Search results

I am sorry but I was trying to help you. Your story has been incomplete and shifting. Now I understand that you were long a 48 put (which should be done if your think Qs heading down, but you also said that you were thinking Qs going up as you think it happens in Jan which is strange). Why would...

Suppose the market did what you wanted to do (go up). Since you shorted an OTM put, this means your strike is below 48. I assume strikes are the same for feb and jan. You would have lost! Why, because your overall delta is negative when you have a time spread with a strike below current...

I may have misunderstood what you wanted to say. I understand that the stock was around a price (which I was not clear what it was) and then you placed a time spread (bought premium for longer term (call or put it does not matter for time spread) and sold premium short term. I agree gaps are...

Here is how they make money. They hold a position composed of many legs. Each leg or set of legs can be replaced with one or multiple legs (stock is part of what I refer to as a leg). What they do then is replace a leg or a set of legs, by a cheaper leg or a set of legs. That is the essence of...

In any hedge, you should make sure you are not naked. Some responses given above lead to naked positions. Do not do it. Positive theta means you sell premium. Negative requires you earn premium. Here is an example. Sell a strandle. Theta is positive (and maximum). Calculate theta. You...

I did not read all responses, but I read some. RE calendar spreads, a call calendar is the same as the put calendar. Check it out by running some numbers. Reason: intrinstic value disappears in a spread. If you buy a time spread, you but longer term extrinsic value and sell shorter term time...

I agree with previous post. Gives us: strike, price, vols, time, and carry. Here is how to compute the carry. Go to ATM strike. Compute the difference between the call and the put price. You then have the (interest-dividend) you should use. Interest is known to everybody, but dividend is in...

There is no problem with time spreads! You seem not to have understood them. That is all. First, the best environment for time spreads is a nice and calm environment. The lowest the vol the best! Think like woodstock era people. They seek no problem--So should not you. There are exceptions. For...