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Don, What are the requirements for joining your prop firm? Also, under which conditions would you allow a new trader to trade overnight in the futures, forex, options & option futures market? Thanks, Walt

I appreciate your advice and encouragement... I will begin the implementation of this strategy and periodically report on it's status... Walt

I appreciate the recommendation, Optioncoach... I suppose that someday a safety net, such as the wings to cap my losses, will come in handy...

Thanks for the advice Riskfreetrading... unfortuneately, most of the points you made were a bit too esoteric for me. Perhaps someone can "shed some light" on the various points on that post. I believe without an edge, then this is all a game of "blind gambling". Although selling naked...

Oops... how embarassing... sorry for my carelessness. I should have known better, as the ATR (10) was above 31...

thanks for the probability suggestion, but I must be off-base on something... today's range was from 1363.25 to 1365.75. That's a day's range of only 2.50. Am I missing something? Walt

You're right, the market can easily reverse and drop 50 points; however, I'll have the resources to easily cover 5+ whipsaws of about 50 points. I could be wrong, but I dont't think the ES ever retraced by 50 points as many as 5 times in a given month. Usually it will trend in one direction or...

You're right, simply buying a 1385 call if the market reaches 1395 would probably allow me to exit with a breakeven, as the premuim received from both legs will offset the cost of the call at 1385. My exposure is that the market theoretically can retrace to the other leg. Although such a...

Here's an example of this idea... ES currently trading at $1360 1 contract - OTM Short Strangle [March] = 1395C ($1200) & 1320P ($1413). SPAN margin requirement $3101 (since this is a strangle, I believe that only the greater of the put or call would be required to hold the margin...

Very well... I will post an example later today on the e-mini, unless someone prefers another asset. The biggest challenge will be the relative cost of the protective put in the collar relative to the premium received for the call in the original otm strangle. To overcome this, I would employ...

You're correct if you do not protect yourself with a collar. However, the collar (long the asset & long protective put) or (short the asset & long protective call) mitigates a loss on the given leg of the short otm strangle...

Only when the strike price is reached by the market price (when a leg is in jeopardy).

I'd like to share a technique that I've been analyzing for quite a while. I was apprehensive because of how simple it really is. I've been deluded into believing that the only way one could be consistently profitable in the options market is to develop a highly complex and intricate trading...

What type of spreaders and option traders were they (i.e. iron condor and backspread traders and naked put or strangle option sellers)? Walt

Has anyone considered selling strangles about 1 or 2 std dev ITM, with a 30 - 60 day expiration where the IV is at least 10% higher than the HV? I've been testing it and it has worked well, even in this highly volatile environment. Although it may seem counter-intuitive to do this, it really...

I'm sorry commiebat, but I simply don't perceive the equivalency. I must be slow I guess... It seems to me that combining a bear call spread with a strangle would in effect nullify each other. If the underlying asset goes down, then this strategy profits; however, if the underlying asset goes...

I'm not sure how you calculated the 190 loss at 36 or 34. You may be right... KISS (Keep It Short & Simple). What are your thoughts about Maverick's thread referenced by bigbiscuit? Walt

You may be right faith, as that is the sentiment of MTE & Neophytenate... I think... The downside of strangles or straddles is the cost of such trades; whereas, the downside of this system is the potential for expiration on a specific strike price.... It's a matter of probabilities and...

Thanks Steve... QUOTE]Quote from bigbiscuit: Heres the thread Maverick set up... Baird talks about something similar in his book Option Market Making http://elitetrader.com/vb/showthread.php?s=&threadid=24449&highlight=perfect+option Thanks for the thread reference...

It's hard to argue against this point, gentlemen. Although I would be tempted to cover the cost of the strangle by selling ITM options against each strangle position at a 1:2 ratio. Of course, this then becomes a call backspread and a put backspread without the butterfly. Walt