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What do you do if the stock drops once you open your long stock plus long LEAPs plus short near month calls position? Then you lose more on the long calls AND the long stock than you make on the near term short calls because you haven't got a proper hedge yet. db

I agree. db

Use the following formula for all your synthetic calculations: long underlying + long put = long call You can rearrange this to: long put = long call + short underlying etc. Your example: 1 long GBP - 1 call = -1put If you then add a second short call you get: -1 put - 1 call i.e. you...

atm short straddle is short gamma, short vega, long theta. In layman's terms the short straddle benefits from the passage of time, a fall in volatility and a range bound underlying (short gamma). Iron fly vs regular long fly. Both have same risk profile. No advantage of one over the other...

1. we're all bad at cutting losses - it's our nature as humans. But it's critical, if you want to be successful over the long term. 2. turn calls into calendars? No. Long calendars benefit from a rise in iv (we predict that iv will fall after the announcement) and the underlying will have to...

First, short strangles/straddles make money if underlying stays in range (but you know this already). Second, short strangles/straddles start to lose if iv goes UP and profit if it collapses. Third, you're correct in that the passing of time generally helps short strangles/straddles. You...

Lol, I can't wait :) ! db

I must be getting sick, I'm already beginning to miss derivman's eloquent off topic nonsense :( . derivman where are you? Please come back to chit chat so we can chat - after all, it's what you do best. Your friend, db

What exactly do you mean? And why do you keep posting google search results every time you join a thread? db

Ah what the heck. This is a waste of time. "Aye" from me too. db

Thanks for the reply derivman. So when will you answer my question? db

[B] Good to see that you're now willing to post some answers to questions. So let's start with your answer to the 'number one skill a new option trader needs'. Go ahead and enlighten us all. db

I say 'naye' because we'd lose aah's most excellent post below, so far the best bit in this topic: db

All Taleb is getting at is that a lot of what we perceive as 'skill' may, more often than not, be really just luck. But it's hard to prove one way or the other. db

Well I'm watching some of my IC's, may need to roll some short puts since they're getting to my delta triggers :). Cheers db

Thanks opt789, I appreciate the time you took and your feedback and the formula. Cheers db

Nicely put AAH/DJM :). db

Looks like it's just me and you now derivman - we can have ourselves a nice little dialogue here :D. I would guess the number one skill is to understand what an option is and how an option works - that process will take some time and is not intuitive. Then there's the usual trading stuff -...

opt789 Don't be sorry, we're all here to learn. Appreciate your feedback. Now, what practical method would you thus recommend, to a retail trader like myself and others, for determining the likelihood of early exercise? In practice this has never been an issue for me but I'm now curious to see...

My dearest derivman, you seem like a nice chap but you must learn not to keep responding to posts that aren't directed toward you. Be a good boy and stick to the rules and remember to stay on topic and we'll all get along just splendid. Ok? Now, what exactly is it that you want answered or wish...