Recent content by phattails

Options have the benefit of theta decay if you're short. Some time I'll turn my directional trade into a strangle if the stock goes against me.and collect theta. Of course requires being able to value an option and knowing how to adjust positions. It's required to have an if-thin plan and...

Another way to ask this is, what's the cost to replicate a double barrier option and a rebate option.

. Yes but theta kicks in. The whipsawed thing wasn't meant to be illustrated as a problem. Certainly there is a minimum Delta which is outside of noise and an expected movement per trade. What I'm talking about is an option position that pays for the cost of flipping and how to structure it.

That question is entirely dependent upon the market, the amount of analysts tracking it, the bid ask spread, etc.

Yes, I agree to an extent. How do the costs compare when you've flipped the trade 5 times though. Buying options might be more expensive in the beginiing, but I'm talking about E[costs]I.I have a feeling there's a way to hedge something like this without directly doing so. It might involve...

Let's say I'm trading a breakout strategy. If I only trade the underlying, I pay commissions everytime I get whipsawed. If I buy a straddle, then I have to pay premium on volatility that's most likely expensive. Is there an options hedging strategy that benefits from a breakout yet is cheaper...

The Volatility Surface by Gatheral is a good read.

I'll start by saying that options trading is not my specialty unlike the case for some of the other posters (SLE seems to be very knowledgable). My thoughts are that you are gaining from potential diversification with available cash and having the desirable convexity with an OTM option...

That's like being a fatty and walking out on the beach in a Speedo. Just because you can, doesn't mean you should. Now if we were talking about having an arm, then yes any arm (provided I don't already have 2) is better than none.

If only that's how it worked...

Support and resistance as defined in a trading book? No. Overall my win rate isn't that high for these starts but profit/loss are so much higher. I know 1 guy that has a 60% win rate with S/R, but that's not a typical statistic for that type of strategy. If you put a "stop' close to S/R...

Lol! brings back memories. I got lucky once holding pharma overnight and never again will I put on that risk.

Here's some unsolicited advice that applies to any question you might have: Get rid of that God awful picture.

Read Haug, "Option Pricing Formulas" and build your own with his VBA. Also, lots of packages in R.