Search results

The delta of the 6 month options will depend on whether they are itm, otm or atm. As a general rule, if itm then their delta will be higher (relative to the 9 month expiry options) and thus you will need fewer contracts to get neutral. If they're otm then delta will be lower and you'll need more...

No, as has already been mentioned in other replies. However noone seems to have mentioned pin risk nor the risk of the OEX SET price. db

??? 1. you are charged margin for the short vertical so this 'cash in my account' is an illusion. 2. why are you mentioning buying stock? We were simply talking about verticals and the point I was questioning was in regard to choosing a short over a long vertical (yes, I know a collar is a...

Why wouldn't you just buy the spread, e.g. buy the bear put vertical rather than sell the bear call vertical, assuming liquidity and assignment are not an issue? After all, 'margin' is the same for both unless you have a portfolio account. db

A brief comment about terminology in regards to the IC mentioned in this thread. When you open a position you SELL the IC (not buy, as Mark suggests) and take in a credit. When you close the position you BUY the IC for a debit. db

He sure is. Would have been a lot easier to get the student to bone up on option basics first (iow get him to do some homework rather than spoon feeding him like a little baby) before spending his, I assume, valuable time mentoring. But each to his own, lol. db

Vega is not implied volatility. db

True. However, some traders buy the extra long calls to create a more delta neutral position when they initiate the trade since most atm butterflies start off short deltas. db

Charles uses the slingshot hedge for a married put position. One buys the stock and buys enough puts to protect the stock (aka synthetic call). To fund the cost of the puts one sells OTM call credit spreads. For example, say you're long 1000 AAPL and long 10 180 strike puts, i.e. synthetic long...

You are selling the front month and buying the back month, same strikes. That's called a calendar or time spread. It is done for a debit, NOT a credit, i.e. you DON"T collect a premium, you pay it. Your max risk is not 75% of your trade capital. Your max risk is the debit you pay to open the...

So, you want to learn to fish. That's good. TOS is an excellent broker and platform. Now, be very careful as to whose advice you take. You can't afford to lose your retirement income. The program you're interested in may be fine but ask yourself "how come they're selling the program at a 50%...

Sell RUT iron condor for credit of 1.50, 50 days from expiry, short strikes delta 8 or 9 with 10 points between long and shorts. Probability of profit is greater than 80% IF you do nothing and simply let it expire. This equates to a 17% return over 50 days. Hope that is enough for you, but I...

Dear newcomer, A good general rule of thumb is: "you get what you pay for". Just remember that ET is populated mostly by people who mean well but don't really know what they're talking about. Unfortunately that doesn't stop them from dispensing advice. If you want to know more about the...

bullish otm cal is long delta, long vega. short otm call vertical is short delta and short vega. Both are long theta. Combine the two and you cut down your delta and vega risks, the exact risk reduction depending on the number of spreads and strike selection, and you collect daily time...

Some traders like to reduce vega and delta exposure of their IC's by adding a calendar at the strike of the long leg of the 'threatened' side - nothing wrong with that. Of course by doing so one gives up some of the profit potential. Perhaps this is the hedge cdowis talks about, except that he...

I don't think that's correct. The short stock combined with short 55 put is equivalent to a short 55 call. Add to that the long 60 call and you get a bear call credit spread which is equivalent to a bear put debit spread NOT a 'put credit spread' (a bullish position). db

Different strikes for the long put and short call with long stock would be called a synthetic diagonal. db

I don't know why this needs to be so complicated. All you have done is simply bought a synthetic call (long stock + long put) and sold a near month call. It's called a calendar. And it behaves like a calendar. db

Hi hlpsg How are things? Have you completed Dan's course? I don't see you attending the trading group meetings. To answer your question, there are a number of good books dealing with money management: 1. 'Quantitative trading and money management' by Fred Gehm 2. 'Come into my trading room'...

[I take advantage of the put skew all the time. It's one of the reasons I like put calendar spreads so much. You do have extra value when you trade with it. Good topic.. [/B] That's the advantage of an OTM put calendar. When underlying drops, both delta and vega (iv rush) are working in...