Search results

My earlier post in this thread is obviously not quite right as far as benysl's example is concerned - it's what happens when you type before you think :). See above answer. db

Not quite (it's a bit more complex than your standard vertical credit spread because of the calendarisation and the many months between the front month short strangle and the far month long strangle) because benysl is rolling the puts down and out, closing the strike separation between his...

Hi Lar I thought contango only applied to commmodities futures options and not stocks/indices options. Could you please clarify your interpretation of 'contango'? Cheers db

It depends. You can roll the put down and out when spot gets to your short strike - this should let you do the roll to the next month for a credit/even. If you wait til expiry your short put may well be deep itm and you'll have to roll down and out to a much further month to do it for a...

You are correct. Your trade should be profitable as long as your rolls are done for a credit or even. Your position is in essence a double diagonal and as such volatility will have some effect (you are long vega). The fact you have kept 7 months to expiry and selected a 7 point strike separation...

? Your credit is now $0.3? This changes a few things. Your risk now is $7-$0.3=$6.70. Iow you're risking $6.70 to make at least $0.30. High probability trade but also high risk. When you roll your put down and out (as discussed previously) you may not necessarily take in a credit since the...

Every time you roll your short put down you increase your risk and reduce your potential max profit - the amount of increased risk depends on the amount of rolling. It is not a risk free trade and adjusting a losing position will NOT give you a better risk/reward no matter how much you want it. db

Not quite. Your max risk, as you said, is the difference between strikes (7 points) minus the credit you received (6), iow 1 point. You basically have a calendarised iron condor (short front month strangle, long back month strangle). You can roll them as you mentioned but your risk will then...

1.If a stock option is itm by $0.05 or more at expiry it will be automatically exercised/assigned ($0.01 or more for index options). 2. If a short option has no/little extrinsic value it is at risk of early assignment (e.g. deep itm short call). 3. An option can be exercised/assigned at any...

I'm not quite sure what you're asking but vega is higher for back month than front month options. Your straddle/strangle swap (aka double diagonal) is a long volatility play and if vol comes down your position will lose money. Yes, front month vol will come down 'faster' but back month vol will...

The 3 choices you outline are all things you can do (plus there are lots of other possible adjustments) and they all make money as long as the stock stays above your short strike. However, once you adjust your position the risk changes again. To better understand what you're doing it helps to...

Thanks everybody for your contributions, particularly AAH :). I'm sorry that the thread ended on a somewhat bitter note - whatever happenend to "no harm, no foul"? db 'wherever you go there you are'

Unfortunately that is human nature - where I live it's called the 'tall poppy syndrome'. db

Hi Marnie Thanks for your explanation. I'm actually on holidays at the moment (sunny Melbourne) and won't be injecting consciousness altering chemicals again til next week :). Even on my break I can't stay away from this site (almost tragic, lol). The reason I asked about the cockroach is that...

Thanks everyone for your contributions but I still don't have the answer to what makes up the component legs of the iron cockroach. db P.S. nice to see you back Marnie.

Papertrade (options or stocks, doesn't really matter which) first then use real money (small amounts) after becoming proficient & consistently profitable in papertrading. Once you are consistently profitable in real trading you can start to build your position size. db P.S. start reading on...

Does it come with pictures and how to get into the different positions? db

That's very odd, I've got the exact opposite experience. I've been trading bullish collars following the 'random crawl strategy' and I've been making money - but it has been a bull market. Go figure. db

Does anyone here know what an 'iron cockroach' is? db

Maybe it's considered unpatriotic for US citizens to trade options on non US markets :confused:. db