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piccon, By looking at your result, it seems that your profit is still mainly coming from otm. There is nothing wrong with using both ctm and otm, and I believe it is great to have a mixed strategy. I also trade otm verticals and ctm diagonals. Most of my profit is coming from vertical...

I agree with you. I don't really understand the reasons behind the strong upward action this morning. There is no way for a rate cut, and soon the fear of rate hike will come back to the market. Can anyone explain today's market action? I never use macro econ for trading options. Perhaps...

Cache, Thanks for your explanation. I thought about it after I posted my message. I agree with you 100% on this matter. Since I have no experience of selling CTM vertical, how frequent (in normal market, not a 3 sigma event) do you adjust your CTM when compared to OTM if the market is...

piccon, Can you show us how much you made with your OTM verticals, and how much premium is remaining for your CTM? Be careful about the pin risk. Several months ago, my short was close to the money (around 2 point difference, i forget the exact no), and i didn't close it because i didn't...

Cache, Did you meant that FOTM credit spread has a negative expectancy at the time of opening the trade? If thats the case, Can you long the vertical so to get a +ve expectancy? Do you think that expectancy (CTM) > expectancy (FOTM)? Or do you think that expectancy(CTM) is neural or...

Ask Scottrade (or other brokers) if you can close your option positions. If the answer is yes, it means you can sell it back.

No. Scottrade meant you can't sell naked put.

Coach, Are you trying to avoid the fight in your own thread? LOL. Sorry to start the war there. This is the only way to learn in a public forum.

When I said consistent profit, i compare it with the time when I only traded stocks. I am still a junior option trader, a lot way for me to learn.:D

I found trading options a lot easier than stocks. I have stopped trading stocks, and now trade only options. I found I have more consistent profit with more free time for ET forums. :p

Congratulation on your good return. I am up only 2% so far. I wish to learn from you and CTM traders in timing the entry so as to increase my return without a drop in my Sharpe ratio.

piccon, Thanks for your explanation. I just closed jan 730/720 at a debit of 0.15. Though it has a 98% chance of expiring worthless, I chose to cover it today to release margin for new opportunities.

I don't want to continue the risk management discussion unless there is new info that will benefit some of us. But I really want to learn from you. I don't quite understand why you are concerned about 740/730 and not the 770/760. Is it because you got a higher premium for 770/760 as well as...

Donna, The discrepancy occurs everyday in SPX. I accepted their excuse and didn't follow up on the investigation until today. Today I found out there was a big difference (around $500) in P&L between my own model and TOS software, and so I digged into it. I just entered the data into...

I talked to Scott from TOS too. They didn't look at the software and just gave me the quick and easy answer. I used the same data (spy = 141.13, call price = 1.9, and put price = 0.55) and entered in a BS model, the IV of the call is 11.25 and IV of the put is 11.26. I believe TOS software...

MTE, Thanks for the clarification. I don't understand why the IVs shown in TOS are different. Does it mean TOS's computation is wrong?

Just hope you didn't trade it because i opened the same trade yesterday. :D

MTE, I don't understand what you meant. I thought the cost of carry is built into the option pricing model. I am using SPY (not a future). What I don't understand is why the IV for call is not the same as IV for put. Using the diagram that I posted, IV for Jan 140 call is 11.99, and for...

RM, If you read the whole discussion, you will find that I never said everyone who doesn't agree with Mark is illogical. I am sorry if anyone has such feeling. My previous post (quoted below) explicitly said that your approach is better for passive management (my own conclusion) implying...

Here is the diagram.