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Chris, Yes, converting to a long butterfly/condor is my preferred adjustment as well. Knowing when and whether to make the adjustment is the hard part. Your idea about actively trading wingspreads on the QQQs though is interesting. I'll certainly look into it. On another note, now that...

Chris, I'm still constructing the long/short leaps portfolio, but at this point its too early to tell whether it will work. So far, since I started this in October, virtually all the longs (i.e. AIG, PFE, VIA, XOM, GE) have done reasonably well, while most of the shorts (i.e. BA, MO, EK, TXN)...

Chris, I don't disagree with you and I have no intention of changing my strategy to go gamma pos or directional on the indices. Iron condors on the SPX will remain a staple of my overall trading approach, though I may cut back on the number of contracts per position going forward as I...

No problems here.

Mav, Absolutely. I may have used up 8 of my 9 trading lives with this one. Lesson learned. As a result, I'm inclined to cut back quite a bit on my short gamma exposure next year. I'll also be diversifying across a much larger number of plays per month, which is something I know you've...

Chris, Well, in retrospect, doing the "right" thing on Monday, ended up in fact being the right thing. Had I not bought back my short 530 calls when I did, the damage would have been immense. Legging out of the spreads, which I don't do very often, also brought some unexpected surprises, as...

Assuming there's no significant volatility skew between the two strikes, there are a couple general rules of thumb that you can use to help pick the best strike. The lower strike call will typically offer a higher probability of profit with a lower break-even, while the higher strike call will...

Chris, True. Though one could be tempted to learn another dangerous lesson from a day like today. That is, to hold on come hell or high water to one's short options, despite any pre-defined technical or delta trigger, in the expectation (or hope) that a strong market will reverse in time to...

Chris, In the example I gave, the adjustment would actually be made before the underlying reached the short strike (i.e. adjustment is made to protect 540/550 spread when the underlying hit 531+). Delaying the adjustment until the underlying reached the upper wing, and thus neared max loss...

Yea, that's been my experience as well. If it hasn't printed, but you're .05-.10 off the mid-point, you should get filled.

Yes, but of course my limit and yours may be quite a way's off. Still, if you're not too greedy and go for, say, a dime below the mid-point, you should get filled if you're not doing big size. The XEO is the European-style equivalent of the OEX. Since I use index options primarily for iron...

Political relativism seems to have run amok on ET. I wonder if after 4 months of a Dean Administration (heaven help us), whether "Elitists" on this board will be posting diatribes about Howie's betrayal of the left. Sorry, folks, but our's is a system that demands compromise, even with...

Chris, It's nothing complicated. Let's say you had an OEX IC with the following strikes: 490/500/540/550. Let's further suppose that with the OEX at 531 and change, you were now concerned about your short 540 calls. You could obviously limit your risk by converting the call spread into a...

Liquidity's fine on the OEX for 10-lot spreads. You can go substantially higher before encountering fill problems. The XEO, however, is another story entirely. Liquidity is anemic and, based on recent experience, I strongly suspect that the rigor mortis has beset the specialist, may he rest in...

Chris, SPX is European style. HD

While Clinton's extraordinary talents are notorious, I do recall the Ross Perot factor being rather significant in '92. Ralph Nader won't quite do the trick for Dean in '04.

Chris, I agree. I rarely if ever buy back the short options, unless they're trading for pennies and I want to remove risk entirely from that side. Converting to a butterfly or a long condor, in my opinion, is a much better adjustment assuming there isn't any major pricing issue. I'd also...

Very good point. Writing covered calls can help enforce a sell discipline that might otherwise be lacking. As pointed out, it's somewhat facile to refer to a given options strategy as "good" or "bad". Rather, it's the application and management of the strategy, and whether it "fits" the...

As others have pointed out, writing naked puts has the same risk profile as a covered call with a superior ROI. Also, writing naked puts is a reasonable way to establish an attractive entry price on a stock that you want to own. At the same time, covered writes can have some benefits. First...

A 32% lead in N.H. over "favorite son" Kerry, union support abandoning presumptive Iowa fave Gephardt for the Gov., and the most commited base this side of Reverand Al, sure makes Dean look like a lock to me. That assumes of course that the party power brokers, fearing a McGovernite debacle...