Search results

I think that your going to have problems with this DD. There wasn't enough skew b/t Nov and Dec to make this attractive. Add slippage to that and you have small potential gain b/t short strikes. To each side of them (outside), it gets worse and then there's where IV settles as well as...

I'd like to revisit this question since I too am interested in this strategy. I understand the concept of gamma scalping and I think, its advantages and disadvantages. I'd be interested in hearing about its practical application rather than the theory. For example, with a good move in the...

I agree with everything that guys said, particularly the statement that "This isn't going to hurt at all" :>) Now this is stretching the OP's post a bit but hey, it's my nickel! If one is a stock buyer via selling puts, prices have dropped and one is willing to own the stock at strike less...

The short answer is that you are placing a trade that has a high probability of providing a low reward (37 or 47 cents, depending on which typo you go with). But once in a blue moon you're going to have an adverse move and could lose up to $4.53 per contract. Things usually work... until...

Poster's numbers are fishy. A $4.50 stk with approx 3 weeks until expiration and the $5 call goes for 75 cts? Now some amount of time passes and with the stock over $6 the Oct 5 put is 45 cts? That's some pretty hefy implied volatility! But in the event that the IV was actually that high...

From a cost standpoint, IB is even cheaper because assignment and exercise are free and there's no ticket charge either. So you can trade big or small, scaling in and out. I don't use TOS but I don't know how execution could be faster than at IB. You hit the price, you're done. When I...

Here's my two cents, in a simplified answer... Put the bulk of the money in A rated preferred stocks (S&P and Moody's) which yield approximately 6.50% presently. You can trade them and easily bump the yield up another 6.50% (when one is up, sell it and buy something that is down, thereby...

I don't think that current month expiration has much if any of an effect on next month's series. IMO, daily price movement and IV changes will far outweigh any expiration effect, if any.

With these high IV situations, sometimes butterflies can be had for peanuts (I did not check LDK quotes) - almost no risk. IV contraction can put you in the black quickly. And obviously, if the IV is up there, look for the reason and see if there's any date attached to the pending event...

You can't buy diagonal spreads on margin. Long options have no loan value so you cannot borrow against them. They must be paid for in full. Therefore at best, the long leg is reduced by the premium taken in from the short leg. This assumes that the long leg has the same strike or is ITM. If...

Vertical spread is equivalent to a collar. Calls are more expensive than puts due to carry cost. Fine if stock moves up. Not fine if down. Synthetic stock is long call and short put. Adding the long put makes it the equivalent of put protected stock. Avoid the extra commissions and slippage...

StockHustler, The best time to buy options is when they're cheap or when they're more expensive after you buy them. Options are derivatives. For the most part, if you can figure out what the stock is going to do, the options will follow. And as another poster replied, take some...

CHA is a volatile stock and its options move around accordingly. Yes, the Oct 85 call was a big winner today but not to the extent that you think. The last trade was at 10 cts, probably on Weds when CHA was in the upper 70's. Yesterday it closed at $0.55-1.00. That means that at the close...

AMEN!

The blue line is the HV. Look at the brown line which is the IV Index Mean. Note the big drop in IV every 3 months (and the 4-6 week rise before that). What do publicly traded companies do every 3 months, assuming that they're not soon to be wallpaper? Buying calls is a directional play. You...

Karnak says: Relative price of AAPL options will decline on 10/23 Karnak says: Click on the link in my last reply to see why

BTW, to see the effect of price on ROI, try a simple comparison of two options at expiration. AAPL closed at $166.80 yesterday. Compare investing (?) $500 in one Oct 165c or 3 Oct 175c's. Then run an expiration return form 165 to 185. In terms of ROI, below 180 the 165c does better. Above...

That's not necessarily true. ITM with higher delta has a better chance of making a profit but OTM gives you leverage and with a good up move, OTM provides a greater ROI. But w/o that move, OTM is more likely to be a larger loss in terms of ROI.

IV rose while price dropped. For ITM calls, the loss of intrinsic overwhelmed the increase in premium due to IV expansion so the option's price dropped. For OTM calls, there's no intrinsic loss and the premium increase due to IV increase more than offset the premium lost due to AAPL...

I've never had enough faith to let them auto exercise anything that I was long that was ITM at expiration. I can just imagine that conversation with the broker the Monday post expiration (shudder)