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Bruh. That pic is from ages ago. I've gone from clean-shaven to "OMG, is that Karl Marx?" a number of times in between. These days, it's indexed to /VX as a subtle indication of my vol trading.

Mistake #6: believing some external source rather than your own, tested methodology.

In the case of a crash, you won't be able to roll. The OP's scenario was the Qs crashing 100 points... any ideas about what happens to the delta of that call? Given that the stock is crashing at 100D, that would put him at about a $10k loss. Good luck rolling out from under that. Same deal with...

You 1) assumed that you can predict the market, and 2) you're surprised that you couldn't - which leads to 3) you didn't test your assumptions with paper trading 4) over a time period long enough to convince you that you either have an edge - or 5) don't. If a $5/share loss times however many...

How are covered calls a hedge against a market meltdown, which is what the OP was asking about?

CCs are synthetically the same as short puts - which have higher premiums due to the vol smirk. You're also tying up a lot of buying power with stock, which is completely unnecessary if your thesis on QQQ is correct.

No true degenerate would ever be caught with anything that sane and stable in his port. Take out a loan against your college fund and YOLO every last penny into .01-delta AMC calls!

Low volume/low liquidity underlyings do that; wide spreads that get even wider with vol (read "uncertainty".) That's not an imbalance - just the market, or the market maker, saying "I don't have any idea where this crap is going to go, so you'll have to pay me to make a 2-sided market in it."

For #1, that spread will return max profit at expiration if the price is above 225; the short call's value will be at zero. Never mind that it's generally not a good idea to hold till expiration... For #2, I'm not sure why you'd say that. Spreads are far more efficient than just buying calls...

20 * 100 is 2,000, not 20,000. And the cost of that option is about 3.60, so you'd make about $1640... on a drop of roughly 1/4 of the price of the underlying, or a 100-point down move. Just for comparison, you'd make the same amount on a 10-point down move by buying 3x 370/380 put spreads at...

If two different positions have the same P&L graph, they are equivalent to (synthetics of) each other. So yes, they have "common names"; if you look through the first set of put-call parity formulas I listed, they're all simple positions. E.g. S = C - P || Stock is synthetically identical to a...

Hard call; depends on the marginal utility of your dollars. :) Given the increment in understanding that I gained from it, I'd have to grit my teeth and say "yes". Although I'd probably watch the offers for a few months and see if anything new pops up.

Combos - i.e., stock replacement, which is the primary case described above - are essentially flat the Greeks, so none of the above is needed. Anthony J. Saliba's excellent "Managing Expectations" has a section called "Why Synthetics Matter" which covers a variety of benefits and trade-offs...

Gotta say: I love discovering things like this, because they give me hope for what I can learn in the future. :) From my current perspective, managing such an animal would be damn near impossible (delta, sure - but if I have to manage the other greeks, how the ever-loving hell would I do it...

Thanks! It sounds like you're using synthetics and hedging to continually evolve/improve your position... that's still off in the future for me, but the perspective is really useful. I'm still working hard at grokking the basic strats, trying to develop a solid intuitive feel for how everything...

@guru , I'm curious: how do you construct these positions? Are you starting with, say, a fly (or some other strat) and then adding spreads to modify the greeks or something? I don't think I've ever seen anyone do this kind of thing before.

Looks that way in TradeStation as well.

Ignoring all the option bits, it would be the other way around: since they were 437s called at 445, he would be buying at 445 to sell at 437. I.e., paying $89k and selling at $87.4k, for a loss of $1.6k on shares.

No, you will not have to buy $89K of SPY. Assuming you got in for $11, your max loss at expiration is about ~$12 (that's at 460; since your fly is unbalanced, your max loss on the downside is a buck less than that) - and at 445, you'd be up ~3.10. Yes, your shorts would be ITM - but your longs...

That's... not exactly the aspect I'm talking about. Looking at the book and seeing the skew is something I'm taking for granted here; what I'm - let's call it "envious of" - is the skill and the speed in reacting to it that the pro guys have developed. The 10,000x repetition that @jamesbp is...