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On ET I read a lot of "The only way to do that is X or the best way to do that is Y." I think the answer is that the best way is what works for you. In a perfect world you'd want to go long further month IV a couple weeks before the EA, ride the IV up and if lucky, catch some directional...

That happens too. Once in awhile you see a run up peak 1-2 days before the EA.

Yes and no. You can tailor the risk graph (bias) to whatever outlook you foresee (hope for). I have no clue how much or in what direction a stock is going to move post EA so I'm looking to set up something that has a balanced and favorable risk graph. With equal numbers of contracts...

And one other thing I forgot to mention ... Another consideration is looking at the IV of the respective months. As you go further out, the IV effect is much less. As a loose rule of thumb, the 3rd month is usually a better indicator of where post EA IV for the 2nd month is going to head...

The only valid part of the above is the RBS performs well if IV increases but not necessarily better than the long put. In terms of a comparison of a long put to a RBS, you can draw no conclusions because it depends on the ratio, the IV and the time remainig. You can set up examples which...

If there's no Chicken Little market like last year, IV ranges will moderate. Oh wait, the sky DID fall in last year. Nebbermind... You can still guesstimate post IV levels but you just have one less data refererence available. You can look at how much IV expands and how much horizontal...

IV still ramps up but based on what happened last year, you can't look at the historical and extrapolate possible EA behavior since normal relationships have been seriously distorted (for example, take a look at the past year for AAPL and GOOG).

There's no general rule because there are so many moving parts (time remaining, IV, skew, ratio, etc.). You have to model/play with both and see what the respective risk graphs look like. Regarding RC's, they tend to be best close to expiration so that the throwaway money is reduced (the...

Would "spin" be defined as... 1) Circular movement around an axis? 2) A short trip? 3) To give a verbal account of? 4) To turn in circles? And what is the definition of "catching turns at the right timing" ? All pertinent information greatly appreciated so that we can hone in on...

Absolutely fascinating! With a stock at 25, what would the premiums be for two ITM puts (short 30 Put buy 29 Put) that can result in a 1:2 backspread that costs zero?

And to add another 2 cents, backspread not very desirable unless done for a credit.

Some corrections: The maximum gain on a put is the strike less the premium received The maximum gain on a 2:1 put backspread is the lower strike less the difference in strikes +/- the premium received/paid OR 2X the lower strike minus the upper strike +/- the premium received/paid...

A single reverse calendar is problematic because you also have to get the direction right otherwise premium capture from IV contraction can be lost by a large move away from strike. To offset this, you can do double reverse calendars and tailor the risk graph to your liking. As mentioned by...

Your assumptions are correct. What you do with them is the tricky part. I don't think that there's an easy cookie cutter answer. What strategy works best depends on a number of variables ... amount of skew, amount of IV inflation, time remaining, as well as your ability to either guess the...

The only thing that I can tell you for sure is that the adjusted contracts are for 5 shares :) But if you take the premium for the adj contract, divide by 5 and subtract it from the strike, it gives you a comparative price as the new standard contracts, give or take a few cents So in your...

I don't know about you but I never post misleading information on ET. Maybe incorrect but not misleading :)

Ugh, what a horrible position! You have a 7 ct credit. On an expiration basis that means you lose money above 7.82 and lose money below 7.68 for a 14 ct profit range which is probably non existent after commissions and exit slippage. Your upside and downside breakevens are 2X the strike...

FWIW, you can achieve a similar risk graph with fewer legs (commission and slippage) by just ratioing next month's strangle to this month's straddle: +2 Oct 95 put -1 Sep 100 put -1 Sep 100 call +2 Oct 105 call These tend to have unbalanced P&L areas. If one was neutral, it...

I doubt that you're going to find much written about it since it's a combination of several strategies. I don't think that you need a tutorial on entry setups and adjustments, etc. You model the position and see what the risk graph looks like. You use option strategies that fit your outlook...

It breaks down into a variety of positions so you can call call it A or you can call it J. It's not how big it is, it's how you use it.