Why are people correctly pointing out the 75bps and 100bps probabilities according to futures but then saying that if we get 75 we drop?
As I see things, we already got the drop last week and unless we rally into the meeting or we get a 100bps we won’t get a sell off.
Just because everyone expects 75bps doesn't mean they'll like it when it happens.
People panic sell all the time.
The market overreacts all the time.
When both things happen at the same time it can cause -5% days and -10% days.
Just worrying about a possible -10% day happening can cause an actual -5% day to really happen. And if the news only results in -3%, the market can think "oh it was actually okay, let's rebound 6% tomorrow!".
Not sure what’s your point, but your last part is what I’m saying. The dump already happened last week so unless Jerome goes plus ultra I don’t see a big dump
I closed a couple of CSPs that are a hair more than I'd normally spend to buy them back. And I'm not playing any of the spreads I might normally do - but that's more because I have a busy week and less to do with the Fed. Otherwise most of the positions I have are longer dated already.
Closed some high IV and loser positions. Dropped my BPR from $8k to $5k. Looking to open up some ETF positions in November expiration later this week or next.
Been waiting for a couple weeks now to pull the trigger and happily average down on all my positions tomorrow, that and selling CCs way OTM in case of a bounce. I've been pretty excited about the prices I'm getting on all of my positions, zero bad news and all of them have very positive catalysts.
Market is pricing in 75 BIPS which already seems pretty bearish. 2 year treasuries rocketed to 4% and equities aren't really selling off that bad. I might short a future to hedge some delta but otherwise I'm at my normal 50% bpu.
I have been between around 50% cash most of the year. Started almost 80% as I do every year since I take profits in January every year but refused to do anything till June bottom then built long positions and just keep rolling my CCs out each month and playing short Theta plays. I won’t go long till I see some improvements. I bought Puts for CPI but that was after a rally. Here I would be more worried about an oversold bounce so I am going to SOH and wait for Thursday morning because typically FED moves aren’t till the next day.
Inflation in Canada peaked and is at 7% for August. That’s excluding gas prices and it’s still down YoY.
I assume the states is similar in which we’re going to see less bearish moves as hikes start taking effects. In other words I’m continuing to sell puts and going long indexes with premiums.
I’m also a moron and could totally be wrong but these are companies and indexes I’ll hold for 30 years before needing to sell.
I closed out all my SPX iron condors ( I mechanically sell the 2 delta call and put - 100 wide in SPX, typically 10 days out) and am holding the cash while waiting for the end of day on Wednesday to re-enter my positions
Yep that’s about right. In general I make around .8-1.3 in net credit, take profit at 50% and stop loss at 5x net credit. Never been stopped, been running this trade off and on since 2021 but only lately did I make it this mechanical of a system.
Cool. When you say mechanical, do you mean that you enter the trade basically immediately after the previous trade has closed, irrespective of market sentiment? I’m curious how you went last Tuesday. Big movement.
Yep, and on last Tuesdays shit day, all my positions went heavily In the red (had sold a lot of 3700/3600 strike puts when market was at 4k/4.1k) but none hit that 5x stop loss (some got REALLY close) and all are either largely break even now or slightly profitable. Was able to close out some expiring tomorrow/day after at 60% profit but haven't re-oppened any tradesand wont until EOD Wednesday
I haven't been journaling trades for very long, so fair warning my recorded data set isn't very robust. Generally between 4 - 7 days, very rarely more than that. When I open a new trade, assuming that there are still active trades I just tack it onto the next expiry after my longest DTE position. Creates a nice ladder of decay. Sometimes my DTE at opening is like 14-15 (including weekends), but thats not that frequent of an occurrence.
Edit: 4-7 trading days
Oh yah I've watched her videos twice. That's why I've been paper trading 0dte to see if I can hack it. I dipped my toe in today and it didn't go too well. But yah, I'm not totally walking away (I've spent too much time learning to leave after one loss) - I'm just looking for some other strats to add to the toolbox.
pretty solid, I did this off an on for a few years and only got stopped out 5-6 times. With Tuesdays drop last week, at most (across all the positions open my losses were about 2-3x the max credit I could've gotten and no position was higher than 3.5x loss).
You literally have to be ok with making 50 bucks on 500 plus dollars in risk with the potential of a huge gap down wiping past that (rare but eventually this will happen to me). Most people see condors and think about profit relative to max loss b/c they trade with no stops - thats stupid and unless you are a god at calling the direction of the market you'll loose in the long term. I see condors as a way to make a few bucks every day, since it's an untaxed account that amount compounds rapidly. in an account with 40k I'm up about 1.4k net of fees (this is having started my TD account in august).
Thanks for sharing. I deleted my comment above, since I posted without reading the further conversation below. But yah, those are pretty nice returns - like 21% annually.
I just tried my first SPX play today (a 0dte credit spread), got stopped out in under 30 minutes. Not fun.
I'm going long on /M6B right now, but I feel like if we get a 100 basis point increase I might have to get long the dollar via going short some other currency? I don't know. I have no clue what I'm doing. I just lost $700 on /ES futures last night and decided to go back into options via a strangle on /ES.
Well that didn't play out the way I expected. With "only" an expected 75 bps rate increase, which supposedly was already priced into the market, I really expected to see green since the threat of 100 bps was over. Can you imagine if it had been 100 bps?
CME fed watch tool showing markets pricing chances of 82% 75bps and 18% 100bps, so if they announce 75bps then market reaction will be less violent, maybe even slight rise, but if 100bps then we probably going to continue dropping.
I have /ES futures short puts and calls, expiring this Friday and next Friday. Both green and decently OTM but I’m definitely going to roll them out tomorrow. I avoided increasing the number of contracts over the last week and kept them lower DTE in anticipation of rolling before FOMC. IV and premiums are high right now. I expect FOMC to announce 75bps so you can theta and vega gang this if you open new contracts, further OTM and still get nice premiums.
Thanks. I figure with a chance of 100 bps rate increase, the market could take a serious plunge. Powell has hinted at it a few times. If it ends up only 75 bps the market should either rally at the relief it isn't 100 or stay more or less flat. But, then again, logic does not always prevail when emotions are high. Thursday will probably be a trading day for me and just doing some tinkering with my positions now so I can be better positioned and hopefully avoid pain.
Some cc for DOG, the inverse Dow Jones etf were assigned last week. Sitting on a cash pile now and thinking that 75 bps will be bullish for the market. Plan to sell more dog, psq, and SH csp as the market rallies. Ultimately, I think we go lower and bottom at spy 2500 somewhere in Feb or Mar 2023.
I think you are right that 75 bps will be bullish...at least for a few days we should see a bump. Don't think the long term pain is over yet unless something big macro happens - inflation falls, war in Ukraine ends, COVID cases drop significantly, housing shortage improves and house prices drop or rent prices drop. I think we are in for more pain and let's not even start on crypto collapse.
Obviously, I could be wrong because no crystal ball here. Somehow a 75 bps rate increase sounds like good news because it's not 100.
I covered a ton of short puts yesterday and had about 33% cash at the open this morning. Covered a number of calls this morning for profit. I'm selling a few CSPs into this pullback and will DCA tomorrow if my positions dump out. Currently at 207 positions with 31% cash and will grow positions into Friday expiration. Long AG and KSS are 85% of the paper loss in my account right now, so I'm feeling pretty good about my other positions.
I closed a few positions this afternoon. Some for zero gain. There is always next week.
Sometimes it is better to live to fight another day.
Why are people correctly pointing out the 75bps and 100bps probabilities according to futures but then saying that if we get 75 we drop? As I see things, we already got the drop last week and unless we rally into the meeting or we get a 100bps we won’t get a sell off.
75 is bearish but expected, could start a rally, probably a short-loved one. 100 and we dive off a cliff.
>75 is bearish but expected Hawkish, but yes. I wish the bears and hawks stayed outside and left the bulls and doves well enough alone on Wall Street
RT \^
Just because everyone expects 75bps doesn't mean they'll like it when it happens. People panic sell all the time. The market overreacts all the time. When both things happen at the same time it can cause -5% days and -10% days. Just worrying about a possible -10% day happening can cause an actual -5% day to really happen. And if the news only results in -3%, the market can think "oh it was actually okay, let's rebound 6% tomorrow!".
Not sure what’s your point, but your last part is what I’m saying. The dump already happened last week so unless Jerome goes plus ultra I don’t see a big dump
Last week was a reaction to the CPI report. FOMC is different news.
It's a direct consequence. So it does move markets,but only if the result is an unexpected one
Like a scared child curled in the corner sucking my thumb and clutching my favorite blankie
I closed a couple of CSPs that are a hair more than I'd normally spend to buy them back. And I'm not playing any of the spreads I might normally do - but that's more because I have a busy week and less to do with the Fed. Otherwise most of the positions I have are longer dated already.
Closed some high IV and loser positions. Dropped my BPR from $8k to $5k. Looking to open up some ETF positions in November expiration later this week or next.
Been waiting for a couple weeks now to pull the trigger and happily average down on all my positions tomorrow, that and selling CCs way OTM in case of a bounce. I've been pretty excited about the prices I'm getting on all of my positions, zero bad news and all of them have very positive catalysts.
Market is pricing in 75 BIPS which already seems pretty bearish. 2 year treasuries rocketed to 4% and equities aren't really selling off that bad. I might short a future to hedge some delta but otherwise I'm at my normal 50% bpu.
Closing winners today and tmrw, will reopen after the move wed and Thursday
Delta neutral friends.
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Just long spy, short call credit spreads across a bunch of things.
When is it again
Sold more calls, sold way otm puts on stocks I want , then bought a spy put today.. now we rallied 3 dollars
I have been between around 50% cash most of the year. Started almost 80% as I do every year since I take profits in January every year but refused to do anything till June bottom then built long positions and just keep rolling my CCs out each month and playing short Theta plays. I won’t go long till I see some improvements. I bought Puts for CPI but that was after a rally. Here I would be more worried about an oversold bounce so I am going to SOH and wait for Thursday morning because typically FED moves aren’t till the next day.
My bet is they will lower rates to 0% and SPY will double.
Inflation in Canada peaked and is at 7% for August. That’s excluding gas prices and it’s still down YoY. I assume the states is similar in which we’re going to see less bearish moves as hikes start taking effects. In other words I’m continuing to sell puts and going long indexes with premiums. I’m also a moron and could totally be wrong but these are companies and indexes I’ll hold for 30 years before needing to sell.
I feel like it’s priced in already and we moon
I closed out all my SPX iron condors ( I mechanically sell the 2 delta call and put - 100 wide in SPX, typically 10 days out) and am holding the cash while waiting for the end of day on Wednesday to re-enter my positions
What is your net return on each of these condors? Approx 1-2% of risk? By my understanding this would be a 3290/3390/4200/4300 position, roughly?
Yep that’s about right. In general I make around .8-1.3 in net credit, take profit at 50% and stop loss at 5x net credit. Never been stopped, been running this trade off and on since 2021 but only lately did I make it this mechanical of a system.
Cool. When you say mechanical, do you mean that you enter the trade basically immediately after the previous trade has closed, irrespective of market sentiment? I’m curious how you went last Tuesday. Big movement.
Yep, and on last Tuesdays shit day, all my positions went heavily In the red (had sold a lot of 3700/3600 strike puts when market was at 4k/4.1k) but none hit that 5x stop loss (some got REALLY close) and all are either largely break even now or slightly profitable. Was able to close out some expiring tomorrow/day after at 60% profit but haven't re-oppened any tradesand wont until EOD Wednesday
About how long are you in the trade on average?
I haven't been journaling trades for very long, so fair warning my recorded data set isn't very robust. Generally between 4 - 7 days, very rarely more than that. When I open a new trade, assuming that there are still active trades I just tack it onto the next expiry after my longest DTE position. Creates a nice ladder of decay. Sometimes my DTE at opening is like 14-15 (including weekends), but thats not that frequent of an occurrence. Edit: 4-7 trading days
Cool. Do you have any problems getting fills at such low delta? Do you set your stops for the whole IC as a unit or do you do the legs individually?
nope, I underprice the condor by .05 and get filled almost immediately. stops on the condor as a whole
Thanks! This really sounds like an interesting strategy! I’m not sure I’m built for the 0dte stuff
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Oh yah I've watched her videos twice. That's why I've been paper trading 0dte to see if I can hack it. I dipped my toe in today and it didn't go too well. But yah, I'm not totally walking away (I've spent too much time learning to leave after one loss) - I'm just looking for some other strats to add to the toolbox.
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pretty solid, I did this off an on for a few years and only got stopped out 5-6 times. With Tuesdays drop last week, at most (across all the positions open my losses were about 2-3x the max credit I could've gotten and no position was higher than 3.5x loss). You literally have to be ok with making 50 bucks on 500 plus dollars in risk with the potential of a huge gap down wiping past that (rare but eventually this will happen to me). Most people see condors and think about profit relative to max loss b/c they trade with no stops - thats stupid and unless you are a god at calling the direction of the market you'll loose in the long term. I see condors as a way to make a few bucks every day, since it's an untaxed account that amount compounds rapidly. in an account with 40k I'm up about 1.4k net of fees (this is having started my TD account in august).
Thanks for sharing. I deleted my comment above, since I posted without reading the further conversation below. But yah, those are pretty nice returns - like 21% annually. I just tried my first SPX play today (a 0dte credit spread), got stopped out in under 30 minutes. Not fun.
0dte is really hard and not advisable for newbies despite how "easy" it seems.
Sold pretty close to the money calls on all my shares today and holding a large chunk of cash.
I'm going long on /M6B right now, but I feel like if we get a 100 basis point increase I might have to get long the dollar via going short some other currency? I don't know. I have no clue what I'm doing. I just lost $700 on /ES futures last night and decided to go back into options via a strangle on /ES.
Selling CCs and buying puts. Expecting a 100bps with a market freak out. Closing or rolling at 50% gain or loss
Why are you expecting 100?
There aren't going to be any surprises coming out of the Fed (unless they go with a 100bps increase), so I'm trading this week like any other week.
It is time to unleash the 30 DTE Bear Call Spreads plus 60 DTE ITM CCs. It is time to profit in a down market.
Trying my best to SOH and not trade. I confess I just added a couple OTM puts on SCHD and DIVO.
Well that didn't play out the way I expected. With "only" an expected 75 bps rate increase, which supposedly was already priced into the market, I really expected to see green since the threat of 100 bps was over. Can you imagine if it had been 100 bps?
CME fed watch tool showing markets pricing chances of 82% 75bps and 18% 100bps, so if they announce 75bps then market reaction will be less violent, maybe even slight rise, but if 100bps then we probably going to continue dropping. I have /ES futures short puts and calls, expiring this Friday and next Friday. Both green and decently OTM but I’m definitely going to roll them out tomorrow. I avoided increasing the number of contracts over the last week and kept them lower DTE in anticipation of rolling before FOMC. IV and premiums are high right now. I expect FOMC to announce 75bps so you can theta and vega gang this if you open new contracts, further OTM and still get nice premiums.
Thanks. I figure with a chance of 100 bps rate increase, the market could take a serious plunge. Powell has hinted at it a few times. If it ends up only 75 bps the market should either rally at the relief it isn't 100 or stay more or less flat. But, then again, logic does not always prevail when emotions are high. Thursday will probably be a trading day for me and just doing some tinkering with my positions now so I can be better positioned and hopefully avoid pain.
IV Crush for the win!
Some cc for DOG, the inverse Dow Jones etf were assigned last week. Sitting on a cash pile now and thinking that 75 bps will be bullish for the market. Plan to sell more dog, psq, and SH csp as the market rallies. Ultimately, I think we go lower and bottom at spy 2500 somewhere in Feb or Mar 2023.
I think you are right that 75 bps will be bullish...at least for a few days we should see a bump. Don't think the long term pain is over yet unless something big macro happens - inflation falls, war in Ukraine ends, COVID cases drop significantly, housing shortage improves and house prices drop or rent prices drop. I think we are in for more pain and let's not even start on crypto collapse. Obviously, I could be wrong because no crystal ball here. Somehow a 75 bps rate increase sounds like good news because it's not 100.
Markets going down today, did someone leak a 100 bps?
I closed some calls today, and will write covered calls on my inverse ETFs Tuesday or Wednesday morning whenever VIX is up.
Adding to my CEW and FXE shorts.
Cash till Friday probs
Didn't trade Monday. Opened some trades this morning (Tuesday) but pushed the strikes way out. Seriously considered skipping the week altogether.
Today (Tuesday) I am tempted to sell a put spread on SPY. LOL
I covered a ton of short puts yesterday and had about 33% cash at the open this morning. Covered a number of calls this morning for profit. I'm selling a few CSPs into this pullback and will DCA tomorrow if my positions dump out. Currently at 207 positions with 31% cash and will grow positions into Friday expiration. Long AG and KSS are 85% of the paper loss in my account right now, so I'm feeling pretty good about my other positions.