If you look at the low volatility Symbol: SIX (meaning no commercial traders believe in short) and see a all time high in commercial long positions (COT DATA), also consider that the price could have found its bottom.
Tr8dingN3rd
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Hi BurntWill
Thank you for your comment.
It's great if you can lean on different indications like COT etc. I hope this works for you.
To me, looking at such indications was always a pain - I was much more wrong then right.
These days, I use my tools, like the forks and price action, all within context.
In this chart, I don't look for short term trading.
I use this chart as a context for my weekly & daily trades, and sometimes even to trade, for example with leap options.
Thank you for commenting and be welcome anytime to throw your opinion with explanation, so everybody can learn from each other.
Cheers.
Delta10
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@Forker, if you go for leap options, then high volatility and an extreme long positioning of commercial traders is an excellent entry for a high possibility option trade
Tr8dingN3rd
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Hmm....depends if you sell or buy the option, right?
Already high Vega has the high potential to go down and hurt the options premium = Bad for the options buyer.
And vice versa - A decreasing volatility is beneficiary for the option seller.
All time highs from the commercials: This would indicate to me, that this <<< has to be >>> like that. Because commercials always have to take the opposite side, since they, as commercials, must hedge/even their inventory. So, they are forced to buy when the markets fall. And the further the markets go south, the "hotter" their investments become...i think ;-)
Maybe I should start to take the COT data into my considerations too...someone please kick me ;-)
Delta10
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@Forker, Concerning Crude Oil (CL), I think that we have a strangle situation here at the moment; no extreme long or short positioning of the commercials
by the way: I only SELL options far out of the money, that's how it works for me
Tr8dingN3rd
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Same side BW...mostly selling for premium, but like to trade some WideWingButterflys in the ES or RUT (RUT has mostly better IV, see RVX).
Nice chart - The marked oval shows the bottom of CL and the COT high.
Looks like you have calendarised your strangle?
Delta10
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@Forker, no, I usually sell calls and puts with 10 delta on both sides, so one of them will play out anyway; if the other side gets under pressure, I will buy back the second leg and create another strangle to reduce the loss on that side; this is a simple strategy and it works excellent in any market
Tr8dingN3rd
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Very nice - usually trader roll down the opposite side only.
Open another strangle looks like a superb idea to me, thanks for sharing.
With such a simplistic, but powerful approach, I'm sure you are a happy camper during the year hahaa...
Talk later BW & thanks for the nice talk.
Delta10
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@BurntWill, usually I sell one 10 delta strangle getting a credit of 2 x premium; if everything runs smoothly (meaning the price moves sideward), I will buy back both legs at 80% win; if one price gets under pressure, I will close that leg with approx. 100% loss and open another strangle, with far OTM legs with just the intention to get that leg's loss back; if necessary I could create another leg if one of those legs would be under pressure again
Tr8dingN3rd
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Good strategy - I close my with 50% already.
Chances are over 90% with approx. 2 Stdv. strangles.