Option Trading

[omad]

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]

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]

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

[blueswan]

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]

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]

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]

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]

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]

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]

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?