you stand better chance playing mega millions/powerball.
I begin trading (investing in) options on Monday
- Thread starter union1411
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Eh, ignore them too an extent, but long vol trading is actually very difficult. This is true whether it's long gamma or long vega(there is a difference). I blew out twice trading for others being long vol and I'm not a superstar even today, but I do consistently make money this way. It's when I deviate that things get f'ed up.
Thanks for the beginner lesson, but my question was how are you going to be delta neutral and long vol and OTM? You said you just started reading on options a few months ago so I am curious what thinking is behind your strategy.
Was not a negative post at all. Your statement did not make sense initially and I asked a valud question. Pass on it if you want but I just want to know how you will trade non-directional delta neitral and long vol while using an OTM option.
Phil
Was not a negative post at all. Your statement did not make sense initially and I asked a valud question. Pass on it if you want but I just want to know how you will trade non-directional delta neitral and long vol while using an OTM option.
Phil
No no you misunderstand, it is not a question based on me doubting it could be done. It is based on wanting to see the person think through their approach. I have seen a lot of beginners catch on to an approach or phrasing casually read in a book but do not think it through.
I am not sure what you mean by ratio strangle. If you mean more calls than puts or vice versa then you can get to delta neutral and all strangles are long vol, but simply choosing stocks whose IV is at the low end of the range is not enough. Choosing the appropriate time to expiration to overcome theta on long calls and puts and the wider loss zone of the strangle means stock selection is more crucial than anything. You can have numerous long strangles sit there and decay away before one can make some money.
This is akin to the game of simply buying OTM calls or puts alone. It is a low percentage gamble and leads to frequent losses. The fact that you are now OTM on both sides increases your chances slightly but the loss zone is still pretty wide.
It can be done but not as a means of trading 100% of your capital. I just want beginners to put more time in planning the trades out thoroughly than simply running after a strategy.
Phil
I am not sure what you mean by ratio strangle. If you mean more calls than puts or vice versa then you can get to delta neutral and all strangles are long vol, but simply choosing stocks whose IV is at the low end of the range is not enough. Choosing the appropriate time to expiration to overcome theta on long calls and puts and the wider loss zone of the strangle means stock selection is more crucial than anything. You can have numerous long strangles sit there and decay away before one can make some money.
This is akin to the game of simply buying OTM calls or puts alone. It is a low percentage gamble and leads to frequent losses. The fact that you are now OTM on both sides increases your chances slightly but the loss zone is still pretty wide.
It can be done but not as a means of trading 100% of your capital. I just want beginners to put more time in planning the trades out thoroughly than simply running after a strategy.
Phil
Yes but not former, still over there as well. 
Phil
Phil