calculate win probability . how i do this

I've never quite wrapped my head around the idea of legging into a spread. Let's say you're bullish on the underlying, and you wait for a pullback to buy a call. You nail it. Stock reverses, and moves up maybe a strike or so. Now is prime time to sell a call, as premium has increased, right? Well, if premium has increased, then your long call has increased . . . why not just sell it for a profit? And if premium HASN'T increased, what was the point of waiting to sell the 2nd call?

Never mind what happens if you're wrong and the underlying keeps dropping, but you only have a long call in place.
 
im not saying i legged into my trade, but im saying that maybe if you enter a spread with a highly favourable payout, you get better entry points.

still curious how i got in at less than market value on nov 4. if anyone has an explanation thayd hw great.
 
crayon851 said:
so i got lucky then is what ur saying?
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What i said is non of the model is 100% accurate. If you too hang on those bul*sh** model, the only thing i can say is good luck.

Note: don't ask me what is the best approach, trade secret. ;)
 
crayon851 said:
i agree it is hard, but i found it odd or extremely lucky on my recent baba trade. i put a debit spread on for a 36 debit with a spread of 103/104. 103 was at 2.28 and 104 was at 1.91. according to the charts, the 103 never even hit 2.28.

any explanation on how this happened? im curious
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I'm not sure what you're saying. That's a 37 cent debit for starters. Regardless, are you saying the charts never showed the $103 options trading at $2.28, or are you saying that your model said it SHOULD have been worth $2.28?

If the former, then I would ask if you put it on as a spread or as 2 separate legs? Because it's possible that you filled at $0.37 (or $.36) net debit w/o hitting that individual leg price.

If we're talking about your modeled pricing, then that's been covered.
 
jimmyjazz said:
I'm not sure what you're saying. That's a 37 cent debit for starters. Regardless, are you saying the charts never showed the $103 options trading at $2.28, or are you saying that your model said it SHOULD have been worth $2.28?

If the former, then I would ask if you put it on as a spread or as 2 separate legs? Because it's possible that you filled at $0.37 (or $.36) net debit w/o hitting that individual leg price.

If we're talking about your modeled pricing, then that's been covered.
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no not modeled pricing.

i put on as a spread with a net debit of 37. when i looked at each individual leg after the trade went through, the cost basis of of the long leg said it was 2.28 and the short leg was 1.91ish.

after looking at the charts for the historical prices of the long leg, at no point in time did the long leg ever drop down to 2.28 or even near that area. so im wondering how this even got filled to begin with.
 
crayon851 said:
after looking at the charts for the historical prices of the long leg, at no point in time did the long leg ever drop down to 2.28 or even near that area. so im wondering how this even got filled to begin with.
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My guess is that you aren't seeing all the trades. I'd trust your own account history far more than some chart.
 
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