The question then is how does one reliably predict direction? Efficient market theory says an edge doesn't exist. If it's possible for a retail guy to do that, then why hasn't the professional community exploited any edge that exists.
Eliminating half of the risk - A practical options research
- Thread starter earth_imperator
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The question then is how does one reliably predict direction? Efficient market theory says an edge doesn't exist. If it's possible for a retail guy to do that, then why hasn't the professional community exploited any edge that exists.
Not true....
Its a question of Implied sold vs realized vol..
It's very very path dependent to keep the "whole thing"..
Anyone with discipline can do a good job hedging,it's a question of the market behaving and not gapping,i.e higher realized vol..
Its a question of Implied sold vs realized vol..
It's very very path dependent to keep the "whole thing"..
Anyone with discipline can do a good job hedging,it's a question of the market behaving and not gapping,i.e higher realized vol..
@destriero wrote:
I cannot verify nor confirm yet what you said above, as I haven't tested these cases yet.
What would you instead suggest to better focus on?
As said above (and as the title of the thread also clearly says): I'm not after full elimination of the said 2 main risk sources, but just one of it, the IV risk. For the moment this also excludes dynamic hedging methods like delta-hedging etc.
I'm specializing in 2-leg constructs only, ie. put spreads (and call spreads), no butterfly nor condor nor box etc.
I cannot verify nor confirm yet what you said above, as I haven't tested these cases yet.
What would you instead suggest to better focus on?
As said above (and as the title of the thread also clearly says): I'm not after full elimination of the said 2 main risk sources, but just one of it, the IV risk. For the moment this also excludes dynamic hedging methods like delta-hedging etc.
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@earth_imperator wrote:
@taowave wrote:
@taowave wrote:
You are talking again just BS. It proves that you have no clue about the topic
Show us one trade you have actually put on the books.
How does one specialize in 2 leg constructs without ever trading ??
And you are oblivious to realized vs implied while delta hedging??
What edge as a retail trader do you think you will have trading vertical and calenders while attempting to reduce Vega exposure??
And why no flys?? You will trade short verts,not knowing butterflys are stacked verts??
When you put on your first trade,let us know.
How does one specialize in 2 leg constructs without ever trading ??
And you are oblivious to realized vs implied while delta hedging??
What edge as a retail trader do you think you will have trading vertical and calenders while attempting to reduce Vega exposure??
And why no flys?? You will trade short verts,not knowing butterflys are stacked verts??
When you put on your first trade,let us know.
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@taowave wrote
See screenshot below.
since with options one usually deals only with implied volatility (IV).
Just show me an information provider that publishes besides implied also the "realized" volatility for options strikes. I have never seen such. Another proof that you know not much about options trading, and instead just talk some hearsay BS bingo buzzwords...
Is there a problem with this?
2 legs are ideal for me. If not for you, then it's not my problem...
Transaction log:
I could, but it's irrelevant.
See screenshot below.
Asks an idiot.
Funny, b/c there is no such distinction between implied volatility and realized volatility in options trading;
since with options one usually deals only with implied volatility (IV).
Just show me an information provider that publishes besides implied also the "realized" volatility for options strikes. I have never seen such. Another proof that you know not much about options trading, and instead just talk some hearsay BS bingo buzzwords...
I don't know yet, I'm still researching it...
Is there a problem with this? B/c I like simplicity, ie. the KISS principle...
2 legs are ideal for me. If not for you, then it's not my problem...
FU AH!
Transaction log:
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I totally agree, directional, but once good, can add cycles which in turn averaging down makes sense to change losing position and end up with small profit trade.
The above said problem applies only to spreads that have different DTEs, ie. calendar and diagonal spreads, but of course not vertical spreads.
