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Hmm, I think I understand what you're saying but do you not think that the risk based haircut in your example might encourage someone with less appreciation for the risks to increase the size of that new further OTM spread? As the haircut changes with movement in the underlying, if it moved to a...

Just so there's no confusion (my fault): The original "Coulda, Woulda Shoulda" PDF download is still available and FREE from the site. This is worth reading whilst you wait for the new book if you haven't read it before. The new book "Option Trading: The Hidden Reality" is available in two...

As you say, a lot of info gets buried on this thread. If folks are interested I believe he has a PDF only version of the new book (no printing though grrr...) for $22.95 which is worth it IMO. He certainly is interesting and has some hilarious anecdotes from when he was a floor trader. I'm...

Good job. I can't wait to see your overall PnL at the end of the month. It looks like you've had a great month. Too many positions for me to keep track of! MoMoney.

Thanks for the explanation Phil, Have to give credit to GATrader for pointing this out back in October on this thread: http://www.elitetrader.com/vb/showthread.php?s=&postid=862201#post862201 ...though, you didn't seem as convinced at the time! Perhaps the explanation was not as...

Seriously, take the weekend off :)

LMAO :D You got some big ones.

Why a poor play? Which other strike would you have chosen in hindsight? MoMoney.

I think this topic has a lot of interest....just wait and see :) Anyway, you can always get this thread moved over by the admins to the journals section at a later date if you decide to keep it up. Congratulations again on success thus far. What tools do you utilize for earnings...

Nice going IV_Trader. This would make a good journal topic. Any chances you'll start one over there? MoMoney.

Skanan, This is a strategy employed by some folks for enhancing portfolio returns etc. so it might be considered if you are already long stock. Long stock as we know has unlimited risk (down to zero anyway) so it is not limited risk in that sense. Breaking it down we have: Long stock...

Sheesh, I really have to learn to stop jumping all over other people's journals lol. I'm no expert as you know, but in response to your question...hmmm...how do I put it, I wasn't suggesting legging into each wing/vertical "individually" as movement permitted/dictated, though you could do...

Phil, I think one way to think about it, or at least the way I think about it is that the intention is to leg in to/convert to the limited risk fly for less than fair value or "build expectancy" etc. This is achieved by assuming some risk for a period of time and earning theta both on the...

Thanks. So you're not really betting on mean reversion as such, but rather implied over statistical differentials. Presumably, Bloomberg allows for searching/filtering on open interest, liquidity parameters too or do you check that out after? Being a bit of a leech here, so last question...

Excellent! A journal for morons like me to follow. Your vanilla plays got kind of buried in your replication journal and were omitted from blotter so this is great stuff. Don't want to pre-empt your ongoing commentary but a few quick questions: 1) How far out are we talking to get the...

Ctrl-Z = undo in my crazy world. I'm not here.

Yes, one has to take a view on how much time value is "too small" and run the numbers. [B] I think that's right. MoMoney.

If stock ownership was the objective, one could go into the open market and buy the stock - that would not be a good enough reason to sacrifice the time premium, execution costs aside. MoMoney.

Doh! :eek: I think you need to think about that one lol.

Not an expert by any stretch of the imagination but... Assuming you are referring to American style options, essentially the answer is yes. However, dividend issues aside, in practice, you are not likely to be assigned on a short call more than 2 weeks out from expiration as the option is...