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AMZN has 3-4 point swings intraday. If I was that buy and holder holding some shares who's not that concerned with daily fluctuations (paper losses), I'd sell the calls on rallies and sell the puts on pullbacks. If it trades in a horizontal range, possibly cover the calls when you sell the puts...

You can have debit spreads where the short leg is considered uncovered and hence there *is* a margin requirement.

If people want to get out (sell) of their position, that creates supply. If people want to take positions, that creates demand (buying). But don't assume that demand for calls means up. It's like the open interest argument. Lots of calls were bought. Was that person bullish or were they...

How would an estimate of the future determine what is the fair price today?

Hi Mark, Is there any merit to balancing and iron condor's strikes based on having a similar delta for each vertical component? While this may result in an modestly unbalanced IC based on strikes, would the P&L be more equally balanced for equal moves up or down?

Option price is the equilibrium b/t supply and demand. If the ask is $2 and buyers come in, it rises (and vice versa for sellers). If you iterate the option pricing components (other than vol) into a model, the result will be the implied volatility. People try to estimate future...

It depends on the nature of one's trading. I pair trade and tend to rack up larger losses than gains per 100 shares - oddly, in both the down swing of '08 and the up swing of '09. Yet both were really good years because my win rate was 70+ pct... I made it up on volume :)

If you're making money on your shorting, why would give it up? Apart from that, to some extent, one side hedges the other (think 9/11 market action) I pair trade and I shift my bias intraday (close to flat overnight). While it's somewhat of an arbitrary indicator, when my longs are...

This is one of those "Everyone has an opinion" topics - often different. IMO, IV matters if you're trading volatility, eg. forward and reverse calendars, calendar straddles and strangles, gamma scalping, etc. IV matters if it's going to change while you're long or short the option .... ya...

Lose more money than the cost of your calendar? Ahem :eek: *mumble, mumble... That's nonsense!) The market maker will be there to buy your long option to close. You could always exercise your long to cover your assigned short but no one would do that unless it was trading below parity...

I don't think basic calendars are a good way to attempt to generate income. In order to get anywhere with them you have to have them finish reasonably close to the strike at near term expiration and predicting that is as hard as predicting whether a stock will go up or down. And the...

Could you provide an example of how you determine that the IV is accurate? Pick the options of any stock. I'll try to follow along :) Also, apart from a pending news event, how do you determine if the IV is cheap or expensive. And please, something deeper than current IV is higher (or...

HV provides no edge. It's a reference but it's from the past and more often than not has little relevance to today.

Citing a chain that you started on the ECONOMICS bb here stating that interest rates going higher is nonsense aboslutely proves the point. Silly me. Good luck with your corporate bonds.

This is good advice for anyone who hopes to succeed at trading. AFAIK, risk management is the most important thing to learn and follow without fail.

FWIW, it's a lot easier to evaluate and compare strategies by looking at only one of them. Calculating 40 spreads just makes a bit more work. As MTE suggested, you can also buy the 4 call and sell the 5 call and have the exact same profile (the benefit is that the calls are OTM and they are...

Did you look at Jan '10 quotes instead of Jan '11 ??

If the only possible way to make money in the market was selling 30% OTM SPY puts and the gain was limited to 1% per year then buying corporate bonds might make sense. But whadya gonna do if interest rates rise and your bond value drops? Hold on for X years coveting your meager yield?

As explained by NHS, the dividend will be priced into the options. The exception to this is special dividends where they can adjust the strike price or add the dividend to the delivery requirement. I think the threshold is 10%. For examples, go to either the OCC web site (optionclearing.com)...

After a spike from $3 to $14 in '98 and back to the $4 area, a friend finds and researches a small financial compnay (TEKC). He buys close to 20,000 shares and mentions it to me. Story sounds OK. I traded it often, scalping 10, 20 sometimes 30-40 cts. within several days. He goes for buy...