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Plenty of stocks out there - but your selling one year straddles so not get rich quick... Example:: GRPN trading at $4 with 4 Straddle out 283 days for 1.50. As I said above, you either own more shares at 2.50 or the stock is called away at equivalent price of 5.50 if stock is at 4/or higher on...

If you have little capital, just buy a stock you like and sell a one-year straddle and look at that premium you collect as a dividend. Then if the stock drops, you'll own an equal amount of additional shares reducing your average price. The premium you collect will also be your maximum gain as...

I would suggest that you make a payoff graph to help you visualize what is happening at expiry. The Y axis is your profit or loss and your X axis is your stock price. The max loss and Max gain will be capped. The example is a put credit spread. The max loss is $2+commission - credit received for...

The article that you referenced does in fact bring up many of the weaknesses of the Black Scholes (BS) model that I mentioned. Read the whole article. The BS model is used as the basic foundation by most professionals and then they layer on TOP of it to address the weaknesses. That's why you...

There is little liquidity in these options so difficult to trade in/out for size. That's too much work. I like to put these trades on and go travelling. Market makers don't provide fair spreads so you have to wait for customer order flow to come in. It's work!

I would not buy a put when vols are this high. Stay small and short high vol with directional view. The way I think about the straddle is if I'm wrong, I own more stock at $2 dollars so my average price drops to $8 dollars with upside capped at 48 dollars. If vols crash and I'm up enough to fund...

Correct. The leverage is not for getting big but to limit loss to pennies when wrong. When you are right, the deltas allow for equal return as stock with no theta decay in sideways market. Whether you buy calls or stock+puts, margin and return is the same. Always look at both to determine real...

Black Scholes fails to work correctly within 5 days and greater than 45 days. It also fails to calculate ITM options correctly. Time is the one variable you can control.

Why limit yourself to 30 days? Why put constraints relative to time when your goal is making money. Time/space as the fourth dimension challenges our formal training. I'm still thinking it through and how to change my mechanics. I know my largest winners were longer term. So 30 days feels like a...

Why is it hard to double when ITM? Just look for opposite option with .10 cents extrinsic and trade that one. When Long options you are Long vols and taking a directional bet. Vols at all time lows, it pays to be Long vols. But time is key. It could take one hour or one year to hit target but...

Correct. Mid point is what your broker wants you to do and it's wrong most of the time. First look at the opposite call/put. The spread should be narrow and that's the real bid/ask relative to extrinsic. Then there is the real value which you will learn over time. Look at the ranges over time...

The reality of execution will never allow for 20% cut loss to happen. You attribute it to pilot error but I would call it market slippage or market stop loss order in illiquid option markets. People dont understand that market makers profit from fast markets cause liquidity dries up when you...

As per Tom of Tastytrade, if you don't agree with the strategy, you can do the opposite. Of course he still gets his commission on every trade. I am doing the exact opposite of your strategy. My batting average is only .33 for the year. 33% of my trades are profitable. But my portfolio profits...

This is the wrong assumption to make. Surprisingly, most options don't get unwound. They are liquidated via the underlying product at expiry which has significantly higher volume. If you're not a professional, narrow the products that you trade so the bid/ask spread is fair. I wrote an...

I asked myself the same question 30 years ago. I can make 100% return buying an option and selling it within a few days. How long will it take me to turn a $1000 into $100,000. Strategy: 1,000 - 100,000 in 7 trades 1000-2000 2000-4000 4000-8000 8000-16,000 16,000-32,000 32,000-64,000 64,000-...

This is the beauty of going long options and the death of short premium sellers! There is no need for a stop due to limited loss of option so when SNAP dropped below 20, there is no squeeze for a loss and lost opportunity when it rebounds. This is why vols wont go to zero with all the short...

Trade size is critical so model it for the possibility at zero by year end. But the high vols will guarantee a big move. This will always happen as those big bets unwind. There is zero chance of being unchanged. That's why I like the directional straddles by moving away from ATM. So I did a 25...

The vols reflect the binary events. Until read out, this stock will drift up so you want static Long deltas and no theta decay for your hedge. Why not do both strategies and your pnl will make it clearer for you over time.

I always laugh when the media reports concerns for user growth and profits as to why a stock drops. This is not new information so how is this the headline? What we do know is that the underwriters had free stock options at the 17 strike and pumped the stock above 27 to make $300 million. Now...

The most counter-intuitive thing I have learned in trading is that everyone has predictable "Blind Spots". Traders can raise self-awareness of these behavioral bias that doom them and you would think that would be enough to avoid the pitfalls but they still fall into the black hole. So people...