Thinkorswim missing feature? a work around!

Posted by: Admin: "The Vol_Trader"  //  Category: Thinkorswim

I have zero complaints about Thinkorswim, BUT there is one feature that I’ve asked them to implement and the answer was that they’ve tried and for some reason that I didn’t comprehend, they cant implement it into the analyze tab due to how it works internally (or something like that, I told you I really didn’t understand the answer). 

What could possibly be missing from the best options, futures, and stock trading platform ever?  (Tom, I left out Forex b/c I have not traded that and thus have no comparison)

When I use the analyze tab I like to track my P&L for positions that I have closed previously along with my still-open positions.  Currently, there is no way to do this in Thinkorswim’s analyze tab.  I’ve found a very simple work-around for this.

Let’s say 3 weeks ago you put on an iron condor in SPY.  You sold ten contracts each of the $110c / $112c / $106p / $104p spread for a credit of $1.37 which looks like this: (Click any picture to enlarge)

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Three weeks later the market has not moved much and due to theta decay you’re up a few hundred dollars and you decide that you want to exit the put spread as you feel there will be a fall in SPY.

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You close the put vertical taking a few dollars in profit.  Originally, the put vertical yielded a net credit of $0.63 per spread.  You buy back the spread for $0.50 for a profit of $0.13 or $130.  Additionally, you’re up $360 on your call spread.

You still have your short call spread open but the Thinkorswim analyze tab no longer shows you the profit form your put spread.

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If you want to see your total profit for your call spread and your closed put spread you have to do this simple work-around:

I add a single OTM option to buy one contact and sell one of the same contracts.  In this case I’ll add one sale of the 45 put for $1.30 and add one buy of the 45 put for $0.00 yielding a hypothetical $130 profit.  If there were a realized loss, I’d buy for $1.30 and sell for $0.00 for a hypothetical $130 loss. Below is the P&L for the call spread and the work-around with the $130 included both at the current price, white line, and the expiration price, red line.

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Note the strike price, month and whether it’s a put or call are completely arbitrary as long as they are the same.  I like to use the farthest OTM strike I can find so I do not confuse it with the other simulated trades I’m looking at.

Hope this helps… Lawrence

UPDATE OTEX trade management after earnings release

Posted by: Admin: "The Vol_Trader"  //  Category: Earnings Trades, Trade Management

If you have not already, please read my guest post at Option Pit (Click here) prior to reading this post.

So, OTEX reported, “profit up on higher revenue and cost cuts”.  Premarket the shares are up from their close of $37.25 to $41.  See chart below: (click any picture to enlarge)

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At $41 our trade is suffering the max loss I predicted yesterday to the upside as of this writing premarket.  (See P&L plot below) When the market opens I’ll look to close my short puts first and then see if there’s any decrease in underlying price as I think today should be a down day with the terrible jobs numbers…

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UPDATE: 09:31  Ok, so the market now is open and OTEX is up around $43.80.  I bought back my short $35 Sep puts for $0.10 for a nice profit.  Now I will watch to see the price action of OTEX.  I predict it will hit it’s highs at the open and spend the rest of the day retracing it’s gains. 

UPDATE: 09:51  As predicted OTEX hit it’s high If it makes a new high on the opening 5 minute bar and has come down some.  I’ll continue to monitor now.  The 5 minute chart and current P&L plot after the short put was closed are below.

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I will continue this post later today, stay tuned.

How to setup an options trade for an earnings release -OTEX

Posted by: Admin: "The Vol_Trader"  //  Category: Earnings Trades

Please see my guest blog at Mark Sebastian’s site, The Option Pit Blog.  Click the picture below to get there:

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MCK – out of the rest – an earnings trade gone well

Posted by: Admin: "The Vol_Trader"  //  Category: Earnings Trades, Trade Management

Click here to see my MCK earnings trade setup and trade management.

This morning at the open I closed the remaining spreads for a debit of $0.14 for each 3:2 spread.  On 7/29/10 I entered this trade for a credit of $2.70. 

This trade went exactly as planned.  My prediction were spot on for IV and direction.  (click picture to enlarge)

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DIS – Managing this earnings trade that has become short Theta

Posted by: Admin: "The Vol_Trader"  //  Category: Earnings Trades, Trade Management

So, yesterday I didn’t get to exit my DIS trade like I had hoped to.  My regular readers know that when a trade moves in the desired direction I often take my time to get out in small increments, however, with this trade I’m anxious to get out.  Most of my trades are theta positive and with time working on my side I don’t rush to exit.  This trade is theta negative and time is working against me.   I am long back month options and short front month options but still theta negative.  This is because there’s so little extrinsic value left in my short Aug options due to OPX being only 8 days away and because of the Vol Crush that occurred after earnings.

This trade is very short delta and the futures are showing some weakness pre-market and so is DIS (on very light volume).  I’ll monitor and start exiting today. (click picture to enlarge)

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