Is this is the best position ever if you can do this...

TheBigShort said:
I think you are still yet to read a few books on trading options.
1) vol trading Euan Sinclair
2)Robert Rebenato volatility and correlation.
Everyone wants to be long "cheap" gamma/vega. Figuring out that selling stock and buying a call = a long straddle, will not make you money.

Ps. I think you have it a little mixed up. Its selling stock and buying calls, not buying calls and buying stock.
Also keep in mind, short dated options you are trading gamma -> implied/realized. When you trade options +2 months, you PnL is more effected by vega -> implied/forward.
GL
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Thanks for your suggestion about the books. I have read quite a bit of options books. Sure, they are the road to wealth but to the author not the readers. Books are good to get educated about basic understanding of options. I hardly read any thing about adjustments which is really what a novice trader need to learn when the underlying moves against your position. This is where success comes from.
 
lotfyisis said:
Thanks for your suggestion about the books. I have read quite a bit of options books. Sure, they are the road to wealth but to the author not the readers. Books are good to get educated about basic understanding of options. I hardly read any thing about adjustments which is really what a novice trader need to learn when the underlying moves against your position. This is where success comes from.
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It seems like you know more about options than I do. Let me know when you find out how to pay for a straddle without taking on more risk. I will be happily waiting to transfer you all my money :)
 
No I don't know more than you. I am just trying to get ideas from experienced traders like you. I am trying to see if such a trade is viable or not and how to optimize it. As I suggested, will selling a strangle at a delta of 25% on each side sounds as a good start ?
 
Jones75 said:
Here's a link to using "Long Synthetic Straddles with Stocks", by Jim Graham. I've used it many times with relatively good success. Biggest drawback is if the liquidity is too thin, and you get screwed by the bid/ask spread.

And a cautionary note, understand the IV and make sure you're not overpaying or under selling.

https://www.discoveroptions.com/mixed/content/education/articles/longsyntheticstraddle.html
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Thanks Jones75 for the link, I enjoyed reading the article. Is this is your favorite option source?
 
So buy the straddle and sell the wings? This kind of smells like a short butterfly. That does not sound like it will be generating any alpha to me. Maybe if you look at the skew and you realize that the wings are higher then they should be, then sure.
 
It’s a synthetic put. Cash-secured doesn’t change the structure. There is no point in trading the synthetic straddle unless you’re trading odd lots or microstructure.
 
destriero said:
It’s a synthetic put. Cash-secured doesn’t change the structure. There is no point in trading the synthetic straddle unless you’re trading odd lots or microstructure.
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what you are saying is adding a short strangle to long straddle is a synthetic put. Is this is what you meant ?
 
lotfyisis said:
what you are saying is adding a short strangle to long straddle is a synthetic put. Is this is what you meant ?
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Long 100 shares + long two puts = long 1 synthetic straddle
Long 50 shares + long one put = long 1/2 synthetic straddle

Long 100 shares + long one put = long 1 synthetic call
Short 100 shares + long one call = long 1 synthetic put

Short strangle + long straddle = synthetic (iron) butterfly

Ostensibly we've learned a lot about options in the last 45 years. There is no vanilla structure left undiscovered.
 
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