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Buying the short call is most likely a good idea if it has a fair amount of time remaining. That will leave you with a long call at a lower strike which won't be encumbered by the drag of the short call should your position start to recover. Assuming that your outlook for the underlying...

Andy, Regarding adjustments, see my reply to you on the other topic that you started: http://www.elitetrader.com/vb/showthread.php?s=&threadid=107583&perpage=6&pagenumber=6 I've done some delta neutral trading in the past, pretty much trading by the seat of my pants Small size, decent...

Knowing what's best to do is based on knowing what the future will be. Since you can't know that, you have to decide based on the current numbers in front of you. If you have a profit and you want to book some of it, knowing that in return, you are giving up some delta, then roll the put...

Gravestone, Good, well thought out post providing the pros and cons of buying high and low priced options, It would seem to me that the long option player should be buying options at any IV in an increasing IV environment such as the days and weeks before earnings announcements and closing...

Andy, Just a follow up to the question that we both asked previously. For long straddles (which I'm dabbling with and adjusting with stock), in terms of delta, from everything that I've looked at, it's not at how much delta you adjust but when you adjust. There's no magic delta number...

It's a proposed merger of equals between GSF and RIG. If approved, RIG shareholders will receive A) 69 shares of "New" Transocean Inc. ("RIG") common (B) $3,303.00 cash (C) cash in lieu of 0.96 fractional share of "New" RIG common The contracts will be adjusted. For details go to...

"We passed zen." we? WE? I think not! I'm zenophobic!

Or maybe you could just let the market do all the heavy lifting and just trade on the news?

Is this a zen moment?

Margin requirement is set forth under Reg T by the FRB. For naked options, it's purpose is to require more margin as a position gets closer to the money. The nearer an OTM option gets to the strike, the greater the risk of loss. A margin requirement protects you and the broker by limiting the...

Is car insurance really worth it? Is health insurance really worth it? How about life insurance? It all depends on what your needs are. As for a more specific answer, you utilize the strategies that fit your risk/reward profile and accomplish your goals.

[StockA price: $42 Nov 50 Call: $0.30 1) Margin requirement is $450 per call (option premium can be applied to the initial margin requirement so margin call is $420) 2) If underlying goes from $42 to $49, your margin requirement increases to $910 ($880) 3) If you dont have the required...

Actually, you made a very specific statement. Why not back your statement up with something more specific rather than starting a pissing contest? Although commie_bat's stock split example was a bit cryptic, with an understanding of option pricing, it would be clear what he was suggesting...

Unless you one of the few with special talent, buying cheap OTM options is a losing game. Newbies are attracted to it because of the potential for a quick hit. Unfortunately, that hit is usually on them. They're more suited as throwaway money when hedging something that has the potential to...

LOLOL. Yes, the internet is a wonderful place

It's a trade off whose results depend on the size of the move. If you compare a samme dollar investment, the ITM has a better chance of making money due to higher delta. If the underlying goes nowhere or drops a bit, there may be some salvage value. The OTM is more likely to lose more $$...

Didn't the author present some sort of case for diagonalizing the position? The only advantage that I can think of is that if the underlying stays within the long strike range, you end up owning the strangle at a lower cost. If the underlying moves outside the long strikes before near...

iloveoptions, I think that I just have to keep at it, trading small and increasing my feel for what I'm doing. For the most part, I'm trading by the seat of my pants based more on theory and less on experience. Again, thanks for the explanation.

Comparing a 170/175 bull spread with a long 175 call is apples and oranges. Different long strikes introduces another variable, namely amount ITM. Be that as it may, your profit guesstimate is way too high. With a delta of less than 10, on a 12 pt move, the spread makes approx $1.20 and the...

I'm not going to touch this one until you get your numbers right. The put is ITM. There is no out of the money amount. FWIW, the margin req. is $1,245 Your SMA debit is $760 You cannot apply the $485 to your margin requirement AND spend it elsewhere