Australian (ASX) Stock Market Forum

XJO, Gear, Spi, Overwrites & CC's (no not the chips)

Joined
21 November 2007
Posts
44
Reactions
68
First off I'm not a writer so you will have to cut me some slack on that aspect. So why am I doing this. Over the last year I have been doing it mentally very tough from things in my life outside of trading and have been struggling to reengage back into trading. One of my friends suggested maybe keeping a public blog might help me focus and get back on the horse as they say so here I am.
My background - traded stocks late 90's to early 2000's. Transferred across to spi futures from there then added xjo options about 2018 or so. 2023 did some dabbling in the DAX futures but the time of day/evening didn't really suit.
In my search for a topic I posted on here last week I read through alot of the derivatives forum and thought some was good, some was bad and some was just plain wrong. So I hope to add value here and bust some myths about the derivatives market here in Australia.
I will note entry and exits and points gained/loss but I wont be keeping track of the total profit/loss as this is not what this journal is about.
While this is not how I actually trade from day to day it is very close. I have set this up the way that I thought might provide the most benefit to the forum.

As the title suggests those are the products I will trade (xjo options, Gear etf, spi futures, overwrites with the options but not CC's. I will go into that later why that is such an inferior setup to trade.)
The core holding Gear etf is held in my smsf which is at Stake broker
All other products traded in my account at IB.

All my analysis is done on the xjo chart and I use these products to trade my view. I have about 20 years of stats I have kept on the xjo and these help with
my roadmap of where the market might/might not go. I have 2 ways of looking at our market, 1) I have found points where the market doesn't trade much ie doesn't chop around that level much and 2) seasonality of the week/month. I create what I call a line in the sand at these levels "lits" and have bullish positions when above or bearish positions when below.

Ask away with any questions don't know if I have covered it all here.
 
I currently have only half my allotment to Gear at the moment avg price $28.48
Have sold in a ratio of 1:2 compared to Gear (overwrite) xjo Aug15 8100C @ 30

All other trades going forward will be documented and recorded on the day
 
I currently have only half my allotment to Gear at the moment avg price $28.48
Have sold in a ratio of 1:2 compared to Gear (overwrite) xjo Aug15 8100C @ 30

All other trades going forward will be documented and recorded on the day
I hope you are feeling better, i found keeping a journal and bouncing ideas in this forum as well as unshamelessly stealing some of the brains very valuable.
It is indeed very hard mentally to trade, even systemic trading, when isolated with no peer around.
Will follow with interest even if i hardly trade your tools..well i used to play with gear bear in a system but not currently.
And welcome to the community
 
Just to clarify what I mean when I say overwrite. (xjo options are $10/point per contract) Lets say your Gear etf makes/losses $50 per point movement. If we are doing a 1:2 overwrite we need to sell 10 xjo option contracts = $100/point
 
Outlook
8/7 67% chance we will not get a decent close below 7767 before the end of the month
8/7 60% chance 7702 is the low for the month

Oh and I forget to add this is not advice and is for entertainment purposes only :)
 
Outlook
8/7 67% chance we will not get a decent close below 7767 before the end of the month
8/7 60% chance 7702 is the low for the month

Oh and I forget to add this is not advice and is for entertainment purposes only :)
Can you define a " decent close " for me , also can you give some insight how you have defined these probabilities .

Just curious on the process here

I note above you sold XJOFX9 , whats the strategy for this strike ? Is that just to collect premium ?
 
Can you define a " decent close " for me , also can you give some insight how you have defined these probabilities .

Just curious on the process here

I note above you sold XJOFX9 , whats the strategy for this strike ? Is that just to collect premium ?
Hey Chipp good questions. Decent close would be about 25 to 30 points but may give that a bit more if I think it was an exhausted move to reach that point. I'll let you guys know if it is a cross for sure.
The probabilities from those points comes from 20 years of stats of the xjo. While I can't go into the first one the second one is based on the occurrence of the high or low of each month. So I know on average the high or low of the month occurs 61% of the time in the first three trading days.
The core strategy for overwrites: Portfolio is long the index I sell twice as many calls as I have being long the index. Use 20 delta options and go out to the quarterly expiry. You are synthetically short the straddle at the strike price. On a strike touch you roll to the next quarterly expiry. You will outperform the xjo total return index and 85% of the fund managers out there using this.
Why quarterly? When you are selling options you are selling vol. In index calls are at the lower end of the smirk of the vol curve. I have never seen a loss on a strike touch in the total position. Your long index has always gained more than your loss on the short calls.
You start the position out with a delta of 60. (100 delta index - 2*20 delta calls = 60)
I am a little bit more active so I don't necessarily stick to that exact formula.
 
Holdings
5/7 50% balance of Gear @ $28.48
5/7 Short Aug 15 8100C @ 30 (2:1 to Gear)
8/7 Short Jul 18 7700P @ 22

Outlook
8/7 F1 67% chance we will not get a decent close below 7767 before the end of the month
8/7 F2 60% chance 7702 is the low for the month
8/7 F3 60% chance 7835 is the high for the month

F2 or F3 will most likely turn out to be right
Xjo range bar closed in the bear zone so most likely we open tomorrow lower than today.
 
Still waiting for this dogs breakfast of a chart to show its hand where it wants to go. Vol hasn't dropped much considering we have gone nowhere for 2 months at least.

chart.PNG
 
Well it has broken the downtrend line and now at horizontal res. Do we get chop or do we go to the skies. No need to play here as there are much safer places to trade.

Holdings
5/7 50% balance of Gear @ $28.48
5/7 Short Aug 15 8100C @ 30 (2:1 to Gear)
8/7 Short Jul 18 7700P @ 22

Outlook
8/7 F1 67% chance we will not get a decent close below 7767 before the end of the month
8/7 F2 60% chance 7702 is the low for the month 11/7 now has moved to 99% chance it will be low of month
8/7 F3 60% chance 7835 is the high for the month ❌
 
Exited the short put will look to renter at lower levels.

Holdings
5/7 50% balance of Gear @ $28.48
5/7 Short Aug 15 8100C @ 30 (2:1 to Gear)
8/7 Short Jul 18 7700P @ 22 12/7 Exit @ 2 +20pts

Outlook
8/7 F1 67% chance we will not get a decent close below 7767 before the end of the month
8/7 F2 60% chance 7702 is the low for the month 11/7 now has moved to 99% chance it will be low of month
 
8/7 F1 67% chance we will not get a decent close below 7767 before the end of the month
8/7 F2 60% chance 7702 is the low for the month 11/7 now has moved to 99% chance it will be low of month
Reckon F1 and F2 90% probabilities now and thats as close to certain as i get , you have handled this well my friend . Kudos , i have started observing options and working on strategies for future . Weekly option probably be my weapon of choice , Thanks for the thread @rolly1 , i for one find it interesting to see methods like this . I also are on GEAR fwiw and will look at writing some AUG calls at some stage . Premiums lifted nicely last couple days with extra 60-90 p premium on offer depending on strike
 
Reckon F1 and F2 90% probabilities now and thats as close to certain as i get , you have handled this well my friend . Kudos , i have started observing options and working on strategies for future . Weekly option probably be my weapon of choice , Thanks for the thread @rolly1 , i for one find it interesting to see methods like this . I also are on GEAR fwiw and will look at writing some AUG calls at some stage . Premiums lifted nicely last couple days with extra 60-90 p premium on offer depending on strike
Hey Chipp thx for the kind words. So an update as to where we are at. So the current market move is the worst outcome you can get for the overwrite/ short syn straddle position. ( quick fast strong move up towards the sold calls. )
Gear up 5.16%
Short calls 2:1 down 2.59%
Closed short put up .25%
Nett 2.82%
XJO up 2.65% for the same 1 week period.
So as you can see although we have the worst possible scenario for this position it is still holding the gains with the market.
Vol is being bid on this up move which indicates peeps taking protection from this point here. I may look to cut some + deltas near the close.
 
Last edited:
Hey Chipp thx for the kind words. So an update as to where we are at. So the current market move is the worst outcome you can get for the overwrite/ short syn straddle position. ( quick fast strong move up towards the sold calls. )
Gear up 5.16%
Short calls 2:1 down 2.59%
Closed short put up .25%
Nett 2.82%
XJO up 2.65% for the same 1 week period.
So as you can see although we have the worst possible scenario for this position it is still holding the gains with the market.
Vol is being bid on this up move which indicates peeps taking protection from this point here. I may look to cut some + deltas near the close.
Yeah i think you went a bit early on the covered calls , thinking out loud here , i think i am writing these calls on a big up day where IV takes a jump and premiums move accordingly . Be great to have a chat one day in depth , exchange of ideas type thing , I am a decent direction trader re XJO and i think we could def feed of each other to build even more robust strategies . Anyway love your work .
 
15/7 T4 buy July 7925P @ 27
MM was 24/30 when filled
Cutting some +deltas here. CCI 5 moving down last 2 days as market has gone up good chance of some sort of pullback from here.

Holdings
5/7 50% balance of Gear @ $28.48
5/7 Short Aug 15 8100C @ 30 (2:1 to Gear)


Outlook
8/7 F1 67% chance we will not get a decent close below 7767 before the end of the month
8/7 F2 60% chance 7702 is the low for the month 11/7 now has moved to 99% chance it will be low of month
 
My modelling has another 6-8 days of upside before we start to level of altough a couple days of sideways after aggressive move up be no huge surprise

20 years of average XJO Price action for next 12 days . The WR% up is high but degrees of move up skewed by some bullish outliersScreenShot999.jpg
 
LOL @Chipp 1 Rolls 0

Massive divergence on the cci now so I am going to hold the long put and see if we can salvage something out of it.
On a strike touch at 8100 on XJO we will roll the short calls up and out.
Anytime I try to predict where the market will go I get my ass handed to me :oops:

Holdings
5/7 50% balance of Gear @ $28.48
5/7 Short Aug 15 8100C @ 30 (2:1 to Gear)
15/7 T4 buy July 25 7925P @ 27

Outlook
8/7 F1 67% chance we will not get a decent close below 7767 before the end of the month
8/7 F2 60% chance 7702 is the low for the month
11/7 F2 now has moved to 99% chance it will be low of month

c1.PNG
 
Top