Anybody trades options without any greek letter?

[wayneL]

Quote from taowave:

Let me ask you,what good is it to know how it will affect your position?? By the time it affects your position,its too late...If you are managing vol its one thing,but if you are trading directionally its much much different..

I dont believe they have a rich mental map of the Greeks..They do have a very thorough understanding of the markets they trade and the probabilities of success/failure and magnitude of the directional move..

If I gave you a probability distribution of likey price moves,dont you think you would intuitively have a feel for how much you should pay for an option???

Just asking the question out of interest matey, not looking for an argument.

But to answer your questions.

1/ I find it helps in my trading.

2/ Yes, but again, I would map that out in my head and have a sense of what my risks and rewards were Greek-wise.

But that's just me. If others don't, no skin off my nose.

 

[dagnyt]

Quote from covered_call:

Yes. Options prices go up and down. Just like futures prices, just like stock prices. Greeks certainly add flavor and can help with valuation and risk measures, but you're buying and selling an instrument. Buy low, sell high. Greeks are not necessary, jut a tool. Same as fair value, cost of carry, curvature of the dererred curve and other tools used to determine whether to play the long or short side of futures.

Greeks are for RISK MANAGEMENT.

That's the point most people miss. Greeks help manage risk. they do not make buy/sell/hold decisions.

It has nothing to do with 'playing the long or short side.'

Mark
http://blog.mdwoptions.com

 

[donnap]

Quote from OddTrader:

Would it be possible to trade an options strategy consistently profitably without considering/using anythine about deltas, gammas, thetas, etc.?

Any theoretical comments, pros and cons?

Has anyone got any practical experience, whether good and bad?

Yes, it is possible - with experience.

For example - with vertical spreads greeks are not as important as with some of the other strategies. Your experience should tell you if something is out of whack with the pricing (volatility skew).

Just get the direction and magnitude of that direction correct, and have a plan for closing and viola = profit.

With experience, you would find that you are using at least some of the greeks without necessarily naming them.

 

[BirdBirdBird]

dagnyt clarified my point well. Greeks show your risk exposure and little else.

 

[taowave]

hi Wayne,
I apologise if you took my responce as aggressive..
It was not intended as such.My point is for some it is very important to have all the greeks quantified,but for others a simple stop works just as well.It certainly helps simplify things..

After years of trading on derivative desks,I rarely look at greeks if trading directionally.
(I do look at the full alphabit if trading a dispersion type strategy)
Since I set stops,I really couldnt care less if I was wrong directionally,vol or any other sensitivity.

I am all for whatever gives one a comfort level in trading.

Quote from wayneL:

Just asking the question out of interest matey, not looking for an argument.

But to answer your questions.

1/ I find it helps in my trading.

2/ Yes, but again, I would map that out in my head and have a sense of what my risks and rewards were Greek-wise.

But that's just me. If others don't, no skin off my nose.

 

[taowave]

Verticals are a great example of trading without greeks..

Buy a 10 point vertical for 2 ,and you immediately know your risk reward..You should also have some price in mind where the risk reward shifts against you and you may consider liquidating..

Being a good direction trader certainly makes option trading alot simpler

Quote from donnap:

Yes, it is possible - with experience.

For example - with vertical spreads greeks are not as important as with some of the other strategies. Your experience should tell you if something is out of whack with the pricing (volatility skew).

Just get the direction and magnitude of that direction correct, and have a plan for closing and viola = profit.

With experience, you would find that you are using at least some of the greeks without necessarily naming them.

 

[TheROTrader]

this thread is retarded and for a lazy trader...............if youre gonna just go directional you need to know the deltas at a minimum........dont be lazy, use the greeks

 

[wayneL]

Quote from taowave:

hi Wayne,
I apologise if you took my responce as aggressive..
It was not intended as such.My point is for some it is very important to have all the greeks quantified,but for others a simple stop works just as well.It certainly helps simplify things..

After years of trading on derivative desks,I rarely look at greeks if trading directionally.
(I do look at the full alphabit if trading a dispersion type strategy)
Since I set stops,I really couldnt care less if I was wrong directionally,vol or any other sensitivity.

I am all for whatever gives one a comfort level in trading.

No worries Taowave,

I was just interested if you (and others) might have a "picture" of them, even if only subconciously.

Cheers

 

[JohnGreen]

Good discussion.

Comment 1:
Greeks give you interesting and sometimes valuable information about you position. Why not use them? If you have a decent broker, you will have it all at your fingertips anyway without a vast amount of effort. Ignorance is NOT bliss.

Comment2:
Greeks are always dynamically changing in response to market conditions. IV may be rising or falling. Time is always marching on. Prices are usually moving upward or downward. Don't think they are static, or assume your position is safe because the Greeks were fine yesterday.

Comment3: I sometimes chuckle when I see Greeks calculated to four decimal places. In real life, they're no where near that precise or powerful!

 

[OddTrader]

Perhaps, to some traders, "The Greeks" are just market noises, simply a manufactured product of market manipulation, in order to mislead the faint-mind players!

More decisions to make, more errors/ mistakes can be made!

Comments?