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At an absolute minimum, you need to understand the relationship between the VIX and the underlying, even if all you're doing is buying calls. Otherwise you're liable to buy those calls then wonder why you didn't make any money when the underlying went up as predicted. The same is true about...

If you want to trade IV, then you have to become intimately familiar with its behavior. The IV of each contract has a distinct personality. Choose one and target it exclusively for a while. Get to know its personality inside out, backwards and forwards. Let's start with the vix, since it's...

I think some of you will find the attached article of interest. I'm not sure I believe the results claimed for this approach, and the study was done in a different environment than today's. Still there may be the germ of something worthwhile here.

Chris - you have a system that you think will work, but are not using it because it won't work with options, and you only actively trade options. I'm just suggesting that this is a self-imposed limitation that need not be. It seems to me that you could easily put your system to the test...

Trend following is tough these days. You might want to look at countertrend trading instead. If you've found a strategy that looks successful but don't want to trade futures, what's wrong with trading spy?

252 is indeed the approximate number of trading days in a year. But the standard is to use calendar days until expiration to calculate option prices and IV, not trading days. Assuming both ivolatility and IB also use calendar days to expiration in their option calculations, I think you should...

It's very true that implied volatility - the VIX for example - is a completely different animal than price, and behaves quite differently. Implied volatility (and real volatility) represents emotion - complacency when it's low, panic when it's high. There are 4 times in its 18-year history...

You probably know this, but it's not the exchange that changes its order to match yours. Exchanges don't put in bids or offers - market makers and customers do. They're just bidding and offering through the different exchanges. What you're seeing is clever robots programmed to change their...

Sounds like you're approaching it the right way then. As for answering your question - I did the best I could here: http://www.elitetrader.com/vb/showthread.php?s=&postid=2008933#post2008933 I wish I could do better but it's a big subject and impossible to cover in a few words. I'll try to...

I mostly agree with this - not that anyone has been giving bad advice in this thread, just that I think the OP has the same misconception about option trading that I see so often (universally actually) among options newcomers - namely, that there is a "best strategy" for trading options, and...

Thanks for that reference maw. My own reading of it is it's just Haug having fun being bombastic and provocative, which he clearly loves doing. Very much along the lines of that silly article he co-authored with Taleb in which he claims that BS and similar pricing models are irrelevant because...

A little twinge of remorse is human. Just so long as you don't allow it to lower your standards.

Rudolf, I think you're trying to see gamma scalping as a complete, soup-to-nuts option trading strategy. It's not. It's just a piece of the puzzle, an arrow in the quiver, a tool in the toolbox - to be taken out and used when appropriate. If you took a class on the proper use of a hammer in...

Ha ha - well you're tenacious MAW - I'll give you that! And here I thought I had you pinned by quoting your own "bible" to you. But I guess like every bible, everyone has their own interpretation. Honestly MAW, I have no idea what you're talking about. I'm not even sure I know what the...

Very common mistake. People think if they don't know what play to make at a given moment, it's THEIR fault - if they were only better traders, they'd always know a good play to make. Another huge bugaboo - the biggest IMHO - is the fear of missing out. That's the one that'll kill you...

If I tell you this is incorrect, you won't believe me. So I'll refer you to the book you yourself called "the bible of options," by Espen Haug. You have his book, so you must have the disk that comes with it. Open up the first spreadsheet, go to the first pricing model, and read the...

Wow. Beautiful.

Okay, with these numbers we'd have to be talking about a stock not a futures contract. But why is your cost of carry rate 3 times more than your risk-free rate? That doesn't make sense in the real world.

How was I laughing at you? I think I gave a very straight answer to your question by inviting you to come up with a scenario where, in fact, using real-world criteria, the delta of a call is greater than 1.0. I'm here to learn too. So let's say crude is $100 a barrel. I'm long the $20...

Let's keep in mind that the math is just someone's best attempt to describe real life. So let's skip the "middle man" and go straight to the source. If a crude oil call can have a greater delta than 1.0, then there should be a scenario in which crude oil goes up a dollar, and I made more...