Search results

volatility is synthetic time and time is synthetic volatility. db

Using delta to get neutral and thus ends up with the synthetic straddle. 10 long puts have delta (in this example) of minus 450 whereas the 1000 long stock has a delta of 1000. The combined delta is thus 1000 minus 450=550. So there's an excess of long 550 delta. To neutralise these (get delta...

Extrinsic value is often referred to as 'time value' - realise it's a bit of a misnomer. Extrinsic value is mostly determined by time and implied volatility and distance of underlying from the strike, but realise that other factors also impact 'extrinsic value', i.e. dividends and interest rate...

Hi AAH I couldn't agree more. It's always easy to criticise those who are trying to make an effort at improving themselves. Yes, many seminars exaggerate the good aspects but to claim that they are all a waste of time or teach one bad habits is just silly. Those sorts of claims generally come...

Could you please clarify what you mean by 'itm outright'? Are you referring to the vertical? If so then how much itm? Thanks. db

Nice summary! db

Probably best to read some books first and then ask for clarification if necessary. This topic is huge, as has been pointed out several times. db

Like you I've worked my way through a tonne of books. Only one author I have come across has any books that actually detail the strategy (each book only focuses on one strategy) in such a way that you can practically trade it. I have them all and found them to be very good and have more than...

Geewhizz that was quick. I thought you said (only 4 posts ago) you wouldn't post here again and we all breathed a sigh of relief. And now you're back :confused:. I think you should keep your word otherwise noone here will ever take you seriously again. Btw your number 2 is only true for naked...

What about the other spreads - calendars, flies ...? Also your answers are a little incomplete and your generalisations a little too general. A credit spread has negative gamma if it's otm (positive if itm) but still benefits if underlying moves in one direction or sideways or even a little...

[/B] It's nothing personal. It's just that people here don't generally come to this options forum to be sold some product. This forum is supposedly for learning to trade options, not sell books/seminars. Noone minds the occasional reference to good material, but the sales pitch that you've...

damn , you good [/B] He's very good. That's why he's selling the book. Sure can teach us a thing or two about options since most of us don't know what we're doing. Oh boy, selling premium, why didn't anyone else come up with this before ? - I can't wait to start pulling in the money, I'll...

Well Marnie, it doesn't seem to matter which board one goes to, the same rubbish gets circulated, I remember the same nonsense being discussed on the optionetics forum. I'm with you for the head banging smilie vote:). db

An open position obviously doesn't 'increase in time' but an increase in volatility has a similar effect on the position as if there were more time to expiry. For example if you're long 100 sbux june 30 calls then you know you have x days to expiry and your premium is y. If iv then suddenly goes...

Dec 08 has more time than dec 07. (And then there is synthetic time as atticus already mentioned). If you look at an option chain you'll see that the more time to expiry an otm option has the higher its delta. For example, the otm june 60 strike has a lower delta than the nov 60 strike...

If you believe in the above statement then you should stick to your guns. However, at what point will you exit/adjust/lock in profit if your prediction is wrong/right? db

Thanks for the info Tom. I also did the 'optionetics' thing which btw I thought is quite good for learning the basics and mechanics of options but not really that helpful when it comes to actually making money trading. db

This question may seem a little naive, but why would anyone want to close out a long option that is worth 0.02 or less? Pin risk is the only reason I can come up with. db

The simplest thing to do is to plot your position on a risk graph and see the value of your spread change as you plug in different price values/iv/time to expiry etc.. It's a good learning tool. db