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When you have good timing and selection, it works. When you don't, you get burned.

What does mismatched deltas mean?

When IV is high, you overpay on the long side and get overpaid on the short side (and vice versa when IV is low). The time premium expansion is greater for the nearer money leg than for the outer leg so there is an advantage to buying spreads in a low IV environment tho not as large as you'd...

Closing quotes are useless for these calculations.

If your broker has to fight on your behalf, you're getting screwed by the firm... or at least they're trying to screw you. :) For the guy who does a coupla contracts a month, overpaying doesn't add up to a lot - even if paying 5 to 25 times more per trade. But if you trade some volume, deep...

If options are priced fairly, there's no difference in the P&L of equivalent spreads. To see this, graph a position where you you buy the bull spread and buy the equivalent bear spread. The result will be a horizontal line near zero (any small distance away from zero will be from associated...

Yeh but he wouldn't have lost money on the calls :D :eek: :D

EBAY Apr '08 ~ $33 Dec '08 ~ $12 down $21 in 7 months. Dya think the premium you brought in for writing monthly CC's is going make up for that? At $12 with the same implied volatility, an ATM call might bring in 20-30 cts of time premium. Annualization numbers will be similar but...

Let's ignore the fact that premium decay is non linear (more premium per day closer to expiration) so you don't get to annualize by dividing 21. You sold an ITM call. Therefore your potential profit is $ 0.76 not $1.01 and your annualized return using your slightly exxagerative method is...

Any chance you could provide an example of this, eg. with real quotes?

Implied volatility increases before earnings and drops afterwards.

JJacks, Following up on the above, you have to have a firm idea of what you are going to do before the post EA opening and/or a really good analysis set up because you have to process and execute quickly since price can be a moving target in a fast market. You don't get to work the order in...

And once again another troll takes it up the Zarkon BTW, I stared at the OP's heat map for 2 minutes without blinking and I saw Walt Disney's profile !!! :)

It's even less than that: http://www.interactivebrokers.com/en/p.php?f=commission (click on the Options tab at the site)

The OP is off on another wild goose chase, looking for a broker who discounts a spread transaction. Another broker charges 75 cts per contract with no ticket fee. So 20 contracts (10 to close, 10 to open) would be 15 bucks, So even with his spread discount, he's still overpaying. Kinda...

Ummm, d'ya think that might have something to do with what the put was bought for? @ v @ (eye roll)

With naked staddles, even if you get volatility right, price can still get you. Yes, best left to experienced traders.

No problem in a perfect world. You pick the strategy and the stock cooperates. But what if it doesn't? Suppose after buying the stock on day 2 at 351, it drops quickly, say to 345 (don't assume that you can transact at any given price since markets can be fast). Now you have a 6 pt equity...

The two days I will remember forever were the crash of '87 (ouch) and learning my lessons and being short LEH going into its demise on 9/15/08. '08 was a traders wet dream :)