Are options a waste of time and money? (pun intended)

[wxytrader]

Is this a joke? The probability of a profit indicator is useless, as is rsi lol, no one uses them. You’re still learning and at this point know much less than a 16yr old floor clerk interning with a local.

If you look at an atm option today it’s priced at 50d. If you have a view on the stock then to you a 25d strike is cheap.

If you’re trading vol then the structure of vol through time, such as an atm strike today, tomorrow, day after, etc., changes. This can be exploited.

If you’re trading index vol then term structure of vol futures also changes due to basis, positioning, etc. which can also be exploited.

In fact, there are many opportunities within options to exploit. Are they easy to? No.

The RSI does your concave/convex slope calculations for you...that's all I was pointing out.

Anyway I think what you are trying so say is this: https://cmtassociation.org/kb/explo...e-a-trading-edge-market-neutraldelta-neutral/

Spoiler alert! The big secret to exploit volatility is......Straddles! lol

"The current study revealed that a simple straddle options-based strategy designed to exploit a sudden implosion of a stock’s volatility with time as the only existing criteria produced draw-downs that preclude it as a viable trading strategy in its own right. However, this simple strategy had a positive expectation of generating superior returns, and therefore can be used as the basis to develop trading strategies capable of producing superior returns without the need to correctly predict the direction of a given stock, commodity, or market being traded."

 

[newwurldmn]

Is this a joke? The probability of a profit indicator is useless, as is rsi lol, no one uses them. You’re still learning and at this point know much less than a 16yr old floor clerk interning with a local.

If you look at an atm option today it’s priced at 50d. If you have a view on the stock then to you a 25d strike is cheap.

If you’re trading vol then the structure of vol through time, such as an atm strike today, tomorrow, day after, etc., changes. This can be exploited.

If you’re trading index vol then term structure of vol futures also changes due to basis, positioning, etc. which can also be exploited.

In fact, there are many opportunities within options to exploit. Are they easy to? No.

Trading vol is easy: just sell it.

 

[wxytrader]

I didn't know I had to.
What about your trades?

Ok lets look at buying an Aug2 staddle on IWM. The premiums would put your break evens at 189.17/198.84.

Good luck with that.

So clearly this trade need tweaking. Ok lets try adding a spreads (reverse iron condor).

Yuck!

Lets look at the individual spreads.

Great reduced the break evens and risk. We need to widen the legs.

Ok looking better but still a big heap of garbage with a 1:2 risk reward unless price swings you can close both legs separately for profits.

 

[themickey]

Divergence of the rsi widely used...and understood.....

Maybe by retail traders but I doubt instos would look at RSI, but then again I'm not doing intraday, maybe they use it.

 

[longandshort]

The RSI does your concave/convex slope calculations for you...that's all I was pointing out.

No it is not lmao, stop posting that. No one is talking about the price of the stock when we use those terms. We use those terms to describe how the option's value will adjust to a change in delta OR other Greek.

Anyway I think what you are trying so say is this: https://cmtassociation.org/kb/explo...e-a-trading-edge-market-neutraldelta-neutral/

Spoiler alert! The big secret to exploit volatility is......Straddles! lol

You read one study and now you think you've found the holy grail. Quite the flip from your original post. Yes, straddles are one way to take a long or short view on vol. There are lots of things you can do with vol.

 

[earth_imperator]

Ok lets look at buying an Aug2 staddle on IWM. The premiums would put your break evens at 189.17/198.84.

View attachment 319493
Good luck with that.

So clearly this trade need tweaking. Ok lets try adding a spreads (reverse iron condor).
View attachment 319494
Yuck!

Lets look at the individual spreads.
View attachment 319499 View attachment 319500
Great reduced the break evens and risk. We need to widen the legs.


View attachment 319501
Ok looking better but still a big heap of garbage with a 1:2 risk reward unless price swings you can close both legs separately for profits.

Forget it! You unfortunately don't listen. Is IWM HiIV? Nope!

 

[wxytrader]

No it is not lmao, stop posting that. No one is talking about the price of the stock when we use those terms. We use those terms to describe how the option's value will adjust to a change in delta OR other Greek.


You read one study and now you think you've found the holy grail. Quite the flip from your original post. Yes, straddles are one way to take a long or short view on vol. There are lots of things you can do with vol.

I know you aren't talking about the price of the stock! Gamma will tell you how much the delta will change with an x move of the underlying. Delta will tell you the price of the option will change for x move in the underlying. Now lets talk about volatility skew...are you familiar with the concept?

 

[longandshort]

I know you aren't talking about the price of the stock! Gamma will tell you how much the delta will change with an x move of the underlying. Delta will tell you the price of the option will change for x move in the underlying.

Then why do you keep referencing RSI? Stop lol.

Now lets talk about volatility skew...are you familiar with the concept?

WTF. If you know about skew, then why are you upset about using terms like concavity/convexity?

 

[taowave]

Lol!!!!!!

wohoo. Another post that beats the OP’s lifetime likes.

 

[destriero]

There is an arb in structure and this hit the tape. The req under PM/TIMS is $3500. 3,500.