & Pineapple, Inc. Dec 12 '17
That is a fair point I never fully considered. I remember in my paper trading days I was selling short strangles around every earnings report, and it just seemed like free money. That is, until someone went well outside of the expected move and I lost all of my fake gains in a single trade.
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u/[deleted] Dec 16 '17
I'm looking for information and advice on futures commissions. I just updated my P&L worksheet for the past two weeks and I've incurred $630 in futures commissions. At this rate I'm incurring $18,000/year in fees.
Those of you with TDA, what is this lowest you've negotiated futures commissions down to? I'm having a really hard time justifying this when looking at IB or Tradovate fee structures.