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If it's a true random walk there is no special advantage to buying at new lows or selling at new highs. Let's assume that the log of the price undergoes a one dimensional random walk, (the assumption made by Black Scholes), so prices never go to 0. If you are at a new low the price is just as...

To each his own. I could never do anything but lose money on FX.

Just keep in mind that we've been in a bull market for over 3 months. When the inevitable bear market comes you'll find yourself owning some of those stocks you're writing puts on. Make sure you'll be happy with that (and that you have the cash to buy).

If your doctor tells you that you have pancreatic cancer and a month to live, you should not assume that there is a "solution". I would say the debt situation is past the point where there is any "solution" other than massive inflation and the economic stagnation that comes with it. The only...

In 1980 the total U.S. debt was under one trillion dollars. Today it is $13.5 trillion, and rising by over $1 trillion per year. In inflation adjusted terms the current national debt is 5 times bigger than it was in 1980. That debt works out to about $117,000 per household in the United...

I do not doubt for a moment that the World Gold Council and the gold miners have done everything they could to spur on the buy side of the gold market. But keep in mind that the demand in India and China is for the physical metal, not some ETF. Also, while some of the big hedge funds that are...

Oops, I was misled -- I was looking at IB's margin page for options (http://www.interactivebrokers.com/en/p.php?f=margin). They list the margin requirement for stock, index, and currency options but not futures options. But on their products page they do list options on futures.

I'd like to know of one too. IB lets you trade most anything <i>except</i> commodities options.

As others have pointed out, I'm sure they sold a call, not a put, at 105. Since this position has a naked put at 85 the true cost of the position must include the margin requirement of about 11.65*. So while the out of pocket cost is 0.35, the total capital outlay including margin is about...

Well, again, no single call will have a delta of 1, and no single put will have a delta of -1, although deep ITM options will come close. In my experience a long or short synthetic value tracks the stock price change to within the bid/ask spreads on the options. Typically the bid/ask spreads...

Surely you meant, "The rare and isolated events that blow options up 100 to 1000 fold simply cannot be factored into the pricing equation. Otherwise there would be no <i>sellers</i> and no liquidity in the market." If sellers knew the odds of a super crash they could price that into the puts...

A flash crash can easily cause the bull put spread side of your IC to be fully in the money. If you're trading iron condors in significant size, so that you are using up most of your trading capital in the margin requirements, that will quickly wipe out your capital. Now fortunately in the...

Our Messiah in Chief has stated that he believes in a "living" Constitution. That's a liberal code phrase meaning: A liberal judge should decide what the law should be, and then pretend that it was lurking right there all along amongst the penumbras and emanations of the Constitution...

I don't think there's much disagreement here. It's the rare retail trader who even attempts delta hedging, for the reasons you stated. And pure option strategies that start delta neutral don't stay delta neutral for long.

I am largely in agreement. The most obvious exception would be delta hedgers, who dynamically hedge their option position with stock or futures so as to remain delta neutral. They make money if they correctly judge whether the implied volatility is too high or too low, rather than by betting...

Why no analogous rules for when too many people buy a stock, pushing it up to ridiculous levels?

I wouldn't call AMZN a fraud. It is profitable and is the king of internet retail. Still, I would say it is overpriced. A P/E of 71 for a company well past the start up phase is mighty rich. I have a few puts on AMZN, currently slightly underwater. I don't expect the stock to crash but a...

The problem is there is no call or put with delta 1. Very deep ITM options will have delta close to 1 but have low liquidity, so you have to deal with a wide bid/ask spread. Such options of course cost more than near the money or OTM options, but at least you don't have to deal with margin...

I voted for "hero". Hillary Clinton called the recent release of diplomatic messages, "an attack on America’s foreign policy interests." Well, I'm tired of the way my country's foreign policy interests as seen by our politicians always amount to finding some excuse to wage war on some other...

While it makes sense to ban some of the anti-social actions of HFT like "quote stuffing" I see no reason why day traders have more of an inherent right to make money in the markets than high frequency traders do. Day traders "waging war" on HFT are like blacksmiths whining that the automobile...