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How about the bid ask spread and liquidity between these options?

You are right. For CTM, timing is very important. A bad timing will likely cost you more than $1 for each contract. But a bad timing of OTM usually cost you a dime or two. As I am bad in spot the reversal time, I might be better to continue with OTM till I learn the timing skill from you...

piccon, I lost about 8% from my high watermark (using NAV). I didn't close any FOTM credit spreads when it passed through my short strikes. Instead, I kept hedging (balancing my delta) by buying long term puts, and selling short-term puts and calls. In the end, I lost from my long wings...

So the only benefit is lower margin requirement, right?

Without looking at the margin requirement, are there any advantages of trading one over the other? Are ES options better in terms of the slippage, and liquidity? Why you prefer one over the other?

Domestic, I am really confused by your current strategy. You said you didn't use unlimited risk strategy. Now you mentioned you have more short than long. Is that considered unlimited risk? I believe you have been doing very well. It was a lot easier for us to understand and follow...

RM, Did you refer to static hedging here (i.e. open a debit spread on top of credit spread in the same time)? If yes, I agree with you. However, as time passes, if my credit spread doesn't look good, I will choose hedging it by adding one leg instead of closing or reducing the size of...

If you want a debit spread to hedge against your credit spread, why don't you consider backspread?

It is hard to close a profitable spread without paying a fairly high premium in order to release the margin under the current high IV environment. I had Rut Apr 760/Mar 780 put diagonal. TOS is holding my margin till the settlement price comes out. Now I have a strong directional bias...

If it drops 50% in two years period gradually, it creates the best trading environment for premium sellers (esp FOTM sellers) for the following reasons: 1. Premium is high ( usually IV is high for a dropping market) 2. If it is a slowly declining market (assuming 2% a month), it won't...

Thanks Mark. My Feb 800/June 900 call was really a bad one. It was a costly tuition for me. Even though IV increases a lot, my June 900 call is basically worthless. My lesson learned from that experiment: 1. don't own vega to sell gamma (from Mark) 2. don't own FOTM wings for...

Don't understand what you meant here? I got these expensive options at the first panic when i was unable to close my rut 770/780 put spread to protect the vertical. I am planning to sell 780 April to help reduce my insurance cost. Is that "owning vega to sell gamma"?

They are rut june 760 and 790 puts, CTM and ITM.

I have some extra long puts with RUT (exp in June), what should I do? 1. Do nothing? 2. Sell some short-term put? 3. Always keep the book delta neural? What else can I do? Any comments?

pm = the max loss you will have within 15% change of the stocks. Just write a simple program to find out the max loss you will have within 15% movement.

Yes. However PM is MTM. It means the daily change of PM of holding a stock with a vol of 70 is a lot higher than that of holding a stock with 12 vol. An understanding of how PM changes with your holdings is the essential part of taking advantage of the leverage without significant increase...

Mav, What are the main differences between an option prop firm and a JBO?

I don't like rolling. IMHO rolling = close out the current position + open a new one If you think the market will go up, close out the position. But why will you want to open a new one if the market is predicted to go up? You should wait till you think the market has exhausted the run...

Mark/Bob/Group, It seems to me that the IV change has a bigger impact. Like the example that Cache has indicated, selling a CTM call spread will have no loss if the spot increased by 10 points because of a drop in IV. What about a FOTM? What about put spreads? A 10 points drop in...

We had some discussion regarding these strategies in the past. However, in a higher IV environment, which one (CTM or OTM) is a "better" strategy in your opinion? I don't have any experience in trading high IV environment, and so would like to get some ideas to see if I need to adjust my...