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Math doesn't usually make these things clearer. If anything, math confuses the issue for people who are non-mathy enough that they didn't do the math for themselves in the first place. Here's how you do calculus without any calculus: Start with a very basic definition. Gamma is how quickly...

They are options on the actual index. If you want to trade the index, either find an ETF that tracks it, trade the futures or synthesize a position with options.

Heh. Everyone is sure they want to own the stock at a lower price, as long as the stock is at a higher price. What idiot wouldn't want to own a $43 stock for $35? The problem with naked puts is that you only end up owning the stock for $35 when it's worth say $33, and by then you're not so...

That "wrong" is wrong. It double-counts the effect of the split. He's counting a factor of 2 because delta changes, and another factor of 2 for the split. Problem is, the "because delta changes" *is* the split. Gamma is the "slope" of delta. If you quadruple the gammas, some of the deltas...

Unpossible. 1) Gamma is the (calculus kind of) derivative of delta. That means if delta is multiplied by a number, gamma is multiplied by the same number and nothing else changes. 1A) Gamma is how much delta changes with price. That means the difference between deltas at different strike...

Gamma is the first derivative of delta, so if delta gets cut in half gamma gets cut in half too. Also, the delta of "the position" (your option holding) actually [/i]doubles[/i], because you will have options on twice as many shares (at half the strike). Which means that gamma doubles with...

I'm no expert on currency markets, but don't you only eliminate the directional profit and loss if your "collar" has both options at the same strike? And doesn't that make your position a long plus a synthetic short?

They don't call it "Motrin IB" for nothing ;)

Every broker will be different, but most should lend you something on other holdings - just not as much as they would on cash. The closer it is to cash, the more likely they are to lend a higher percentage against it. Your broker might lend 50% on equities, for example, which means that $20k...

In short, you found a nice gentleman who is generously giving away free money. Great, that should last as long as he stays solvent. Any other plans after that?

The VIX is a measure of implied volatility, which is an instantaneous concept. The "expected volatility" in the future is a hand-waving definition of the current implied volatility.

Interest rates are low now. You won't find a completely safe way to make a big return. You especially won't find a way to "juice up returns" while still being able to recoup all your capital in an emergency. Since you're investing in spreads you're obviously screening or at least looking...

That's a useful number to be sure, but another useful number is what size of move you're actually betting on with your position. Even with no IV contraction, an up move toward a long straddle loses money before it makes money. You were betting on a couple points or more down, or so far up...

The stock moved in favour of the straddle by 1 point. The straddle was worth 3 intrinsic before, 4 intrinsic after.

Straddles are symmetric about the strike. Thus, if nothing else had changed, the 75 straddle would be worth the same whether the stock was at 72 (3 points below strike) or 78 (3 points above strike). When the stock went from 72 to 79, your straddle experienced effectively a one-point move...

That's probably only worthwhile if you want protection at the same strike price for several months. Great if the market is trending down, but bad if the market is trending up and you have to keep rolling your put up at a loss because it offers less protection as it gets farther from the money.

Rhetorically asking "what are the chances" is kind of not a justification for exposing yourself to a black swan, since a black swan is by definitinon a "what are the chances" type of event. Also, you're getting 2 points for a 100 point spread over 4 months, so if the black swan shows up once...

You can go one strike in either direction, maybe two, if that fits with your outlook for the stock. A 60 strike on an almost-$90 stock is just a mite excessive is all.

I don't know what kind of a price change you're expecting in a few minutes or hours, but I can't imagine it would be enough to make a straddle profitable. ATM straddles are initially delta-neutral, which means they're slow out of the gate when the stock moves. Even when you get farther from...

Your quote showed the options trading below intrinsic? That's some seriously faulty data. Are you using Yahoo for your option quotes or something? Also, the reason there's no liquidity there is because the Mar 65 is a dumb contract to trade on an $88 stock. Even with tight slippage there'd be...