Buying/Selling Options

Quote from 8_Ball:

I think if/when the risk-based margin goes into effect the verticals are going to gain a big advantage. All that margin interest building up is going to make it very difficult to make money on all but the most volatile stocks.
It's going to be like swimming against a riptide.
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I think even with reg-T margin, vertical still has an advantage over collar. Should check it with OptionCoach, the vertical expert. :D
 
I prefer verticals for the simple reason that I do not like owning stock :)

Quote from yip1997:

I think even with reg-T margin, vertical still has an advantage over collar. Should check it with OptionCoach, the vertical expert. :D
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Quote from 8_Ball:

All that margin interest building up is going to make it very difficult to make money on all but the most volatile stocks.
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I have traded verticals for 6 months now after I learned from Coach. Even with low vol index, I got pretty good return with reg-T margin.
 
Wayne, that quote was only the opening line of Scott's posting. Further down he acknowledges that Verticals can be rolled. However, his point was that rolling, or adjusting, verticals requires 4 transactions, thus 4 commissions and 4 slippages. Although that fact alone would not tip the scales in one direction or the other, it is nevertheless a valid point.

Mav, I don't consider Scott to be a buffoon and have learned a few things from him. It is well documented that he and I have had more than our share of arguments. By the same token, I have spoken highly of you in his Forum, the most recent such posting just this morning.

4Q
 
Quote from exQQQQseme:

Wayne, that quote was only the opening line of Scott's posting. Further down he acknowledges that Verticals can be rolled. However, his point was that rolling, or adjusting, verticals requires 4 transactions, thus 4 commissions and 4 slippages. Although that fact alone would not tip the scales in one direction or the other, it is nevertheless a valid point.

4Q
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4Q,

Thats no different to a collar. There are still 4 trades (assuming both the sold and bought strike are rolled)

There is also no reason why one leg only is rolled in either strategy. That point is just not valid.

The fact that the collar contains stock is irrelevant (save for the cost of carry issue)

I really think Kramer has introduced an invalid artifact into everybodies mind that is stuck there.

Cheers
 
Hi Phil. If you get the chance can you take a look at what I wrote this morning where I said in Scott's forum that I am experimenting with doing a Bull Call Spread (BCS) and blending it with shorted stock in order to manage the deltas. The use of the BCS is the result of Mav's explaining the synthetic equivalence. I figured, since the equivalency exists, let's see what I can do with it. I'm still at home plate on this. Not sure if I'll get to first base or not.

4Q
 
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