Recent content by Eric1977

The best part of options trading is that you can "have your cake and eat it too", so my point is that it's not a bad strategy to trade overlapping calendars and butterflies on the same underlying, because the vega risk is minimized and the probabilities increase.

I have been thinking about a strategy for playing a range bound sideway underlying that involves putting on a calendar on the bottom of the range with a butterfly towards the top. Instead of having an exact price target, I have a price range where I want the underlying to hang out. By combining...

I understand that differences in how a calendar vs. butterfly react to changes in vega (volatility), but my primary concern is keeping the underlying within my break evens. I'm using a strategy where I can get at least 66.6% probability (I assume based on IV), that the underlying will stay...

I've been testing calendars vs. butterflies, and I find that calendars offer slightly better risk/reward, but lower probability. I'm using MSFT, comparing a July Call butterfly (29/33/37) vs. PUT Calendar (sell 33 July, buy 33 Aug). Is my observation true across the board, or is it related to...

What I wrote above is as far as I can tell, an example of arbitrage. My question is, has anyone found arbitrage in other markets in 4/5 deep in the money back spread ratios combined with buying an at the money put? It seems too good to be true.

I just made an observation, and I am wondering if and how it is correct. I trade options in Israel on the MAOF TA 25. I have 2 possibilities. 1) BUY OCT 1230 CALL for 1360 SHEKELS 2) SELL 4 OCT 1180 CALLS, BUY 5 OCT 1190 CALLS for a credit of 515 shekels, and buy the 1230 PUT for debit of...

The most conservative options income strategy is probably calendar spreads, sell an ATM call or put about 40 days out and buy the same strike price the following month. This strategy takes advantage of theta (time decay), and your risk is limited to basically what you pay for the calendar. You...

"There are some companies in the UK that offer something they also call "binary options" that seem a lot more like the gambling stuff you are talking about. These are the ones that can't be traded out of and have weird rules like "winning 85%" when the trade works, and "winning 15%" when the...

What do you mean exactly by pricing inefficiencies? Do you mean on the underlying? My impression is that these binary options trading firms are nothing more than online casinos using the underlying assets and the term "options" as a way of fooling people with no financial background into...

I'm looking for a Prop trading firm, but I only trade various option spreads. I do hold positions overnight, b/c this kind of options trading strategy needs to be held for at least a few days. I had 10:1 margin on options for a 10K account back in 2006. The profit split was 70/30. Can anyone...

With the explosion of so called "Binary Options investment firms", I am surprised that there hasn't been much discussion about what exactly these companies are. From my observation, they are basically a kind of on line casino. When Hedge Street opened as one of the first on line binary options...