Buying Naked Calls
- Thread starter Bushwacked9
- Start date
Yes you do ... you said ... "when dudes come out the woodworks with these type of statements I need to address it"
Well address it then ...
Which is another irony.
Tom and Tony are literally demonstrating to folks how to structure Programs / Products for the Asset Management world; if ones are inclined to put in that work.
Nothing to me, is funnier ... that listening to Retail Traders rail on and on against some AM Firm due to their "poor performance".
Meanwhile, that "poor performing" firm, marketed themselves as ... (using the TT concept for nothing more than the sake of example since recently discussed) ... a Short Delta Firm ... to a Larger Institution, FoF (though most of those Managers are hidden) ... Pension, Larger QEP or AI; and their client is happy as a clam, because as they are Dunn-balls-to-the-wall long in one Program, the "Poor Performing" firm is providing a nice Non-Correlative benefit to the Client, and everyone is happy as a clam, and the Short-Delta Firm is laughing all the way to the bank; and the Client is happier than a pig in slop when the Long-Balls program is getting slapped around.
Meanwhile, retail folks are trying to find out how "Tom and Tony are wrong". And usually those are the same folks wondering how large Institutions are hitting those high Sharpe's and insane Sortino's that it must be "Artificial Intelligence and Machines!" and arguing over phraseology.
LOL
Some folks are so behind, they think they are in the lead in the race.
Meanwhile, the reason no one is around them is because the race was over 5 hours ago, and everyone has gone home ...
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maybe its just me,but I prefer not to be dead wrong on my vol assumptions and double down to make up for my stupidity,especially when I have a fixed dollar stop
I don't care if Sosnoff is profitable, but you do..
I say a new years resolution for 2020 is to focus less on another mans pockets and focus at the goal at hand
You should care. His recos suck. What do you have to gain if the guy can’t make money from his own recommendations?
The 5-10% doesn't address vol/vega.
You don't know what you're talking about. I also stressed the thing for 100 days at +30 on shares. Read the post. It's monumentally, inconceivably and irreparably stupid to state that a drop in vol (drops enough!) benefits the long option.
Just quote a strip and look at the vega by expiration. What happens to vega as you add time?
Adding to the position would still be averaging into a loss to vol.
1. Agree 5-10% doesn't address vol/vega.
2. I admit, I don't know what I am talking about.
But hear me out, here is some simple math (today's real time quotes):
1. Let's say today I buy one contract of 6 month ATM ($308) SPY call @ ~$15, IV ~16.
2. If SPY has a growth of 8% (5-10% range). In 6 months, SPY will be @ $323, I break even which is what the market priced the ATM option at.
3. So, the market is expecting 8% growth and there is no edge in buying ATM SPY call.
4. However, if in a week, IV drops to ~8 which is what @raVar said if IV dropped, the ATM SPY call will be ~$8, and I buy one more contract. My average cost will be ~$11.5.
5. In 6 months if today's market price is correct, I would have a profit of $3.5 a share?
Of course SPY won't stay @ $308, SPY might not grow to $323 in six month... But these are all probabilistic outcomes we are talking about at this moment???
One! Averaging on a lower vol-line is better than averaging on higher vol-line. That's a "no sh!t!" statement. There was no mention of adding. The guy has no idea what he is doing. He may have an alto that breaks glass, but he's r3tarded on the subject of volatility/trading.
Two! If he adds on a share drop and lower vol he (loses less) EARNS MOAR!
Three! There are infinitely better structures than buying the ATM call into that move. That's not the point, but nor is your idealized 8% gain.
Four! I am blocking you again.
Five! You can cover for the guy all you want. He stated that the drop in IV would help. Vega increases with time to exp. Long-dated and multi-year (LEAPS) are majority delta and vega. Nobody with any options trading experience would state the following:
raVar wrote: Buy the calls, six to eight months in the future, with strikes three to four deep ITM. That way, if I'm right? Then hopefully the falling IV will help me enough to overcome some of the other math, and my delta's will thus improve with the passing of time (though time is working against me). BUT IF I'm right, then that might be the best way to go. Mathematically speaking. Six to Eight Months in the future ... 4 or 5 strikes deep in the money.
https://www.elitetrader.com/et/threads/buying-naked-calls.337685/page-2#post-4959743
Well, nobody other than raVar and the guy who liked that post.
Then hopefully the falling IV will help me enough to overcome some of the other math, and... Stated nobody, ever, in the history of volatility f*cking trading when referring to a long single.
Six! The IMPACT TO the increase in gamma is artifact of the passage of time, drop in shares, and/or a drop in vol POST F*CKING ENTRY. None of which are advantageous to the long call BEING HELD. The "delta's will thus improve with the passing of time" is again, artifact to a rally in spot, drop in vol, or time. Two of those*** (guess which!) are detrimental to the position and the third is ambiguous to vola.
*** please refer to the next post.
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