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So I don't use stops and I think the math supports this.
Ah read that wrong. ok so p/l will be between $65.98 --> $68 Margin requirements should be the cost of the trade or whatever it is for basic debit spreads as essentially this is 2 debit spreads. Actually isn't it basically a reverse iron condor? -
W
So I don't use stops and I think the math supports this.
Yes Sep 2024. Ok so the P/L is showing as -$65.98 until expiration where it becomes +68 but the cost was $32? Also it is showing P/L not proceeds so I profit $68 over the year? https://optioncreator.com/stwcjtb -
W
So I don't use stops and I think the math supports this.
https://optioncreator.com/stwcjtb buy 1 spx 20-Sep-2024 $45 call $40.10 sell 1 spx 20-Sep-2024 $46 call $40.06 buy 1 spx 20-Sep-2024 $46 put $21.31 sell 1 spx 20-Sep-2024 $45 put $21.03 Total cost: $32 Proceeds at expiry (1 year): $68 So at the end of the year I am making 68-32=$36??? What am... -
W
So I don't use stops and I think the math supports this.
I would suggest that options are less capital efficient the farther out you go. -
W
So I don't use stops and I think the math supports this.
Over the long run, the math would suggest they are about even for profits once you factor in the risk reward I assume. I'm talking about cash settled options, no risk of assignment. -
W
So I don't use stops and I think the math supports this.
I'll look into it. I don't think my broker allows boxing options strategies if thats the same. The profit earned is really very low and minimal. The strategy is only helpful for experienced investors and not retail investors, where a lot of knowledge is required to take such a call. The margin... -
W
So I don't use stops and I think the math supports this.
T Technically I am back-testing because I have sized way down. Currently after some mis-management I am down 640 USD last week. Had I exited during the volatility spike, I would have been up 250 USD. Had I not tinkered with it by adding a credit spread in the other direction then I would only... -
W
So I don't use stops and I think the math supports this.
You just gave an example of how stops are useless. They won't protect you while the market is closed and that's when the big moves happen. Do you not understand defined risk? There are way more effective ways to protect your position than stops. Have you guys been drinking the smb capital... -
W
So I don't use stops and I think the math supports this.
I don't know...I would be just as wary from hearing something Will happen. Based on what I can figure it should work out that I make the same money doing nothing as I would micro managing the trade. I really don't have the patience to actually test it before implementing it. I just test real... -
W
So I don't use stops and I think the math supports this.
Ha we were posting the same idea at the same time. -
W
So I don't use stops and I think the math supports this.
Good point....but one would have to assume that tinkering would solve the problem, and I know from experience that my tinkering does not. :) One caveat to my system is if the stock moves substantially early, then I will take profits to take advantage of the volatility spike. I would have to... -
W
So I don't use stops and I think the math supports this.
This is on a defined risk spread. I find my profit target and let the trade just run out. My reasoning is if my profit target is hit then I make maximum profits. If it isn't then I let the option expire worthless. Over time this should average out to being the same as if I took early profits... -
W
Do we need a new greek?
Having no direction is a direction! 12 delta calls and puts are routinely touched so you will be ITM and at risk of assignment. How do you manage this risk? -
W
Do we need a new greek?
No problem. I will find a measure that works for my circumstances. I only trade one stock at a time. I ignore all the noise since using EW theory...typically you can predict what the earnings will be because it has to fulfill its wave requirement. I will be modelling 1-3 dte probably...just need... -
W
Do we need a new greek?
Sure I do. I can calculate the standard deviation by using the avg price movement of a stock in the last x days using crude math. This is the typical way to calculate SD which imo is flawed. SD=SQRT(DTE/252)*(IV*Price) Why? Because you are using the sqrt of 252 when all that really matters is... -
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Do we need a new greek?
So is that basically the same thing I just described only more technical? When I first got into stocks I didn't even realize they had indicators so I tracked a bunch of prices on a spread sheet and started averaging them out. Yes I had spent time creating some crude form of a moving average lol... -
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Do we need a new greek?
They are imo! The premium is almost always insurmountable. This is why people prefer 0-3 DTE's because you level the playing field when it comes to directional trading...if you are right you make $...with longer DTE you can be directionally right all the time and still lose $ because it didn't... -
W
Do we need a new greek?
Yes I was following up about how it is still a derivative of vega (visa versa) so it will not work. I was reading about sticky strikes but they are strikes that do not change when volatility does. I will continue reading. Can you elaborate on My workaround right now is finding the avg... -
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Do we need a new greek?
Ultima! https://corporatefinanceinstitute.com/resources/capital-markets/vomma/ Can't we math this to find for IV instead of Vega? https://www.iotafinance.com/en/Formula-Vega-of-an-option.html -
W
Do we need a new greek?
Anybody have or know of a way to calculate the future volatility of an option after a change in stock price? Vega measures the amount price will change with a 1% move of IV. Delta measures the amount price will change based on a $1 move of the stock price. Gamma measures the amount delta will...