Long Term Strangles

#1

atrader2 Here!!

Im starting this thread BECAUSE THERE’S NOT A SINGLE POST UNDER STRANGLES IN THIS SECTION OF THE FORUM LOL and so I can post the results of some testing I’m going to be conducting on longer term strangles, I like to look for these when I cannot find an Iron Butterfly or I should say when the $75/$25 setups are very close to the close to close ranges, if you can find strangles that are dirt cheap meaning like $5 to $7 a side that are inside the edges of the Hi/Lo ranges that would qualify in addition if there is news in between your strike time and your expiration even better!! You looking to get these trades on for a max cost of $15 (That’s for both sides not just one).

After you find these setups you automatically set up take profit orders looking to make about $20 profit on either side so if you put the trade on for $5 per side set you take profit at $25 then if yout TP gets taken out you have made $20 on that side minus $5 on the other side which will lose most of the time not always but most of the time so a $15 overall profit on a $10 investment (don’t forget exchange fees)

If you TP get hits leave the other side on as you never know price may come get that TP as well:p

See chart below for a what a good setup would look like:

2014-12-03_1044.png1030x687

This trade was set up around 10am this am 12/3

Remember price does not have to get to those strikes one spike up or down could get your TP hit and its over a 20 hour period which gives lots of time for this happen:D

I will be posting results over the next month or so, if you would like to part take in the testing please post your setups here!!

#2

Where to begin. Long-term strangle is an oxymoron. why do ya think you could by $7 and Sell $95? Your probabilities of hitting either strike? I’ll take your $12 anytime. At least you’ll know who got it. Great thinking tho about if ya can’t find and IBF look for a stangle or Iron Condor not worth it then consider a straddle. However, please consider the reasons for pricing of an IBF/IC vs strangle/staddle.You can look at th price ladder/option chain and figure most of that out. You’re always buyin or sellin one main thing (and a lil of somethin esle) when trading IC/IBF vs Strangle/Straddle. What is the big thing and which trades go with the buyin or sellin?

#3

Yogirich,

Thanks for the reply, however I am aware of the odds of that hitting the strike (very low) but at no point in the post do I mention the price hitting that strike if that was the case the price of the option would need to get to $50 please read these portions of my post:

set your take profit at $25

Remember price does not have to get to those strikes one spike up or down could get your TP hit and its over a 20 hour period which gives lots of time for this happen

I will report my results of my testing.

Thanks -atrader2

#4

Yogirich,

One other thing, how is long term strangle an oxymoron? is a strangle only for a short period of time? I’m confused can you please explain that one, what is contradictory about this?

atrader2

#5

Yogirich,

Here is a sample chart for NG and 4 recent trading days looks to me as if 3 of the 4 days would had take profits hit and there is one that may or may not have been hit but did not really fall into hours I would be trading NG anyway.

I feel this Long term strangle is not suitable for all pairs/instruments but big swinging instruments may be good for this as long as you can get the pricing you are looking for and the strikes are inside the hi lo ranges, its worth a test period anyway, who knows what other ideas you may get or discover while testing it, its demo so you wont be taking my $12 anyway :wink:

2014-12-07_1140.png1359x725

Best, -atrader2

#6

atrader2, are you using daily binaries in your examples above?

#7

Mark,

What I look for is 3pm exps for the pairs or for like NG 2:30 exp so end of day expires, I set them up anytime after 6 pm for the next day. I just started this study so we will see where it goes.

Best,
-atrader2

#8

Just tryin to help. Didn’t answer my (THE) question: what are ya buyin or selling? And yes, strangles are a shorter-time strategy for a reason. And trade you showed legging in is not a strangle. Just two trades. And no stops on IBF “when ya get both sides on” is a fool’s game. Leggin into any strategy more than a few mins apart is not trading the strategy. Glad it’s demo. I’ll be around when you go live. Was trying to save ya the time of reinventing the wheel

#9

dude I have no clue what your talking about and to be honest i really dont care, the forum is about helping people you come across like a real know it all and are not helpful in your approach and I will post my results of my testing when I get the testing done, I never said leg into a strangle?? Please just refrain from commenting on my posts from this point forward. Additionally this section of the forum is for strangles is not IBF so why are you commenting on IBF’s??

#10

one other thing Yogi - on your no stops on an IBF comment, the strategy was taught to me by Darrell and this was before there was stops!!!??? Its a risk reduction strategy on its own, you can use stops if you want but you take away the ability for price to move outside your range and come back in, I have been extremely successful with IBFs so I feel I have proved to myself what works and what does not. I also don’t remember Darrell telling anyone while he was teaching this that you need to be in on the other side within minuets, you obviously want to get both sides on to make the IBF complete but now that there are stops you can have the one wing on with minimal risk, in addition I really could care less what its called or what you feel is trading if it makes money that’s whats important, you can waste your time classifying everything and putting your labels on it. If I make money on one wing on an ITM play so be it who cares?? I still have limited risk that’s fine with me.

#11

Hmmm. Lots to think about.

#12

Hey atrader2, I have been following your stats… Great job! I actually began a month or two ago placing some next day spreads inspired by your OTM next day trade ideas. After a few weeks I ended up focusing on Euro/USD. It has worked out pretty well. I am still gathering data to do a study with, but the raw data so far looks to be paying out. I find that if at close to 10pm I find an OTM strike above and below the market in Euro USD between 25 and 35 dollar risk, more often then not by 3pm the strike on one side or the other will get hit. You can usually get 40 to 60 pip range…(20 to 30 pip up or down) and since the average movement on that instrument most days is 50 to 70 total pips, the probability is pretty good. Thanks for the stats and the inspiration.

#13

Hey Chaz,

Are you doing straddles with spreads for end of day exp’s? and was this inspired but the long term strangle idea I had?

if you have screenshots I would like to see them, sounds good!!

Best,
-atrader2

#14

Hey atrader2. Yes, inspired by end of day binary strangle idea in a post I saw a while back. They are not spreads…but binary straddles. I have tried both 11am and 3pm. There is the inherent danger of a reversal off a winning trade with the 3pm, however my stats so far show that 3pm strikes have come out in favor more often. There have been very few losers so I had to go back and do some quick research on my spreadsheets. Still need to do some more analysis. With 3pm strikes you can check throughout the day and if you have some profit that covers other side and gives you a little extra early you can make the decision to take it depending on some deviation level analysis or other fundamentals. I have found that most of the time the London session takes care of most of the movement.

I was away from home this eve, but set up a trade for tomorrow none the less. This is obviously first holiday week to try this…so see how it goes. And I got in a little late so little less than 1:1 by a few bucks.

#15

Hey Chaz,

If your using binaries its a strangle, you are using out of the money binaries correct? straddles involve spreads.

Your attachment does not work, you will need to use Jing screenshot TechSmith | Jing, Free Screenshot and Screencast Software

or some equivalent, there are posts on how to do it so you can post your charts.

What instruments are you doing these trades on? Im glad you are trying these I have been so tied up with testing my IBF trades I have not had a chance to continue my testing of the long term strangles, However I do want to continue as there was a rather annoying member that basically tols me there was not such thing as a long term strangle and the term was actually an oxy moron lol well lets prove him wrong, any findings you have would be appreciated.

Best, -atrader2

#16

Hey atrader2. Sorry about the confusing terminology. Yes, OTM binaries. I ran across that thread…I have no earthly idea what that guy was talking about! Very confusing.

I did use Jing to screen capture and save But marked the file up with paint. That might have confused things here. Dunno, but the attachment works when I open in from forum on my end. I will give it another shot. I had a mislabel on there anyway. The instrument would have to move 1.5 deviation to reverse and finish the other direction in the money. Just a side note.

<img src=/uploads/db0876/1266/bf16bed22be6b6c3.png">

#17

Today this trade expired OTM. Not much volatilaty today and I got in the trade a little late. So the strikes were a little off from where they normally would be in relation to settlement that comes out at 8pm night before. Will post next trade if you like.

<img src=/uploads/db0876/1267/2b3c209e10565cea.png">

#18

so you are using ranges and deviations? Correct

The pricing you are getting seems expensive, I like to try to get them at $12 max each side but again i have not fully tested this so you studdies will help.

You should keep a spreadsheet of you trades.

This may not be the best time for testing with the holidays lol things are slow

#19

Yes, using ranges and deviations. The less expensive strikes generally require you to get out at a certain profit. Not neccesaraly letting the contracts expire. Since I am not in front of the computer some days, the strikes I am using fit within the +5 and -5 deviations, giving them a better chance of simply expiring ITM. Less baby sitting. I figure, if the expected move on a day is say 50 pips, you can get the cheaper strikes, and get out of them with profit after that move…or the more expensive strikes and let them run ITM and set take profit orders for selling around 92 to 95, and buying back around 5-8 dollars. There have been days when those orders were filled early in the morning. If you get close to expiration with profit, but not yet at your pending order amounts…you can simply close them out then and take your profit.

I do keep a spreadsheet of these trades. Have not sat down and sorted the info yet, but I do know the trades are on the plus side so far.

This is an awful week for testing! Friday and today are the most stale days I have seen as far as movement from EuroUSD and most other instruments.

#20

ok well I would be interested to see you results, sounds good!

As far as the further out of the money trades you can set take profits on them just the same however.

I plan to do more testing of this after the holidays pass and we can get back to normal conditions lol