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Please post an example of your strategy (include month and strike). I can't visualize how the backspreads don't drag the butterfly down. One drawback is that with 7 legs, you're going to have a lot of B/A slippage.

One tip for executing double RC's if you go that route... Set up combo orders as: 1) the two spreads, as well as 2) the two straddles (or strangles). Sometimes you can get a better fill going in/out one way over the other. For EA's/news, because the pre news demand is generally...

That's a good suggestion for the flip side of RC's. And if you're 2-3 weeks away from expiration, under the right circumstances (good front month skew, not a lot of 2nd month IV expansion and an expectation of price movement), there are also some interesting possibilities with diagonalizing and...

Try reading an entire paragraph out loud on only one breath :)

There's no doubt about that. Unfortunately, many people take larger option positions and then show up on option BB's asking what went wrong or what they should do to fix it :0 I was interested in delta neutral scalping against long straddles for a long time. I read about it and asked many...

FWIW, long options have no loan value and must be bot for cash.

The owner of a long option has the right to exercise and buy or sell the stock. So you will never have to be involved with the stock if you choose not to. It's the seller of the option who has to buy (or sell) the stock if assigned.

Near expiration, I find reverse calendars interesting if the 2nd month is inflated and the near month can be had for peanuts, despite the skew. Look for posts by IV_Trader on this topic. He's the RC man! (g)

I agree but I think that one should understand the ins and outs of the strategy before paying that tuition. The classic text book answer to why use a double calendar would be that you expect the underlying to range trade until near term expiration and then upon expiration, you own a next...

If the underlying moves away from the strike, it drives the options toward parity. Since the far month cost more, it can potentially lose more. In such simple terms, I would say no. As the underlying moves toward either strike, a loss will be incurred unless time has passed and you are near...

AFAIK, this is all Monday morning quarterbacking, aka hindsight. You buy long puts because you think the underlying is heading down. If right, you profit. If not, you don't. You convert your long puts to a diagonal or a calendar because your outlook becomes less directional and you...

They're pricing in the 31 ct dividend for 1/31 If you check the "Include Dividends" box at OX, the IV of the calls will be in line with that of the puts. You might want to indicate how you are determining theoretical value as well as why you think that the options are below it. There are a...

Buy sheep Sell deer

They're pricing in the 31 ct dividend for 1/31 If you check the "Include Dividends" box at OX, the IV of the calls will be in line with that of the puts.

Hey, did anyone notice that QCOM was pinned exactly at the 38.35 strike price ? :confused: :D

Calls have positive deltas and their price and delta increase as the underlying rises. Why the underlying rises is irrelvant. IOW, if SDS rises because the market dropped, it doesn't change the basic definitions and characteristics of the options.

Today I'm going to try a shorter answer w/o the brain fart :) If Bennie cuts and the market likes his act, IV is likely to contract. That will hurt your long puts. That's not likely to help a backspread and the BS will then help only if there's a large enough up move that puts the long...

FWIW, the time premium for an ATM option is roughly related to the square root of the time premium. Assuming no change in variables other than the passage of time, a 9 month option worth 3 will decay 1 pt to 2 in 5 months. The next point of time decay will take 3 months and the last pt will...

If the options are priced fairly, the only reason to do one synthetic over the other is avoidance of add'l commissions (to close) should the underlying cooperate.

Oops, thanks for catching that. Was rushing to finish reply B4 market opened and brain farted :)