Recent content by daytonabeach83

to circle back to something you said above, about selling options where vol is understated, i'm typically basing strike selection on the shape of the expiration's vol curve.. i try to buy the dips, and sell the peaks, so regardless of which direction the underlying moves the short is losing vol...

so, how do you view a situation where an ATM spread with equidistant strikes is marking at less than 50% of the spread width? isn't the ATM probability supposed to always be 50%, regardless of delta? even if you don't buy whatever delta the ATM call is giving (it might say 55, for instance), if...

not a fan of rolling either... feels like kicking the can down the road, just like you said...

you don't believe in holding indexes long term?

chasing skew will do that, for sure.. i just use it to guide my strategy selection.. i approach trading from a statistical mechanics perspective, so it's less that vol skew is god and more a "don't play the game unless the odds are in your favor thing".. success comes from everything else you do...

ahhh word, this is one of my go-to strategies.. the reduction in cost basis on the long call makes them extremely interesting, plus the time factor.. i do it as a bullish trade tho, not so much a bearish one, but if the IV is high enough it definitely gives you a huge cushion.. i modeled that...

not saying it's easy money, not at all, not even close.. the increase in tail risk alone from trading skew is enough to make most people who trade it lose epically.. statistical mechanics says something like 1/3 of people will go bankrupt playing a game with a 2:1 profit-loss ratio and a 50%...

+1 i think it kinda went past me first time i saw it, or i'm one of the ones who doesn't get the trade lol.. but, diagonal put credit spreads then? >OTM long put @ 60DTE >OTM short put @ 30DTE >as narrow as possible while maintaining a credit >don't sell the short below the long is this the...

hahaha fair point.. sorry again for the thread jacking lol

perhaps this is a confusion about directional vs arbitrage trading? on conversion/reversal for locking up the arb's, yes, you're 100% correct.. that's exactly what i meant above when i said it would offset the ATM synthetic long.. you have to short the shares to complete the conversion, yes...

in the case of the $223 put vs buy-write, the dividend payment (est. $0.392) would offset it but only by maybe 60% or so, and that's assuming the stock moves don't wash it out.. it's pretty close to the same amount as the projected July carry fees, so it would offset the ATM synthetic long @...

this is the clarification on the point i was trying to make..

not trying to be right, i'm trying to learn.. that's why i keep asking questions and dropping examples to clarify.. not to debate the point with you, but to flesh out the details.. i appreciate you having the discussion with me.. i figured the inability to arbitrage the skew is why it still...

even were you to fill your long at the ask and your short at the bid on that IWM example you'd still have a cost basis reduction - again, obviously irrelevant if you're shorting the reversal, only speaking on directional stuff..

to the first, i totally get that.. i guess what i'm trying to get at is that if you're doing directional trades with risk, not arbs, then the skew can still be used to achieve positive expectancy in your trades, at least in my experience.. to the second, i haven't had any issues getting things...