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iloveoptions, Thanks for the detailed reply. I appreciate the rocket science of what you do and I could not begin to comprehend it at my level of understanding. I'm not asking you explain the components of your trading system or about all of the other things that I need to work on. I posed...

LOL. That's what some of us call monkey math (g) I'm not sure what that means. A $50 strike or $5,000 in premium received? Either way, if you only have $1,000 in cash in your account, no broker is going to let you short $5,000 worth of anything. So let's assume your account contains...

Huh? Assuming OTM puts, if the margin requirement is 20% of the strike, do you really think that the premium received is going to exceed the margin requirement and increase your cash availability? Your cash is going to be tied up supporting your short put positions. With all due respect, you...

iloveoptions, Let's suppose I'm long straddles and I'm gamma scalping against it. If IV increased, would you ever sell an OTM option against the position (making sure not to lock in a loss) in order to take advantage of the higher IV? Or do you avoid "neutering" the position regardless...

I don't think that's a good example because you're using different strikes for the long call. It would be more appropriate if both positions were long the same strike. In terms of the OP's question about money management prior to expiration if the stock drops, FWIW, I think that the spread...

You are mixing and matching two concepts and that's very confuzzling. They need to be looked at separately. Why would someone naked short put instead of buying a call? Because the two strategies have very different risk/reward characteristics. Theoretically, the debit call has a limited...

As mentioned, some brokers allow contingency orders on options. But that's no guarantee that you get a fill at that price. each strategy has its advantages and disadvantages. Options are about tradeoffs. My two cents is that calls with stops versus spreads isn't the key to success...

The idea is to see everything that you need to see on one page. Enter the prices and deltas and get back the net delta (including stk buys and sells), realized and unrealized P&L of the option stk and option positions, etc. Any option is susceptible to IV change. . At my level, I'd say that...

I have a direct line to Miss Cleo's jail cell. She predicts the future :) Seriously, I input the variables into an analyzer calculator/program and then vary the legs until I get an acceptable balance of risk and reward. If that doesn't happen, it's off to the next stock and its quotes...

I have limited experience with delta neutral trading (long straddles as well as ratioed calls against stock). I've worked a few positions and the results have been OK. The biggest problem that I've had is keeping track of all of the details (what you describe as organizing all the...

AZD, It's a simple short term volatility play. No more, no less. If something causes IV to inflate, you get hammered and just have to take the loss. I think the odds of that are small but like everything, it's a bet. Initially, it's a bit tough too get your arms around the nakedness...

The closing price is the last trade which could have occurred at any time - near the close, this morning, yesterday. It's not reflective of actual prices. For example, with POT closing at 114.98, the November 80 closed at $24.90 which is what leads you to think that they have negative time...

Pizza boy! I must going senile. Coulda sworn I posted this earlier but maybe I just Previewed it (sheepish grin). Here's my double ratioed calendar strangle (for lack of a better name) trade for OSTK earnings last week (10/18) at $29.10 Basic unit was: +6 Oct 25p @ .30 -7 Nov 25p @...

And sometimes, not waiting is worse. You watch the price and when it's acceptable, you take it. Skip the 20/20 hindisght. Sometimes, EA plays offer better prices a day or two earlier. Sometimes, it's near the close. You never know. And once in a looong while, late day IV change makes it...

Hey Pizza Boy! (g). Since we picked up the idea from Born29 on Yahoo (IV Trader here), I have become a big fan of ratioed double reverse calendars 1-2 weeks before expiration (sounds like a bad Olympic dive with 7.2 difficulty). Sometimes I add a next strike OTM kicker to soften the effect of...

I have a similar question. Assume no change in IV. If I expect an "X" pt move, I can calculate what the options will be worth "Y" days from now. Based on an equi-dollar investment (spec ?), I can then determine which strike will give me more bang for the buck. I could also look at an...

Think twice about going out an extra month on the longs. If there's a similar amount of IV contraction on the 2nd and 3rd month out, you'll risk more premium loss. If you're doing OTM double calendars. model the possibilities of slightly under and over writing. I say both because there are...

Regardless of the move, near month IV is going to contract. A stock drop isn't going to hold the IV up at the pre EA level. Either way, one should have an idea of where the approximate break even points are and be prepared to support the position in the after market should it move to the...

Assuming that there's no mispricing, they are equal on a 1:1 basis since all components are priced in. The margin requirements are different. If you go there, you're no longer on a 1:1 basis.

Phil, Thanks for the detailed reply and including a real world example. Everything you wrote made sense. LOL... meaning, I understood it! These things make sense on paper but it takes awhile to get a feel for them. I've done a few gamma scalp positions and all worked out modestly. But...