RightEdge Forums / Trading / Trading Vehicles

FOREX

DrKoch — Mon, 17 Dec 2007 00:21:06 GMT

I have some trouble using Forex:

With Symbol "EUR/GBP" I get:

Could not convert from GBP to USD for date ...

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With symbols
AUD/JPY, EUR/JPY, ... (any pair with Currency JPY)
I get grossly wrong P/L for each trade. I guess the internal JPY -> USD calcs are wrong.

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Any ideas?

Options support

phg — Fri, 10 Aug 2007 12:18:23 GMT

Bill, nice answer on the IB forum about handling options with RE. I have some follow-up questions. How do you specify an options contract in a watchlist? Is it "IBMIT" for the IBM Sep 100 Call? What if the underlying is a two-letter symbol like "IP"? I gather that RE buy and buy-limit processing would parse the symbol correctly into a proper IB order?

The other thing that becomes a question is, is there something in the works that lets one request a chain, possibly for display in a UI, coupled with the ability dynamically add a selected strike(s) to a watchlist?

Selling option premium

phg — Sat, 12 May 2007 07:58:16 GMT

Rather than continue to mix this with the context about option chains in another thread, it seemed better to start a new thread.

[Copied from post by billb]

a) How long have you been selling puts?

b) What happens in a bear market? Have you experienced one with your current strategy?

c) What is the current method of risk management? Always accepting assignment probably works most of the time,

d)but what about a case like NFI?

a) at least 20 years. (I held a sold put through the October crash of 1987 !)

b) several. As an example, May 10 last year illustrates a bear correction start, notably how far and how fast things settle. One responds by taking losses until the remaining positions, if all are exercised against you, do not represent more debt than you are willing to carry. You sell covered calls against things as they get put to you. (Cash-covered sold puts, as mentioned in the article, do not require any selling at a loss). Notice that since August this has worked out grandly, as the market subsequently went on a sustained tear. It clearly also demonstrates that, with ‘good’ stocks, there is more money to be made from price appreciation than in options.

c) it is essential that the combined obligation, if they ALL went against you, not represent more of a burden than can be handled. The one cardinal rule is to survive to be able to resume trading after the correction.

d) there will always be a few cases that will never recover. These are rare. This is the classic example of the importance of diversification.

-Pete

About options

phg — Sat, 09 Dec 2006 14:13:51 GMT

billb suggested there be a separate thread about options. Let me get the ball rolling.

Options are about statistics. One place where risk/reward - probability of success versus expected return - can be fined tuned is options (only spreads) on the Russell 2000. You benefit from diversification, a near absence of event risk and significantly European exercise (no exercise exposure until the last day). Basically you trade these things by picking your probability of success. For example, this past Friday you could have sold a put at 760 and bought (hedged (spread)) at 750 for a credit of .25. That's $25 for a $1000 risk for a week with about a 95% probability of success. Furthermore, since you can do that each month that annualizes to 30%.

There are two significant downsides. One is, you get greedy and succumb to reaching for return, not heeding the increasing risk. The other is, for the statistics to be meaningful, 5% of the time it is going to go against you. It is essential to have an early, absolutely rigid exit point: at the limit this thing destroys 3 years of returns.

This is frequently turned into an Iron Condor by doing a credit call spead similarly far above the current price; it is extraordinarly unlikely the index will move to both extremes before expiration, so for all practical purposes your risk remains $1000 but with increased intake from this other side.

:rolleyes:

What's your vehicle of choice?

billb — Wed, 19 Apr 2006 13:18:05 GMT

Interested in what folks are trading. The question will accept multiple answers.