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If all options are priced so that the average expected outcome is exactly the premium you pay/receive than that also goes for any combination of options. If you receive premium for a vertical spread that premium is exactly the average expected value of that vertical at expiration. Ursa..

You might want to read through the whole thread once again; the answer is there. To summarize: the current price of an option contract is the same as it's expected value at expiration given the volatility of the underlying being the current IV, and based on a lognormal distribution of...

That's you own decision of course, but know that the adds are a form of income for ET and as such replace a true subscription system, which I would hate to see (not because of the cost but it raises barriers). I wouldn't even mind receiving emails from sponsoring partners through ET, as long...

options212, I just received a SPAM PM from you. I never had one before so I guess it is forbidden. I asked the Moderator to ban you for this. FYI, Ursa..

Please call some of those in to repair the Euronext/Liffe exchange then, since it is has serious quality problems all the time. Since the french took over our Aex (Amsterdam) exchange a few years ago, it has gone from bad to worse. My only hope is that they will not get their hands on either...

Possibly, I saw discussions about that but never really got involved because of different laws where I live. Isn't the fact you are delayed by tax to get rid of stock an even better reason not to do CC's but write puts instead? Maybe, but having a long-term investment called away after it...

That is right, but to me that poses the enormous question: why would you 'already' own stock for the long term if it doesn't do anything, or so little that writing options should be used for income. Why not sell it and buy something better? And don't say you keep them because you bot them...

Nice try though, and execellent hedging too. Rise in all Indexes is quite unexpected, I think it's all about reaching psych bariers, 5000 for DAX and 400 for AEX etc.. Looks like a fluke to me re: volumes, but you never know. Good luck with the next 1, Ursa..

I think it is even more basic than that. Many ppl do not view their owned stock as 'at risk'. They eg. think that they will only lose on the (lower) stock when they sell it again. Until that moment they will hold on and will not regard the current 'paper' loss as real. Instead of explaining...

The wings were 2.50 cheaper than when you started the straddle, so that seems like a good deal. I'm not sure about the latter sentence; what would you consider your cost-basis, because you still own a credit of 17.30 if I'm right. Or do you mean the 2.70 risk, and multiples? Ursa..

Agreed. So you didn't consider hedging/rolling? That would'v been my dilemma. Now you have the iron, would you consider closing the body any time in the future, or is this always an expiration run? Thanks for the peek in your kitchen, Ursa..

Did you complete because your target was (almost) reached or any other specific reason (about GOOG)? What would be the value of a new iron fly today? Very interesting, exotics too. I lag a bit behind you, so maybe in 10 years... :) Ursa..

Yes, I agree with that. The gamma advantage you posess in the DOTM's should play its part in the strategy. Wouldn't know how to quantify that. Also depend on the trading-system you use; many of these systems have positionsize/moneymanagement as essential parts of the strategy; this should be...

The point is you said that DOTM's had hardly any time-decay. But if your strategy tells you to buy 1000 shares, you would buy about 20 ATM options or maybe 200 DOTM ones. The time-decay on the 200 DOTM's is bigger than that on the 20 ATM's. If time-dacay was your only concern you'd better buy...

You mean the change in gamma? It's not part of my set of my set of continuously calculated numbers, so no, I wouldn't be able to give you a value in realtime. But I'm fully aware of its properties :). Actually, I only keep constant track of IV and delta (the other greeks are calculated but I...

Yes, the change in gamma is very favourable of course. I forgot to say, but I think SleepingGiant's idea of emulating a Turtle type system with (D)OTM options has some merit. That is what I meant. But as Riskarb pointed out, it is not as bad as that because your gamma increases quickly as...

All options have a theta, and to have the same delta as in an ATM deal, you'll have to buy a lot more DOTM options then ATM's. The theta/delta ratio is actually higher for DOTM's. Ursa..

Thanks Mike, this makes a lot of sense to me and I'll probably use the weekend to digest it. The concept of a strategy depends of course on it having a target. I can see that having targets, maybe secondary and tertiary targets as well and skillfully switching between them as you go can have a...

You might be right in the comparison there, since I don't believe in those either. Everytime you 'leverage a winner' you have an opinion about what will happen next compared to the situation now. Your previous position has no relevance to that. Suppose you use two different accounts then, in...

Lots of people do it, I think, and that's what this thread is about. What we started to agree upon is, Yes, in the long run you will be right 95% of the time and, No, there is no postive expectancy in that, because the premium received reflects exactly this outcome (in the long run)...