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MTE, In reality the put and call with the same strike and same expiration might have different IV (if we use the mid of bid ask to calculate IV). I talked to Scott in TOS regarding the possibility of software error in computing IV, and the answer was no. I sometimes think there might be...

RM, I didn't mean Mark's approach is the only right approach. I think there are many ways of making (or losing) money. I just find Mark's approach better for my trading style. I am trading real money. By extracting useful information from the helpful contributors in this thread, I have...

Tower, Do you imply that covered call might have a return different from naked put because of the vol skew?

Mark, I am so surprised that they don't understand your risk management process. Your logic is so obvious to me, and I thank you for the clarification and confirmation. Let me try to see if I can explain it. As a risk manager, you have three possible choices in managing your existing...

Replace your long call with your short stock by the synthetic put. Since your definition of "reverse collar" changes, you might not get a vertical. If both call and put have the same expiration month, you will get a vertical. Lets forget the terminology as we are only interested in...

piccon, Did you mean a bull 800/810 call spread since it was a debit? Why would you want to open this debit spread if you think rut will consolidate. I was confused with your positions because you sometimes didn't mention whether they were credit or debit spreads? (I thought you...

Thank you all for your contribution to the trade adjustment discussion. I finally understand the logics of both camps. Mark's idea is that the risk tolerance is the same everyday. However for some traders, since they have sufficient profit (paper or booked), they change the daily risk...

piccon, I agree with your outlook. I opened the call spread b/c I found the downside risk is not tolerable ( I have a short of 780 put as part of my diagonal ). To reduce my delta risk, I opened this trade. If the market agrees with our outlook, my hedge actually will add to the profit...

sto 5 x rut jan 800/810 call @0.85. This acts as a hedge against downside.

Spin, The spread and liquidity might be a valid point, but the delta is not. The stock has a higher delta, but the overall portfolio has the same delta as its equivalent vertical.

Mark, You are not the minority. I agree with you in your decision making process. Rally, Consider yourself a new portfolio manager, someone gives you his portfolio, and ask you to manage the portfolio from now on. What do you look at? I will look at the risk, potential return, and...

What do you mean by cheaper, and why will a reverse collar produces a higher return? Can you illustrate it with an example?

Not exactly correct. You won't long the call and short the put at the same strike in a reverse collar, and so it is not a synthetic long position.

Congratulation for your new style. It seems you have a bigger success by changing from FOTM to CTM. Your return is very impressive for the last 2 months. Can you explain why your account went from 52K in May to 28K in Sep? It was close to 50% drawdown. Did you open many wings as you do...

John, RUT is more volatile, and so you get a higher premium.

I agree. I started trading RUT vertical and diagonals since July, and now devote all my buying power in RUT. I don't see any good reason to diversify to other indices. Having one instrument make position management a lot easier.

Mark, I understand your management style. You try to fully utilize your margin. That makes sense to me.

piccon, thanks for the illustration. I now understand your trading style a lot better. Do you reserve some buying power in order to open other wings in the future?

Mark, Thanks for your clarification. Let me see if I understand. If he opened the condor with 7.3 credit, at the time when you posted your message, holding his position (instead of booking his profit) is more daring than opening a Feb 730/720 position. IOW, comparing the two possible...

We haven't addressed the liquidity problem. At the time when we need to adjust, the liquidity might not be there, and slipping cost might be high for a particular strategy. I don't know which is better. Perhaps they are equivalent. Normally stocks are more liquid than options. I wonder if...