Can you believe this?
- Thread starter badlucktrades
- Start date
i completely agree. definitely risky. definitely a chance to have my ass handed to me. the thing is, i enter these trades last hour or less. these ones were entered 20 minutes to closing. of course anything can happen, but i believe its highly improbable. not sure what you mean by gimmicky though..
how are they "sure thing" bets? I never even remotely suggested they were.
arent we all trying to make pennies when it comes to options? you're either picking up a few cents in theta, picking up a few cents in being right in direction.
the only thing thats different is risk:reward profiles.
Im not able to predict direction, but i feel more comfortable managing a position to collect 0.1-0.2 the last 20 minutes before expiration, than I do putting on an OTM credit spread or trying to be right on direction of a debit spread a week or two before.
Havent tried putting on 1-2 month spreads yet, but Im looking into those, I just dont like having some much time risk l, where anything can happen.
That is what I'm saying - you're trying to make pennies by avoiding risk and not taking into account the larger risk you actually have vs the reward. Selling expiring options 20-30 minutes before they expire is a total gimmick that depends on probability of strikes not going ITM "since there's only a half hour left."
Personally I don't go for pennies. I sell right at the money and manage delta when things go against me. I don't care as much if options go ITM because I'm selling at peak gamma; the *rate* at which it would get worse for me decreases - whereas the penny sellers have an exponential increase in how worse it can get. I do take into account both direction and volatility but I'd say that when I sell options I probably focus more on direction honestly. However if volatility is very low I may not even sell anything due to being exposed to that risk.
Obviously my strategies are not always winners by any means but I'm not ever risking 5-10 to make 1.
Personally I don't go for pennies. I sell right at the money and manage delta when things go against me. I don't care as much if options go ITM because I'm selling at peak gamma; the *rate* at which it would get worse for me decreases - whereas the penny sellers have an exponential increase in how worse it can get. I do take into account both direction and volatility but I'd say that when I sell options I probably focus more on direction honestly. However if volatility is very low I may not even sell anything due to being exposed to that risk.
Obviously my strategies are not always winners by any means but I'm not ever risking 5-10 to make 1.
yeah i agree the risk reward isnt great. when you sell atm options, how long of a duration do you go for? Im assuming you close out one side as it moves in your favor, and reestablish at a diffrrent date?
when youre picking your strikes, if youre atm theres a high probability of it going past your break even points in either direction. is there not?
would you be willing to share an example of a trade youve done?
when youre picking your strikes, if youre atm theres a high probability of it going past your break even points in either direction. is there not?
would you be willing to share an example of a trade youve done?
welcome to high prob trading. spx and spy both have their evils...
sorry you're right. i wasnt thinking about the inbetween, completely missed that.
so if spy stays between 195.50-197, then its an unrealized "loss" on the short position.
If thats the case Ill just reestablish a similar position. and hopefully the credit will outweigh the difference in strikes.
so if spy stays between 195.50-197, then its an unrealized "loss" on the short position.
If thats the case Ill just reestablish a similar position. and hopefully the credit will outweigh the difference in strikes.
You'll receive a bit more for the put, but you can't structure a reversal (short put, long call) that will provide a risk-less return, or anything approaching it. There is no significant skew inside 40-deltas OTM, or there would be conversion arb potential.