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[When dealing with naked strangles, there is no such thing as break even is the worst case scenario. I hate to parse words but mitigate and risk free mean two different things. If you start with a short strangle (- P - C) and the underlying drops and you add "long the asset & long protective...

When dealing with naked strangles, there is no such thing as break even is the worst case scenario.

Ya know, most people at the institution insist that they may be crazy but they're not stupid! :)

I agree with MTE in that there's no particular beauty in trading Leaps. They just give you more time. Sep options are more than enough. If your stock doubles by July, either call will provide a similar gain. My 2 cents would be that the LEAP is riskier to the downside since it has more to...

Sound investing/speculating doesn't have much of a chance of succeeding by wagering your money based on the guessing of the best "vehicle" by anonymous internet characters like me. But if that's your modus operandi, the most bang for the buck will come from the call with the closest...

As far as a short put goes, I'm not sure that we're on the same page here. The CCS consists of a covered call and a bullish call spread. The breakeven point is generally somewhere b/t the two strikes. If the stock is below the short strike but above the BE point, the position just doesn't...

You can get implied volatility on a stock by stock basis at: http://www.optionsxpress.com/OXNetTools/Chains/index.aspx?SessionID=&Symbol=QQQQ&Range=4&lstMarket=0&ChainType=&AdjNonStdOptions=OFF&lstMonths=&FromVB6=True Note that they average the B/A when determining IV

Buying more stock at a lower price is averaging down, not repairing. If there's no good reason to hold the stock now, sell it and buy it back (or another stock) when there is a good reason. If you're neutral on the stock, sell covered calls. Don't do the Covered Call Spread (the 1x2 bull...

Buying a $10 call for 91,50 on a $100 stock makes no sense because you're not reducing your risk. You make (or lose) $1 for each $ the stock rises (or falls) and you have purchased something with a much larger spread. Consider something much less ITM. If the underlying drops, you will lose the...

To determine the most bang for the buck, calculate what each option will be worth on the day and price your expect it to hit $128. Take that value and then calculate the pct move for each option. The one with the highest pct gain is the one. FWIW, IMHO, a much better use of that $500 that...

1) What commmie_bat said 2) Two weeks before expiration, the delta of the 2nd month will be higher than the near month so it will gain more. The delta of the front month will get higher than the 2nd month when the underlying goes ITM and then it will gain more.

XTO had a 5:4 split and the number of shares per adjusted contract was increased to 125. Standard 100 share contracts have a root symbol of XTO Adjusted XTO contracts have a root symbol of XTJ From your Yahoo link, XTO closed at $51.27 and an adj. Feb 45 call goes for $19.40 That...

When you have an option that is a full strike OTM with less than two weeks until expiration, the post earnings announcement IV contraction crushes it if the underlying doesn't move significantlly (several dollars). And given that the Feb 20p was trading for around 15 cents, it's not hard for...

That's called a guts strangle. It's risk/reward is equivalent to selling the same strike OTM strangle. However, it has several disadvantages. ITM options tend to have wider spreads and don't trade far from parityand are therefore more likely to be exercised early. Also, the margin is...

Why do I get the feeling that smoke is being blown up my .... ? :)

The amount of the move determines which strike makes the most, percentagewise. On an equal dollar purchase, small moves favor ITM. Large moves favor OTM due to their leverage. And in both cases, the amount of the move must be enough to overcome IV contraction.

2) Since it's an earnings play, you're going to pay up for the options because the implied volatility is going to be inflated and after the EA, it's going to contract. Because of this, you're going to need a fair amount of movement just to break even...

You can achieve the same result by just buying the 32.5 straddle and you'll save 5 B/A spreads and commissions. On an expiration basis, IV will not be a consideration. For a one day earnings play, it will. You will not have 12 hours of non contraction enabling a possible mve. If IV...

RFT, Thanks for the kind words but I'm no expert at anything... unless you count the number of strategies that I've tried :)

This is one of those beautiful hindsight trades where we're all counting the money on the way to the bank from the trade we should have placed. In reality, buying straddles and strangles results in some occasional beauties like this and a whole lot of partial to 100% loss of the premium paid...