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I have strong bearish sentiment on many eft's and would like to choose a strategy between shorting the stocks or buying puts. The issues with put buying are twofold: 1. The volatility, therefore the premium, is unusually high. Right now the VIX is 35. Options look expensive, more so with...

Ditto. The Risk Navigator is too crappy to be useful -- it is more like a teaser. The exposure calculation for far out options gives far-out over-estimates. The P&L chart for a complex option portfolio is almost meaningless if you have SPX and SDS. A what-if should let me vary IV on a group of...

It is bad that I had to do this but IB keeps the workings of portfolio margin 'proprietary'. I can't find anything useful in the documentation and the reps are trained not to tell. The first bad thing is that the margin can change fast. One evening I saw 20% excess liquidity. The next morning...

Let's say that the strangle has a bearish bias that is I was after, betting on a decline, but not sure about the timing and afraid of the fluctuation in the mean time.

I sold a bunch of strangles and am concerned that the volatility may surge. I want to use VIX to hedge against a sudden vol change. I found the vegas of my options are -0.01. With total 50 contracts, I figure the total vega is -0.01*100*50=-50. My options have high IV than SPX, let's say...

ETFs may distribute dividends and capital gains, which should lower the share prices. Because the option holder receives none of those, when that happens, the value of calls should drops and that of puts should rise. So would selling calls and buying puts before the ex-date be profitable?

When my short call became ITM on expiry day, I thought I would buy to close the position. But the ask price price was 1% over the intrinsic value. I figure it would cost less if I just buy the stock to neutralize the assignment. Is this generally true? With spreads, if both legs are ITM or...

I figure IB has a list of high-risk stocks on which the margin is 50-100% of the underlying value, regardless of how far OTM the short call is.

They are crazy, well, dumb, in another way. As my PM margin soared in the day, I tried to close some positions. To my surprise, a $50 trade (10x5c short call contracts ) brought down the margin by $20000. Those contract were 6 days to expiry. I guess they just wanted to force me to buy back...

Did you consider rolling back to RegT margin? At least it is predictable.

Ok, guys, I set up simulations to study the choice of strikes on the risk and return rate. All in all, the result is surprising to me: deep ITM put backspreads gives the highest return on investment. Here come the details. Constants: IV=50, S=25, price range=20:30, duration=60d Variables...

Not impossible indeed. I asked their rep and was told that it was the real-time margin that counts, that the margin report was generated at 4:30 PM ET. I have been forced to make more trades just to maintain the margin due to the swing. The rep also told me it was impossible to explain, or...

I am trying to compare ratio backspreads vs naked long options. It easier to work on puts since puts have an upper bound for the gain that is the strike price when the stock drops to 0. I want to compare the fund efficiency: the maximum gain over money put in. With a naked long put, the...

When we see quotes in bid/ask, there is something not show. I have got prices better than the bid/ask, that is, between them, with no delay. For example, when the bid/ask is 3.2/3.5, as soon as I transmit a sale order limit 3.25, the order is filled instantly. There seems to be a limit buy...

Today the market moved in my favor as my liquidation value increased -- but my margin increased also. On other days, when my value dropped, my margin reqmt soared. Is it IB or me who is crazy?

I also saw my margin jumping up overnight without movement in the underlying. Their algorithm is hidden, and the rough guidelines are hazy and useless. It's unpredictable. It makes no sense. I studied the behavior through margin preview on orders. If I close a $20K short position, the margin...

some literature discusses it with the butterfly as they have similar features. Thanks MTE.

Hey gurus out there, What is the name of the option strategy that on a P&L diagram looks like a W, or a butterfly with wings tilting up? You get that by buying more OTM options than in a butterfly. TIA

I was thinking of options on ETFs with 2-3 months in maturity. The of a 50% move is slim. As a simpler example of the adjustment I was thinking of, let's start with an ATM put@25. If the stock goes up to 27, sell a call@29. If it goes to 29, sell another call@31. Let's say the term ends with...

Reading the book The Option Trader Handbook for adjustments for short strangle and got disappointed as the book says that there is nothing you can do, I got an idea. You can keeping making up for strong moves in the underlying and never lose. Suppose stock XYZ is trading at 25 and you...