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.
