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I'm just saying all you did was put on a 4-leg synthetic bull spread with ~ 2:1 reward to risk (fill in the appropriate numbers). It's not "inverted" in any practical sense -- you could have saved half the commission and put on a bull put spread for the same credit or a bull call spread for a...

I'm sorry, I couldn't help myself. What an absurd notion, this revolutionary "inverted credit spread". Your new position is a bull spread that you happened to sell for a credit, but it has the same risk/reward profile as any bull spread (either puts or calls). You basically did this: 1...

I see a few errors. For starters, you claim you booked a credit of $1.56 on the initial position, but in your "what if" scenarios, you then claim: ===== What happens to this positions in 7 days when the options expire? Let’s look at 4 possibilities. 1. TLT price is 115.50 a. The 119 sold call...

Yeah, no.

It's not just the bid. As an example, the ask on the Dec18 SPX 100 call is $1,850.80 (SPX = 2058.69), which implies the call is priced at ~ 95% of intrinsic value. I have no idea if it is actually available for purchase. At some point, the discount has to fade -- I admit I haven't really...

You pointed out a negative expectation on this trade: -$31 I assume some of your spreads show positive expectation when you initiate them. How does this calculation affect your opinion of a trade, if at all? It seems to me that the reward (in this case) is not high enough to justify the risk.

Great response, thank you very much. Outside of the 0:15 expiry difference, is there any other reason that DITM SPX LEAP calls "trade" at a discount to fair value; i.e., the ask can be well lower than the difference between the S&P 500 and the strike of the LEAP. My expectation is that one...

Thanks, good point on margin.

Going purely on the market's perception of your call (delta ~ 0.05), I would suggest that there is roughly a 95% chance it will expire worthless. Your odds weren't so good right before the announcement, either. Current value is maybe $0.10, so there probably isn't much reason to dump it now...

OK, much obliged.

Disregarding why one might want to put on a synthetic long instead of just buying the underlying, does such a position tend to behave like the equivalent long stock over the life of the position? Are there pitfalls to be aware of? Assume this is on an index or some other underlying that pays...

Nice post. Would you say that your profit largely lies in your ability to find spreads that the market has not priced appropriately?

Before you retire from the thread, can you offer any insight into whether or not you are able to trade for profit using your high risk, low reward spread approach? I don't need an audited P/L statement, I just would like for someone who has been doing this for a while in a very focused manner...

OptionsGuru continues to confuse Risk:Reward with expectation. The odds of TSLA hitting his target were something like 1% based on pre-earnings pricing. For the sake of argument, let's say both of you were trading with the same target in mind. Using quoted Risk:Reward values (which I dispute...

You don't seem to have a problem using the price of the ATM strangle to identify the market's expected range of movement over a given time frame. That's a static calculation. You can perform a similar calculation on expectation, regardless of whether or not you think it has value.

OK, your typical BS. Gotcha.

Have you calculated Risk:Reward for your trade? If so, how did you do it? To put it another way, what is the expectation of your trade, say if you could put it on 1,000 times? How would you calculate it? I'm specifically asking you to verbalize the math. I'm not comfortable with criticism...

I figured as much. Thanks for taking the time to check it out, now I don't have to.

Can you elaborate? I'm not interested in playing a bunch of videos. An example would suffice, along with a definition of "inverted credit spread".

I didn't say I endorsed the strategy, but that's what some people do. If you sell additional credit spreads, you just increased your risk. That's not necessarily bad, but it should be acknowledged.