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Favorite Trading Strategies
- Thread starter exQQQQseme
- Start date
This is my modest contribution to the option world:
I usually do short put spreads as out of the money as there is a bid on. Short term only, less than 30 days. (I will try to sell the last one that has a bid and buy one lower that doesn't have one)
I know many people here do IC, I don't like them because I don't like to have my nuts squeezed. Also, at any given volatility level, calls are cheaper than puts so you don't get much more money for the risk you add to your position. Besides I find that very OTM puts are poorly priced (they get too expensive IMO) any day the VIX goes up more than 5%. That doesn't happen with calls as far as I can tell.
I usually do short put spreads as out of the money as there is a bid on. Short term only, less than 30 days. (I will try to sell the last one that has a bid and buy one lower that doesn't have one)
I know many people here do IC, I don't like them because I don't like to have my nuts squeezed. Also, at any given volatility level, calls are cheaper than puts so you don't get much more money for the risk you add to your position. Besides I find that very OTM puts are poorly priced (they get too expensive IMO) any day the VIX goes up more than 5%. That doesn't happen with calls as far as I can tell.
Timing is direction when it comes to stock. The "time" to buy stock is just before/during an up move. And not surprisingly, it's the opposite for short stock.Quote from exQQQQseme:
2. I respectfully disagree. You make money if your "direction" is right. In this case downward. I will agree that "timing" affects the amount you make.
You have every right to avoid the facts. But for those unfmiliar with synthetics, any adjustment made to the synthetic has the same result if made to the natural. It's as easy as ABC. If A=B then A+C = B+C3. I'm not going to ride this merry-go-round and get into a never ending argument with anyone. I mentioned it only as an example of a synthetic long put. On this particular trade, I prefer the synthetic over the natural. I have my reasons. Those who feel differently, I wish them well.
Why not explain to all why you think that it is easier to adjust the synthetic put than the natural as the stock moves?
Quote from drcha:
weewilly, thank you.
So perhaps, by the same logic, I should continue doing irons instead of all-call or all-put flies?
Iron butterflies have 4 legs, the call vertical versus the put vertical, so commissions will likely be higher than the 3 legged equivalents, depending on your commission structure.
Deep ITM will have more slippage (larger spreads). The number of transactions (commissions) will likely be higher since more legs are ITM. You have the potential to save on commissions only if the legs (short) are OTM and expire. Early exercise will also be an issue with ITM.Quote from drcha:
I'm thinking of experimenting with using ITM wings instead of OTM wings (reverse the long puts and calls). Do you think this would be marginally more profitable, or about the same?
Quote from exQQQQseme:
3. I'm not going to ride this merry-go-round and get into a never ending argument with anyone. I mentioned it only as an example of a synthetic long put. On this particular trade, I prefer the synthetic over the natural. I have my reasons. Those who feel differently, I wish them well.
Totally agree! I fully support your statement.
"Ask not what your options can do for you, but what you can do with your options." --- OddTrader