do you guys agree on this trade?

Quote from spindr0:

How is a naked straddle market neutral (check your net delta)?
Or are you saying that you hope WINN will be neutral?

If WINN moves, how is it your naked straddle low risk?

If WINN moves, how will you make more than someone who is directionally correct?

You want a bottom up approach. The underlying is most important followed by the sector and the market.
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^ It said it was a market neutral strategy from the bible of option strategies.
 
Here are the books I have.

Options are confusing. So many "if / then" , "if/ else" possibilities.

I'll probably just end up just buying plain old options as a directional play like I do with stocks. It's easy to understand

1. are you: Bullish? buy calls. Bearish? buy puts

2. How long do you think it will take price to reach x price?

3. Buy options with the time desired.

4. Good luck


....and it will be cheaper than buying the underlying stock.
 

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Quote from adamchubb:

sometimes "market neutral" sounds good. people think they don't have to predict market direction to make money. but the truth is they need the market to "stay still" long enough to make money from premium decay, which doesn't happen too often. The market is always moving, either up or down. just look at the SPX chart of last 5 years. do you see any extended period that the index didn't move for traders to earn premium decay????
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For anyone that has traded market neutral strategies will have to agree with this post as 100% accurate.

I have made countless adjustments to my Iron Condors to stay in the game over this entire move higher.

Trading options is rewarding but it is certainly very hard work.
 
Quote from konviction:

I'm trying to get back into options and I'd like to focus on market neutral strategies like short straddles.

Here is one I just put on for WINN:

sold 3 march 7.5 puts
sold 3 march 7.5 calls

Once I found out about pair trading, and the possibility of risking very little to make just as much if not more than someone who had a directional bias, I was kinda bitten by that market neutral bug. It's my understanding that Buffet does a lot of MN stuff as well. Seems like this type of trading is the best of both worlds?

My second question is this, should an option strategy be based on what the equity is doing, or what the overall market is doing?

thanks
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ask yourself 2 question:

1) What will the p&l of your position looks like when WINN stock moves either up or down

2) What will you do when WINN stock moves either up or down.

If you dont know the answer to those 2 questions, exit the position immediately. Short straddle can quickly become a big loser if the underlying start to move, they are only market neutral if the market doesnt move.....
 
Quote from konviction:

I'm trying to get back into options and I'd like to focus on market neutral strategies like short straddles.


thanks
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....i think the bottom line here is you should not be looking at market neutral strats in a melt-up, ben put covered bull market....
 
Quote from daveyc:



I have made countless adjustments to my Iron Condors to stay in the game over this entire move higher.

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....this has got to tell you now is not the time to trade market neutral...
 
Quote from konviction:

^ It said it was a market neutral strategy from the bible of option strategies.
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....it is market neutral, but you can tell from the replies that not every one agrees what that means or how to use it...
 
Quote from traderlux:

....this has got to tell you now is not the time to trade market neutral...
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And chances are, as soon as he shifts to directional, the market will trade in a box.
 
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