Sorry, the patent office won't even consider anything that files under "perpetual motion" or "Rube Goldberg" machines...
Is this strategy possible?
- Thread starter Sanaz3
- Start date
Sorry, the patent office won't even consider anything that files under "perpetual motion" or "Rube Goldberg" machines...
thanks guys for shedding light on this so far. Yeah, like I said, I'm still trying to learn more and to come up with the best strategy with the minimum loss. Yeah, by buying the calls/puts, the time value is something that inevitably becomes a loss, however small, on the last day if the underlying didn't move.
My goal now is to first identify the worst case scenario in my trade, and then try to eliminate or minimize its impact/loss!
My goal now is to first identify the worst case scenario in my trade, and then try to eliminate or minimize its impact/loss!
The wrost case scenario on any strategy where you only buy options is always the same, the scenario where you lose the premium you paid.
If you buy the guts strangle or the regular one as people have already pointed out you'll lose whatever time premium you paid if the stock does not have a significant move.
No offense but you're looking for something thats not really there. Money management will help you limit your losses but there is no free money to be had since there is no riskless strategy
Thanks Xflat. I understand what you guys are saying. What I first had in mind was similar to this mathematical graph, where the result (in math) is always positive.
Buying a combination of ITM money Call/Puts looks similar to the above...so it had me thinking to come up with a strategy that looked like this!
Actually, it's fine that the OP is going through this exercise of finding a "riskless" options trading strategy. If he/she sticks with the exercise sufficiently long they will hopefully understand how options work. The result will be that they will know why a riskless strategy is never possible (yes...even pure arbitrage, which almost never exists anymore, is not riskless), and then hopefully move on to understanding the different types of risk inherent in any given strategy, and how they work into appropriately expressing a trading view.
Quote from spindr0:
If you ignore B/A slippage and commissions, assume that all moves happen the day that you execute the position and pretend that a long put or call can have a delta of 1.3 or so, then there's absolutely nothing wrong with that graph!
damm you got me again! I should have known we were looking at 1.3 delta options.