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That's a short time spread. The short calls are treated as naked. Thus the margin is 20% less the net credit received (i.e. if done 10 times, the margin would be (40 X 1000 X .2) - (.25 x 4000) = 7k).

Yea, that makes a lot of sense. I'll be interested to see how the play develops for you. Good luck with it (though after yesterday's ES call, unlike the rest of us, luck is obviously the last thing you need).

Arb, it seems the new contract can be used to hedge vega risk, and rather imperfectly at that. But would serve as a rather crude gamma hedge.

Vega, I've used both, and always split the spread. So I agree that one can and should do better than the bid-ask. However, that doesn't change the underlying problem with doing condors on the indices with vol at these levels. Again, you simply have to take on too much gamma risk for my tastes to...

Well done, Blue. Yes, the OEX has better liquidity and slightly better premiums than the XEO. But you have the assignment risk. Plus, the same overall issues that have created a less favorable risk:reward situation apply to both. However, as Blue has shown, there may still be XEO/OEX condor...

Short answer -- No. Unfortunately, you're 100% correct. Iron condors on the XEO used to be among my core positions, and I had consistent success with them until December of last year. But as vol cratered, so did premiums, and I was forced to take on a lot more gamma risk to generate the same...

Oh, my bad. Thought you meant long synthetic. Skews still holding up nicely on the put ratio?

Nice. Great call, Arb. Did you go with April or May for the puts?

Gee, Romeo, I didn't realize you followed my postings so slavishly. I don't know whether I find that flattering or creepy.

That was about as coherent as your pretend call writing strategy. Wit and wisdom truly go hand in hand with you, huh genius.

Then go away.

He wanted to make a "gentleman's bet", and yet he lacks the most basic prerequisite for such a wager. Puzzling.

Thanks for clearing that up, Einstein.

Come on, Mav. Let us kids have our fun. So it's at the expense of the confused and dimwitted. I'm just doing what I attempt to do in trading -- fully exploit a clearly discernable edge. Is that so wrong?

Do you have any idea that the person you are referring to treats $50k as a rounding error? Why do I have this nagging suspicion that the words "stupid" and "pennyless" will be featured prominently in paragraph 1 of your undoubtedly brief epitaph? (By the way, since the obvious escapes you...

Sad, then, that you are so utterly devoid of knowledge. By the way, you might be interested to know we have horseless carriages now too. So put down the Viaga and take a little nap, okay gramps?

He'll only be allowed to "sell 3 or so [options] at once" on a $50k account?!? That's the most ridiculous thing I've read on ET today, which is saying a lot. You have absolutely no idea what you're talking about, thus explaining the draconian trading restrictions your broker had placed on your...

The margin requirement for a short naked option is 20% of the strike price times the number of contracts times 100, not 100%. Also, the net credit received will offset the amount of margin required for the sale. Hence, using your example, the gross margin requirement on 25 contracts would be...

My biggest current position by far is short you.

Dude, read a friggin' book. You wan't us to change your diaper too? You're an accident waiting to happen.