StockFetcher Forums · Filter Exchange · options strategy<< >>Post Follow-up
stockfetcher01
25 posts
msg #83915
Ignore stockfetcher01
12/6/2009 1:08:50 PM

I have been working on this and its similar to an Iron condor but only 2 legs.

1st off the bat, you cant use this that for expiration months less than 3 to 4 months out ( the prices you will get are just too low)

Example:

ABC Company Inc trading at $ 40.03 in Dec

Sell $ 35.00 Put
Sell $ 45.00 Call


This gives you a huge spread and if you can pick a stock to doesn't move much it money in the bank. Not a lot but seems safe.

Does anyone know what this is called? I know its some kind of spread.

Also everyone is writing filters for stocks to move upor down, Anyone have a filter to pick stocks that don't move?

Any comment good or bad about this strategy appreciated.

sf01 from New Orleans

tomm1111
198 posts
msg #83923
Ignore tomm1111
12/6/2009 5:57:38 PM

What you describe is a "short strangle". I've provided a link below that explains it.

I've been thinking about how to come up with a filter to take advantage neutral trading strategies, but haven't moved beyond the thinking about it stage. With neutral strategies volatility plays a significant role.


http://www.theoptionsguide.com/short-strangle.aspx

maxreturn
745 posts
msg #84368
Ignore maxreturn
modified
12/13/2009 5:04:42 PM

Any time you sell naked options you expose yourself to unlimited risk with limited upside. All it takes is a surprise volatility event to blow you out of the water. I would highly suggest that if you're going to sell premium look into Iron Condors or Double Calendar spreads which limit the risk.

optionsizzle
2 posts
msg #89287
Ignore optionsizzle
3/8/2010 9:57:57 PM

Hello Stockfetcher01,

tomm1111 is right on, that is a short strangle.

Very dangerous aka account blowing up type of trade if not done right. By selling the call and put you are exposing yourself to unlimited downside and upside. If you are looking to do that type of strategy "selling options' look to do what's called an iron condor which is just selling a call spread and put spread. It will define your risk and will also use less margin from your broker. I would also suggest on not going out so far. I would look to stay in a 3/4 week period to expiration. That is when time will start to eat away at those options legs you sold.


Systrader
56 posts
msg #89289
Ignore Systrader
3/8/2010 10:46:05 PM

Hello StockFetcher01,

I think what you are looking for are stocks that are non-trending so , ADX(30) is below 25 and maybe for the daily volatility to be low ( the day range is below 1). Any optionable stock should be a higher price value to have enough premium also.

You may want to play with this as a starting point:

Fetcher[
Show stocks where the day point range is below 1.00
and ADX(30) < 25 and
and average volume(30) is above 100000
and price is above 20
and stock is optionable
]



I assume you want to sell the front month, so the ADX is only looking at the 30 day average.




Systrader
56 posts
msg #89291
Ignore Systrader
3/8/2010 11:40:54 PM

Hello StockFetcher01

A further suggestion is to consider the weekly RSI(2) and see if this indicates a topping out or bottoming out ,for timing purposes, to sell a vertical call spread or a a put spread . The vertical will allow you to sell PUTS or CALLS with protection and not expose you to unlimited risks. This is pretty much one leg of an Iron Condor.

We can modify previous script with one line for each situation to do this.

if the weekly RSI(2) is above 99% then this would be good time to sell a call using a vertical call spread.

For example consider WCG which closed today at $29.68, if this had weekly RSI(2) above 99% , then you would
expect this stock to fall soon, and so you can benefit by selling a $30 CALL and protecting yourself, by buying $35 CALL
.
SELL WCG MAR 30 CALL for price of 0.65 per contract
BUY WCG MAR 35 CALL for price of 0.05 per contract

So you would receive a net credit of $0.60 per contract., and ride it out till expiry with little movement in stock price, and collect most of the premium from decaying time value.

Likewise if RSI(2) weekly was below 5 or as near to 0 as possible, this would mean WCG is likely to rise soon, so good time to sell PUTS.

In our example if the stock is at $29.68 and weekly RSI(2) is below 5, then look at selling a Bull PUT vertical as follows:

SELL WCG MAR 30 PUT for price of 0.95 per contract
BUY WCG MAR 25 PUT for price of 0.05 per contract

So you will receive a net of $0.90 credit that you have as good chance of keeping nearly all this premium and ride out till expiry.

I hope this will help you figure your option strategy better.

So I just added the line for RSI(2) to the previous script.

For a PUT vertical use this:

Fetcher[
Show stocks where the day point range is below 1.00
and ADX(30) < 25
and average volume(30) is above 100000
and price is above 20 and
weekly RSI(2) is below 5%
and stock is optionable
]



For a CALL vertical use this:

Fetcher[
Show stocks where the day point range is below 1.00
and ADX(30) < 25
and average volume(30) is above 100000
and price is above 20 and
weekly RSI(2) is above 99%
and stock is optionable
]



Play with the some of the values to match your risk and premium price you can collect.



optionplayer333
801 posts
msg #89292
Ignore optionplayer333
3/8/2010 11:48:51 PM

just play a stock with a very low profit indicator value---chtt hasnt moved in months----it profit is 0.4% for the last 2 months---PRICES

Date Open High Low Close Volume Adj Close*
8-Mar-10 93.51 93.51 93.47 93.47 21,000 93.47
5-Mar-10 93.48 93.50 93.48 93.49 16,200 93.49
4-Mar-10 93.50 93.50 93.49 93.50 13,800 93.50
3-Mar-10 93.50 93.50 93.48 93.48 21,500 93.48
2-Mar-10 93.50 93.50 93.48 93.50 84,000 93.50
1-Mar-10 93.48 93.51 93.48 93.49 67,600 93.49
26-Feb-10 93.50 93.50 93.48 93.48 17,800 93.48
25-Feb-10 93.49 93.50 93.48 93.49 35,500 93.49
24-Feb-10 93.48 93.50 93.48 93.50 25,800 93.50
23-Feb-10 93.49 93.52 93.48 93.50 130,100 93.50
22-Feb-10 93.52 93.53 93.48 93.49 61,500 93.49
19-Feb-10 93.48 93.49 93.48 93.48 74,000 93.48
18-Feb-10 93.48 93.50 93.47 93.48 162,300 93.48
17-Feb-10 93.51 93.53 93.48 93.49 279,500 93.49
16-Feb-10 93.52 93.53 93.48 93.51 117,900 93.51
12-Feb-10 93.52 93.52 93.48 93.49 213,100 93.49
11-Feb-10 93.50 93.50 93.48 93.48 305,300 93.48
10-Feb-10 93.49 93.51 93.47 93.47 910,900 93.47
9-Feb-10 93.50 93.51 93.48 93.50 568,900 93.50
8-Feb-10 93.44 93.47 93.32 93.32 1,895,000 93.32
5-Feb-10 93.43 93.60 93.42 93.42 672,700 93.42
4-Feb-10 93.44 93.46 93.40 93.43 769,700 93.43
3-Feb-10 93.42 93.47 93.42 93.46 221,900 93.46
2-Feb-10 93.42 93.46 93.40 93.44 474,700 93.44
1-Feb-10 93.45 93.47 93.42 93.44 393,000 93.44
29-Jan-10 93.43 93.46 93.41 93.46 546,100 93.46
28-Jan-10 93.44 93.45 93.39 93.41 708,500 93.41
27-Jan-10 93.36 93.45 93.35 93.45 964,500 93.45
26-Jan-10 93.30 93.40 93.30 93.38 235,500 93.38
25-Jan-10 93.36 93.36 93.24 93.27 497,600 93.27
22-Jan-10 93.30 93.33 93.25 93.26 267,500 93.26
21-Jan-10 93.32 93.38 93.23 93.24 508,200 93.24
20-Jan-10 93.32 93.37 93.29 93.29 354,900 93.29
19-Jan-10 93.31 93.40 93.30 93.36 352,000 93.36
15-Jan-10 93.36 93.40 93.24 93.28 641,600 93.28
14-Jan-10 93.33 93.35 93.29 93.32 431,300 93.32
13-Jan-10 93.31 93.40 93.29 93.35 476,700 93.35
12-Jan-10 93.32 93.38 93.27 93.29 558,500 93.29
11-Jan-10 93.22 93.45 93.21 93.34 584,200 93.34
8-Jan-10 93.12 93.27 93.07 93.27 295,500 93.27
7-Jan-10 93.14 93.19 93.04 93.11 495,400 93.11
6-Jan-10 93.02 93.20 93.00 93.19 1,016,100 93.19
5-Jan-10 93.23 93.23 92.98 93.06 1,674,200 93.06
4-Jan-10 93.34 93.34 92.95 93.00 2,380,800 93.00
31-Dec-09 93.16 93.32 93.15 93.30 253,800 93.30
30-Dec-09 93.20 93.27 93.15 93.18 281,400 93.18
29-Dec-09 93.27 93.34 93.15 93.26 725,500 93.26
28-Dec-09 93.20 93.30 93.10 93.30 429,100 93.30
24-Dec-09 93.16 93.25 93.11 93.25 385,100 93.25
23-Dec-09 93.22 93.27 93.01 93.16 2,377,000 93.16
22-Dec-09 93.00 93.22 92.96 93.10 2,547,800 93.10
21-Dec-09 92.79 93.21 92.79 93.14 10,427,700 93.14
18-Dec-09 68.44 70.10 68.44 69.98 315,600 69.98
17-Dec-09 68.48 69.25 68.34 68.69 133,200 68.69
16-Dec-09 69.00 69.38 68.30 69.01 180,300 69.01
15-Dec-09 68.41 69.45 68.40 68.87 130,900 68.87
14-Dec-09 68.90 69.00 68.51 68.75 102,900 68.75
11-Dec-09 68.51 68.75 67.68 68.67 226,300 68.67
10-Dec-09 67.88 68.57 67.46 68.37 259,800 68.37
9-Dec-09 68.11 68.11 67.44 67.65 181,100 67.65
8-Dec-09 67.66 68.45 66.63 68.27 159,100 68.27
7-Dec-09 68.19 69.00 67.67 67.80 151,700 67.80
4-Dec-09 67.61 68.50 67.21 68.22 163,400 68.22
3-Dec-09 67.39 67.94 66.67 66.67 96,600 66.67
2-Dec-09 66.71 67.99 66.02 67.41 213,200 67.41
1-Dec-09 66.47 67.18 65.65 66.89 205,500 66.89



dickysofa
63 posts
msg #89318
Ignore dickysofa
3/9/2010 12:09:28 PM

As a rule you only want to sell Front month options (or at most Front +1) because you are counting on rapid time decay. If there isn't enough profit in your naked selling then you might be trying to be a little too greedy...

acfncp3
59 posts
msg #89326
Ignore acfncp3
3/9/2010 5:27:04 PM

The way I do these is with a 50 point spread from the short option... so the risk is not totally unlimited. This actually is described in a recent book I looked at called the complete guide to option selling by Cordier.

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