Option Trading [Archive] - Sharetrader Forum

omad

19-06-2013, 03:44 PM

I trade the US market through Interactive Brokers, I use their platform Trader Work Station.

I don't follow the NZ market at all, I remember reading years ago they were going to introduce options but I guess it never happened. Even if they did have options in NZ the lack of liquidity would make them hard to trade.

omad

19-06-2013, 03:49 PM

Looks like they are going to introduce options here, a quick google search found this:

https://www.nzx.com/Derivatives

lou

19-06-2013, 08:41 PM

How would you describe your strategy for trading options?
Do you have other investments?
Do you do it full time?
What type of options do you trade?
What volume do you do?
What fees do you pay?

omad

20-06-2013, 02:47 AM

I sell premium and my trading is based on probabilities – as far as what specific option strategy I use it all depends on volatility.

No other investments outside my trading account, I'm a trader not a long term investor. I also trade futures and shares although shares are always a part of an option position.

My trading is about 80% of my total income, I plan on making it 100% next year. I'm always in front of the screen for market opening and then it depends on what's happening in the market as to how much time I spend, if there is some action I'll stay till market close but if nothing is going on I'll go back to bed for a few hours then be back for the close.

I trade options on equities and ETFs mainly, I sell some futures options occasionally to defend a position that has gone against me. I have a watch list of about 45 stocks & ETFs that have liquid options and mainly trade them.

I do 70-100 trades a month and I would spend between US $400 - $700 per month in commissions.

h2so4

21-06-2013, 06:50 AM

Do you spend time in the outernet?

omad

21-06-2013, 09:30 AM

Do you spend time in the outernet?

More than most.

david298

11-07-2013, 09:51 AM

I have a tax query. I trade stock options in the US market so have exchange rate (ER) complications for calculating NZ tax. I am calculating tax on monthly profits/losses based on the varying mid month ER value provided by the tax dept. Is this correct?

Also, how must any ER advantage/disadvantage from opening balance to closing balance in my trading account for the the tax year be taken into account? Is this shown as a tax gain/loss or taken into account in my books of account as a capital gain/loss. I presume I would use the ER provided by the IRD at opening and closing day dates for the tax year?

Any advice much appreciated thanks

david298

11-07-2013, 10:05 AM

Hi Omad. I also trade with IB on TWS in the US markets. After trying many trading systems over the years, I am focusing on trading Collars selling premium on the weekly options.

I have recently started trading a simple system, only as an end of day trader. I am using a simple volatility expansion breakout chart scan to find trades.

Maybe we can compare notes on trading if you are interested? There don't seem to be many traders in this forum (or NZ) trading the US options market.

omad

12-07-2013, 03:25 AM

Happy to compare notes David. I don't trade Collars, when you say Collar are you talking long stock, long put, short call?

david298

12-07-2013, 10:27 AM

Yes. Covered calls with a protective Put for insurance. Income is from time decay. I roll the position near expiry every week if the stock and options look good.
It would be very useful to compare ideas in greater detail seeing as you also trade time decay successfully. Are we allowed to give private emails or Skype info on this forum?

I would also be grateful if you could comment on my other posting above, in this thread, regarding tax issues. Thanks

omad

12-07-2013, 11:42 AM

Best to talk to your accountant regarding the tax issue, I'm meeting with my accountant next week so I'll run it by him and see what he says.

As I mentioned I don't trade Collars, I normally don't trade weeklies either except for overnight earnings trades. My normal time frame is 20 to 60 days, so at the moment I'm trading Aug expiry, when Aug is down to 20 days till expiry I'll switch to Sept. The longer time frame gives me more time to be right.

As for collars, it isn't a strategy I would use, it ties up to much capital buying stock so reduces my return on capital. For limited risk trades I aim for a return of 1% a day on the capital used. You can achieve the same thing, limited risk limited profit with credit spreads & and if volatility is low debit spreads. Debit spreads tend to be more directional and you are paying for them but you can still get Theta decay.

Any reason you use Collars instead of credit spreads? Are you trading in a Reg T margin account or Portfolio Margin?

Happy to exchange Skype details via private message but think its good to carry on discussion here so others can learn.

david298

28-07-2013, 09:48 PM

Hi Omad. I am keen to continue this thread in the future but I am taking long leave so will resume on my return. Cheers.

omad

31-07-2013, 03:22 AM

Sounds good.

denshare

31-07-2013, 03:28 PM

Hi Im new and was wanting to know where to go to get a beginners guide so to speak on options trading and is it best here on nzx and asx or in the states?

omad

01-08-2013, 10:18 AM

Hi Im new and was wanting to know where to go to get a beginners guide so to speak on options trading and is it best here on nzx and asx or in the states?

No options on NZX at the moment and liquidity on ASX not to good so the US market is your best option, the hours are not so good but you get used to it.

A couple of questions for you denshare, what's your current option knowledge level, do you know what a call & put option are and what it means to buy or sell one? Also, why do you want to trade options?

joeshe915

02-08-2013, 12:01 PM

No longer trading straddles nor options

omad

03-08-2013, 11:14 AM

Joe, I've not heard of any of those people, I'm always a bit dubious of people selling training especially if it's just one strategy - but if it's worked for you that's great.

Happy to catch up on Skype, that's why I started this post, it gets a bit lonely trading on your own with no one to bounce ideas off.

I'm busy this week so will contact you via Skype next week.

joeshe915

04-08-2013, 01:43 PM

Hi Omad good to hear from you. Looking forward to chatting on Skype. Keen to share and get ideas and trading successes. Rgd Joe

joeshe915

25-08-2013, 04:01 PM

Hi Omad not heard from you yet. Keen to catchup on skype. Let me know when you might be free. By the way do you know of a way in IB TWS to analyse strategies like Iron Condors and Butterflys? My group in the US use Thinkorswim (ToS) which is brilliant but can't get it in NZ. Looking forward to catching up. Rgd Joe

omad

26-08-2013, 10:26 AM

Sorry Joe, had to head to Oz a bit sooner then expected, I'm here for a while but set up now so will be able to chat.

Be easier to talk you through TWS over Skype.

FarmerHamilton

27-08-2013, 11:39 AM

I trade on IB TWS as well , probably about 100 trades / month. Short volatility mainly on S&P500 stocks with profits going into long term mega-cap multi-nationals such as JPM,KO,CL and UTX.

Vol is pretty low at present but stocks like FB and AAPL always offer short vol opportunities. Have contemplated going full time but with 3 boys don't want to be up all night trading and knackered during the day.

Current liquidation balance at IB is $150,000 US ... probably enough to generate maybe $600/$700 week in income ( 20% return )

Tempting !!

Also trade UK and HK options market too. HK suits well for time but unfortunately hedging with the underlying stock is difficult as they only trade in lots of 1000 .... 1000 Cheung Kong ( 0001.HK ) is worth NZ$15,000 .... minimum trade volume , yikes !!

omad

28-08-2013, 02:43 PM

FarmerHamilton, what's the option liquidity like on the HK market?

FarmerHamilton

01-09-2013, 08:10 AM

FarmerHamilton, what's the option liquidity like on the HK market?

On the large cap stocks it is very reasonable all though the bid/offer spreads can be wide so you just sit at your price waiting to get hit/lifted most of the time . A few of the stocks are very liquid with very tight spreads and these are the ones I tend to concentrate on such as

HSBC ( 0005.hk )
Wharf ( 0004.hk )
Bank of Communications ( 3328.hk )
ICBC ( 1398.hk )
Ag Bank of China ( 1288.hk )
Swire Pacific ( 0019.hk )
CNNOC ( 883.hk )

Again profits re-invested in long term holds on stocks such as

HK & China Gas Co ( 0003.hk )
Hysan Development ( 0014.hk )
Hang Seng Bank ( 0011.hk )
Wharf ( 0004.hk )

Brokerage is $20 HK per trade so about US $2.60

omad

02-09-2013, 10:09 AM

Thanks, I'll check it out.

wealthboost

02-09-2013, 11:51 AM

Hi guys,

Wondering if you can help me...I'm looking to write Options on the US market and have no idea where to start. I traded and wrote options on the Australian market a couple of years ago until my broker closed up, I was using Sanford securities which changed to AusieX.
Ok, I want the ability to write US company Options (& ETF Options) and buy puts/calls if required also...how do I go about it? Which platform should I consider? who can I talk to re: taxation issues?...In a nutshell, what do I need to do to get writing there?
Thanks, you help would be greatly appreciated.

omad

02-09-2013, 05:49 PM

Interactive Brokers (https://individuals.interactivebrokers.com/en/main.php) is your best bet for US options, they are pretty much the cheapest commissions available and their platform is good, TOS has a better platform for option traders but not available in NZ. I think the minimum to open an account is $10k US and you have to jump through a few hoops to get it open but it's worth it.

joeshe915

03-09-2013, 09:35 AM

Just to add to what Omad has just written, I went though Halifax. Just go to halifax.com.au and request to open an account. They will set you up with InteractiveBrokers TraderWorkStation (TWS). If you put in $200 initially you can get a paper trading account but you only do live trading with a bigger $amount. TWS initially is not an easy platform to use, but they have (rather long) webinar that go through the basics of using the platform. I just started paper trading initially until I got the hang of it! All the best.

wealthboost

03-09-2013, 03:45 PM

omad

04-09-2013, 02:34 AM

Thanks guys, really appreciated...joeshe915, thanks I'll call Halifax to get more info on that. Omad, do you go directly through Interactive?..and if so is how and where would the cash account be setup?..the US don't make it easy for us NZ'ers huh..

I go directly through IB, you can choose the base currency of your account and change it at any time, so you can have it set up in NZ dollars. Deposit and withdraws are made to/from an NZ bank. You can see how clients money is handled here (https://www.interactivebrokers.com/en/index.php?f=2334).

I would imagine that if you go through Halifax that they would be clipping the ticket on commissions also, Joe should be able to answer this?

FarmerHamilton

05-09-2013, 05:24 PM

I go directly through IB, you can choose the base currency of your account and change it at any time, so you can have it set up in NZ dollars. Deposit and withdraws are made to/from an NZ bank. You can see how clients money is handled here (https://www.interactivebrokers.com/en/index.php?f=2334).

I would imagine that if you go through Halifax that they would be clipping the ticket on commissions also, Joe should be able to answer this?

IB are excellent if you have some experience trading options. To be able to day trade you'll need a decent slug of money otherwise you can get caught out by being "max-ed" out on the number of trades you can do ... I learned the hard way , couldn't hedge a position that was going against me , cheap lesson fortunately as it was only a small trade. To do it properly and make some decent money rather than just for fun I reckon you need $50k ...

The $1 commission to buy 100 Coca-Cola shares makes Direct Brokings $29.95 to buy 500 Sky City look EXTREMELY expensive !!!!

omad

05-09-2013, 06:41 PM

Yep, you need US $25k + to avoid the day trading rules, it's a regulation so applies to all brokers.

If you want portfolio margin you'll need US $110k +.

FarmerHamilton

05-09-2013, 08:17 PM

Yep, you need US $25k + to avoid the day trading rules, it's a regulation so applies to all brokers.

If you want portfolio margin you'll need US $110k +.

I'm over $110k US Omad , what are the benefits of portfolio margin , can it make a big difference ?

omad

07-09-2013, 02:09 AM

I'm over $110k US Omad , what are the benefits of portfolio margin , can it make a big difference ?

Generally it will give you lower margin, you can see what sort of difference it makes by going to your account page and under the Margin Requirements section there should be a button at the top right next to the ? + signs, I can't remember what the button says but it's something to do with Portfolio Margin(PM). If you select this button it will show you what your Margin Requirements would be if you were using PM.

IB's got some info on PM here (https://individuals.interactivebrokers.com/en/index.php?f=marginnew&p=overview4)

FarmerHamilton

12-09-2013, 11:48 AM

Generally it will give you lower margin, you can see what sort of difference it makes by going to your account page and under the Margin Requirements section there should be a button at the top right next to the ? + signs, I can't remember what the button says but it's something to do with Portfolio Margin(PM). If you select this button it will show you what your Margin Requirements would be if you were using PM.

IB's got some info on PM here (https://individuals.interactivebrokers.com/en/index.php?f=marginnew&p=overview4)

Up a heap in Sept so far ... long the market / short vols ... Took off about 25% of my exposure in the last 5 minutes of trading today , don't want to get too greedy but long may it continue.

joeshe915

16-09-2013, 08:14 PM

I'm not totally sure Omad but Halifax don't seem to be clipping the ticket . From the P&L sheet the only charges are the IB $2 per contract. ie. $2 for every 100 lot of options.

omad

17-09-2013, 02:44 AM

IB charge is 0.70 per contract (min 1.00) plus exchange fees which varies depending on where you get filled. Today so far I did a call spread in AAPL, 2 spreads so 4 options total & comms were 2.11. I also did a 5 lot spread in UVXY (10 options total) and only got charged 0.20, not sure what happened there.

Longhaul

09-10-2013, 08:54 PM

I dabbled with options about 10 years ago after finishing university. I didn't stick with it and haven't looked at it since, but was wondering where is a good place to go to get back into it? Would be keen to start paper trading :)

blueswan

06-11-2013, 03:28 PM

I trade a lot of US and ASX Options as well. I use IB for the US ones and IOS/IRESS for the ASX ones. I do a lot of Butterflies.

omad

08-11-2013, 02:08 PM

I trade a lot of US and ASX Options as well. I use IB for the US ones and IOS/IRESS for the ASX ones. I do a lot of Butterflies.

Blueswan, how do you set up your butterflies, what do you look for?

blueswan

08-11-2013, 02:53 PM

I sell Butterflies on the Index for example ASX 200 or the XJO. I buy the body twice for example Buy 20 5400 Dec Calls and you Sell once the wings 75 pts apart. It will look like Sell 10 Dec 5325 @139, Buy 20 Dec 5400 @89 and sell 10 Dec 5475 @51 Basis XJO at 5401. The profit loss does not look good since you are risking 63 to make 12 points. This is just an example but not advisable this time since yo are only receiving 12 points. I usually wait until I get 17 to 18 points and risk 75 Difference of wings from body less premium received. Only do this if you are expecting a movement in the market since you want Options to expire below lower wing or above higher wing. Below 5325 or above 5475 which is Ok on a volatile market. You will be margined here since it is a Sold Combo. When market quiet, you buy Butterflies but when volatile, you sell teh combo. I hope this helps. One thing I like Options is there are so many combos for every market scenarios.

blueswan

08-11-2013, 02:53 PM

By the way it depends on how brokerage you pay since this is a 3 legged one. Cheers

blueswan

25-11-2013, 05:49 PM

These XJO Butterflies we sold for November Month expired out of the money and you get to keep the premiums received if and when you opened this strategy.

I sell Butterflies on the Index for example ASX 200 or the XJO. I buy the body twice for example Buy 20 5400 Dec Calls and you Sell once the wings 75 pts apart. It will look like Sell 10 Dec 5325 @139, Buy 20 Dec 5400 @89 and sell 10 Dec 5475 @51 Basis XJO at 5401. The profit loss does not look good since you are risking 63 to make 12 points. This is just an example but not advisable this time since yo are only receiving 12 points. I usually wait until I get 17 to 18 points and risk 75 Difference of wings from body less premium received. Only do this if you are expecting a movement in the market since you want Options to expire below lower wing or above higher wing. Below 5325 or above 5475 which is Ok on a volatile market. You will be margined here since it is a Sold Combo. When market quiet, you buy Butterflies but when volatile, you sell teh combo. I hope this helps. One thing I like Options is there are so many combos for every market scenarios.

blueswan

06-12-2013, 03:31 PM

FYI, I have just sold another XJO Call Butterfly.Sell 10 5125 Call, Bought 20 5200 Call and Sold 10 5275 Call and all expiring on the 19th of Dec. I was able to receive 18 pts premium or $1800. Risk $5700. I am only doing this since market volatility perking up and aspiring that XJO ( 200 Index) will expire below 5125 or above 5275 by 19 Dec. Let see how this goes.

blueswan

12-12-2013, 03:25 PM

The last Sold XJO Butterflies as above are already deep out of the money and was able to sell them for 18 and some even 22 pts or $1800 to $2200 per 10/20/10 contracts. They are only worth 10 pts or 1000 dollars after this XJO bucketed down to 5050. I need it to stay below lwest leg of 5125 and then I will accrue a profit of whatever premiums I have received on opening the Strategy or Combo. This will expire on the 19th next week. I will let you know on my next XJO Combo I will open.

joeshe915

20-12-2013, 08:02 PM

Thanks Omad for your help on comissions. I have negotiated with Halifax who have agreed to drop the comission from $2 to $1 per options contract! They are still high compared to directly with IB which is a .70c flat fee. I will change over soon as my trades finish with Halifax. The direct contact with IB Australia is a guy called Neil Swanson +61 2 8093 7301. He will provide all info to anyone wanting to open an account. All you need is a scanned copy of passport and rates bill. Hope this helps anyone wanting to reduce brokerage and IB is the cheapest. Optionsxpress charge $1.50 per contract. For an Iron Condor 10 contact you are looking at $120 with OpX vs $56 with IB. I was initially paying $160 with Halifax but now down to $80! :)

joeshe915

15-01-2014, 10:31 PM

Further to my previous update on Halifax comisssions They have now reduced thier comission to 80c per contract. Close now to the 70c from IB direct. So I will stay with Halifax at present. Was going to be a pain to change to IB with 50+ trades on the Halifax TWS.

Skydiverwill

19-01-2016, 09:51 AM

I thought I would try to ask this question in this thread before open a new one. Are there any other broker available for New Zealand residents other than Halifax and IB? I´m new here, been trading paper money using TOS but unfortunately not available here. :( TIA

foolscap

15-02-2016, 07:44 PM

Hi there, I am also wondering about alternative brokers for option traders.
- I tried IB but I am young and do not have that much cash so I am not willing to put $25k into an options brokering account.
- I am trying halifax but am not quite liking how their accounts are set up at this stage, i.e. the password is a default password and there seems to be difficulty changing it? It seems like they are using third party systems and everything gets passed through a halifax agent.

Any ideas?

Baa_Baa

15-02-2016, 08:52 PM