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I am a net seller of premium, but the main part of my portfolio is a type of trades that relate to my handle (but I cannot share them in a public forum)! If you do not sell premium, I recommend you look into it. If I were a net buyer of premium I would never risk more than 2% of my portfolio...

On which underlyings have you done it?

Buffet does not talk about the real secrets on how to make it big in the stock market. He talks about one tiny piece of his machine, and leave the most important thing out. The 2 most important secrets he leaves out are....(I am waiting to read what others know before considering spilling the...

You need to understand various other concepts such as delta. Delta is the dollar change in the price of the option for each dollar change in the underlying. In the case of a put, delta is negative. In absolute value delta is between 1 and 0. If you want to have a movement of say .80 for each...

the market will fluctuate

Thanks for the suggestion. Also you mentioned some items in your first post. Do you have any experience with trading premium in relation to the discussion in this thread?

Sorry I miswrote. It should minimize the area. I think this issue is uselfy mainly for mathematical analysis, but since you seem to want a clarification, I hope this will help. In the plot you posted, there is a red and a blue curve. Now suppose one draws three vertical lines at three...

The economic problems are not due to lack of money. It is a problem of confidence and business conditions. Recession is a good thing in the essence that it cleans bad things to allow for a new business cycle to emerge. Reducing interest rates wiould not solve the problem, it just creates...

Thanks for your concerns. What makes you think that I am not over trading? Do you trade? If yes on what basis do you define little or too much trading. Do not take it the "wrong way"... I just wanted to know how you determine too little and too much trading. But my guess is that you are an...

dd4nyc, Here is the follow up. I thought to think in terms of premium rather than strikes. Define S as the difference between K-X and the premium C. S+C=K-X, which means that S=K-X-C. This quantity is called S because it is can be thought of as a form of slack. When S=0, this...

For the example you posted, you get it by a look of the eye. It is a general result in a field known in a discipline known as equilibrium analysis. The minimization of that area is equivalent to intersecting the two curves. I am going to suggest plotting another curve. It is coming in a...

1) I have not looked at it. I know it maximizes the sum of the areas under the curves plotted by the other poster. It may do what you have in mind, but I cannot tell if yes or not. Could you check it? 2) I do not trade CCs/NPs (I know NP is "equivalent" to CC). 3) I did not understand what you...

Where do you get $300 and $500 margin?

Fine. I am assuming that you are aware that the probability (based on deltas) that your short strike would be visited is 20% (not 10%). This means that you should expect that your short strike be touched 1 out 5 times. I would also add that I would play this as follows: 1. If things go as...

You have a good intuition, and that is what's most important. It is probable that I have more math tools than you, but human intelligence is greater than all tools. By the way the golden number does not appear in the solution formula, it appears somewhere else. That somewhere else is the...

Tell me what happened to your first idea and related question: the probability of re-rolling?

May be you can help me answer a question that has been in my mind. I once placed an order with IB on a low priced option. Market was 0.04 by 0.07. I placed an order to become the best national bid. It was 0.05. The order was routed to BOX. After the order was placed, the market bid reflected it...

Thanks for the response. Could you please explain the charts you included? My guess is that you were trying to find K* for a given stock and associated option parameters. Please provide the parameters and/or explain your chart and points if you can. In the course of analyzing some strategies...

Really? If my memory does not fail me, in another thread, this ET member repeately charged other ET members who were trying to share opinions with strongly worded accusations. Thread is here: http://www.elitetrader.com/vb/showthread.php?s=&threadid=118256&perpage=6&pagenumber=10 I hope...

I noted the opposite. Equity going up, but eur/jpy not going up. This is may be a sign that the equity up move is suspecious, as it is going up without yen shorting. It may also mean that people are buying with cash, and not borrowing to play equities. In either case it means less money is...