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Let's say that in market XYZ the bid-ask spread is 150-100. If I place a limit order at 100 maybe I will not be filled so fast, because there are already some orders queued up. Therefore I place it at 101 to be in front of other people. Another guy sees my order at 101 and places his order at...

I was that unfortunate "rational" investor holding the short side of that contract. In hindsight , I should have recognized that that trend could not be sustained, however when you are caught (naked) in a 5-sigma movement your rational mind simply shuts off..

the problem with all stops in general is that they will reduce your probability of profit. You can have a really tight stop and so you will have many little small losses and a few bigger winners, or you can set wider stops so you will have fewer bigger losses. There is no clear answer because...

Haha Ironchef.. I can have at best a vague idea of where the underlying will be trading, however if I find a combination with risk:reward of 1:10 on a strike that I think unlikely (but statistically possible), I will still put it on.

Thanks for the support sir, appreciated.

Hi, thanks for taking the time and effort to reply. For the risk/reward part, I cannot evaluate the risk if the stock goes past the short strike as it is theoretically infinite, however I can take the max potential profit and divide by the cost of putting on the spread. That would be the first...

There are 3 possibilities: 1-you are trolling 2-you are a spambot 3-you are so much above my level that I didn't understand a single word. In any case however, no, that did not answer my questions..

Hello everybody, I would like to write about a strategy that recently got my interest. Basically it's just a bull/bear front spread, but instead of having the classic 2short:1long ratio it is more like 9:7 or 5:3, basically something less risky than 2:1 but also less conservative than 1:1. I'm...

if the trade has negative expectancy, the more trades you make the more your results will look similar to the calculated expectancy. Just use all your available capital in a single shot, and if you get lucky run away with the cash.

Ok guys, so I am posting this as a conclusion to the solver experiment, and hopefully this will be useful also for other people who would like to follow my steps. First of all, my computer skill level is not that great, I'm slightly above average with excel and VBA but nothing more, so more...

Forgive my ignorance but.. why theta as the third dimension?

@mushinseeker wow I'm happy my approach didn't get shot down immediately :) I will introduce a liquidity constraint, however this is the part that worries me the least. The bid/ask spread is very tight due to a combination of good volume and extremely limited number of tradable products..

Ah yes, before I forget... I have also another very important question: here there is no VIX (there was something similar but was shut down by the government during the 2015 boom/crash), so how can I create a proxy for a volatility index? I have the IV of the single options so I am actually...

Hello everybody.. I'm a new options trader.. I have been lurking around these forums for a while, however I never posted anything before. Funny fact, I am trading the chinese options market. I have been living in China for a while and I was wondering if the chances of success in a market that...