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I have several issues with this: 1. "The profits are “riskless” only in the sense that they are not riskier than the other possible strategies – for example “buy and hold”" Most people do not view "not riskier" as riskless. I am just saying if you tell someone you have a...

Options are often quoted as though they are one - i.e. saying 1.46 means $146 or one hundred fourty-six dollars. So, if the stock goes to 41.46, the option will be worth $146 at expiration, thus breakeven. Also, many people don't include commission costs in their examples (which is good...

cmhackett, Basically, if ITMN continued to rise, you are correct in that you have locked in a tough scenario, where you will have $500 on the calls and $0 for the puts, but you now have about $600ish into the trade. If you keep this adjustment, the hope or idea would be that ITMN would...

Blue_Bull pretty much answers you good above. In general, if you are not an advanced options trader, you don't want to be selling calls without also owning the stock (100 shares per call) or owning another call. The margin requirements can vary and also some brokers may not allow it at all or...

Nasi, Unless I am misunderstanding something from your post, you are long calls and now they have profits and you can sell them? There is no reason then that you would be liable to deliver anything to the buyer when you sell your calls. You just sell your calls on the market and get the...

Yeah, I'll agree with the statement put that way. This is probably the main concern with the given trade - I think earnings are scheduled for just before the expiraton. I agree that it could become an issue. I would have preferred their earnings be just after expiration, but it can be very...

nazzdack, Thanks for the comments, but are you sure about that? The idea here is that you buy strangles and finance part of them by selling fewer, shorter term strangles. If there is no price movement and those strangles expire worthless or are way down in value near expiration, the...

OK, Here is the picture of the same position if IV increased to 42 for all legs - again, I can set the IV for each leg separately if wanted. You can see the chart makes the position look better now:) Thanks, JJacksET4

Just wanted to share one more thing. I wanted to show everyone a program I made that uses the BS formula and basically is an options P/L calculator. What I like about it is that it's under my control, so I have some features that are hard to find elsewhere. For example, I can enter the...

Sorry, I forgot to add the picture. Here it is. :) JJacksET4

I did the following today using WFMI (it was around 35.70 at the time): Buy (4) Aug 37 Call - Filled at 267 Buy (4) Aug 35 Put - Filled at 301 Sell (2) May 37 Call -Filled at 149 Sell (2) May 35 Put -Filled at 175 + 1 extra put - Aug 30 - Filled at 125 Total Long Strangles = $2272...

The number of shares that each contract represents gets reduced. In your example, now a contract on Etrade would be for 10 shares, instead of 100. Here was an article about an AIG 20 - to 1 reverse...

I just saw this thread. I think it's a pretty cool chart. I don't know how useful, but it can't hurt to add one more item to check. I will note that late March seems fairly poor in this chart, and then early Apr seems much better. Now, with the HC bill coming, it looks like it might follow...

Without double checking (probably a mistake on my part lol), I think OTM butterflies using Calls are Bullish, OTM Butterfiles using puts are bearish, etc. So that is the reason. Neutral butterflies are created by using ATM options. ITM would be used if you wanted to make a bearish one with...

What I find interesting is that it seems like volatility can be low, but prices can move strongly over a period of time. Like I mentioned in an earlier thread, GS has moved from 155 range to 175 range so quietly few people noticed and I think IV and HV are real low. It seems like there...

turkey, not quite sure what you mean by "animal spirit"? Are you saying happiness/excitement? I think the low VIX right now reflects the thought that a lot of risk seems to be out of the market - I should add that this thought may not be correct. Let's face it though, buying a stock in general...

For me, buying a straddle or strangle requires a low IV environment where the IV is likely to rise before the straddle nears expiration. Also, an environment where stocks are still moving but IV may be low due to "boring" markets and/or no fear in the markets. I do think we may be at that...

drcha, Thanks. I have looked into using ETFs with this kind of strategy, both "normal"ones and leveraged ones, but the numbers never seem to work out good for me with them. Also, I just don't feel ETFs usually have the potential for big gains (or maybe even more so losses) to make a trade...

Just to make a note of it, GE still going up, Mar 17.50 call now at about .65. This is up from a contract low of .01! http://finance.yahoo.com/q?s=GEW100320C00017500 I agree that this is a good example of chasing pennies killing! Of course, not to say it's good to buy options priced at...

Closed this morning as CLF was up around 3 points to 66 range. Long (2) Jul 60 Call - Closed at 1091 Long (2) Jul 50 Put - Closed at 195 Short (1) Apr 60 Call -Closed at 795 Short (1) Apr 50 Put -Closed at 30 Closed Longs = $2572 Closed Shorts = $825 Credit for close = $1747...