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I have a friend from Japan who wants to set up an offshore partnership for a hedge fund in the British Virgin isles. Can that entity have an account at IB? If yes, are there any limitations or does it trade like a regular universal account? I know that he needs a British Isles bank account to...

Of all the greeks, vega is probably the most important, for it influences delta and gamma. Theta is probably second. I use a couple of ways to predict volatility. First, I take a look at the IV's of ATM calls for the front month and for a couple of months into the future (for example, I am...

Just a follow-up: The conditions for trading iron condors are basically the same for iron butterflies and even bull put spreads. One wants a high volatility environment, and one is looking for a volatility "crush." As an example, I want to place an iron condor this Monday. The VIX is...

I've been trading options for over 10 years, and I never really had a discussion with anyone about when to enter option trades--specifically what time of day or even a specific day of the week. I usually trade the near-month options after the previous near-month options expire. I like to trade...

Thank you all. I appreciate the info.

In addition, there is no rule that says you have to wait until expiration. If the volatility drops a great deal, then you may want to take your profit at that time, and then move into a new trade (speaking for all option trades).

Funny you should ask this question. I use the greeks to determine what option strategy I am going to use. If volatility is rising, then all option prices rise, independent of the direction of the underlying. If volatility is decreasing, then option prices decrease. So, if volatility is in...

I rarely allow ITM options to be assigned (for serials) or to be settled in cash (quarterlies). This December period I actually had a long put that was ITM at the close of Thursday. Upon the open of the S&P 500 cash index, the special opening quotation usually follows shortly thereafter. I am...

You didn't mention a specific short gamma trade--for simplicity I will assume you are short either calls or puts. I have used the following: 1. I only place OTM bull put spreads or OTM bear calls spreads instead of naked puts and calls or straddles and strangles. 2. I only place enough...

I agree with this. I would even add that a wider spread is an even better characteristic. I usually use bear put spreads and bull call spreads as (insurance) hedges. I actually like my spreads to be further OTM and wider than "usual." The returns are extremely high if they end up ITM--which...

I use the generic combo feature to put together my iron butterflies. never had a problem with execution or putting the trade together. and I use IB.

Not true. Here is an example--Last year, January 2008, the ES plunged 60 points on MLK's birthday. That Friday, I placed 4 covered puts ATM. After the 60 point plunge, my underlying showed a profit of $12,000.00 and my puts showed a loss of $7,000.00 for a net gain of $5,000.00. Yes, the gain...

Here is what he did: Bought back the 970C and placed two covered calls at 995. Now he has 6 longs and 6 shorts.

With a covered call, you actually have a chance for huge gains compared to fixed gains for the short put. Think about delta for a minute. The underlying has a delta of 1 an the short call has a delta of .5. Suppose the underlying goes up 60 points (I trade the ES S&P 500, so this is very...

Calls and puts behave differently. Each is affected differently because of the nature of their Greeks. The biggest difference is fear vs. greed. Fear overwhelms greed; long puts gain more than short calls when volatility is high. When volatility is low, then short puts gain quicker than long...

Ran into an interesting question from a colleague. He currently has a ratio covered call going (4 long underlyings and 5 short calls). All calls are for the current period (Aug). The calls are deep ITM. He trades the ES (S&P emini) like I do. He is long at 972 and the short strike is 970...

UPDATE: IB has fixed the bug. Now, it is possible to create and execute any GLOBEX recognized spread, as well as spreads for the stock exchanges.

See above. Really no pros, unless you are a gambler and not a trader. You will see better results if you go further out, timewise--at least 4-5 weeks before expiration.

Market makers are typically long calls, short puts and short the underlying--taking the other side of the retail investor, who sells calls against the underlying (covered calls), and who buys puts for insurance. As the writer stated, there is a great deal more call selling..this pushes the VIX...