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My first trade!
- Thread starter TSLexi
- Start date
Quote from cdcaveman:
my experience is earnings is random ... selling strangles isn't a good idea at all... and the whole 90 percent of options expiring worthless is how much your missing the point...
pick up a book or five.. euan sinclair.. hull.. read them..
Elaborate on your first statement...I'd be trading IV, not direction.
Quote from TSLexi:
Elaborate on your first statement...I'd be trading IV, not direction.
with options your inheretly trading distrobution as well.. just because you sell high iv doesn't mean you won't lose.. the trend isn't your friend in that case.. you could sell a strangle it could go slowly in one direction and the variance could be low but still you can lose.. or you can sell what you think is high vol , and it can double
Quote from cdcaveman:
with options your inheretly trading distrobution as well.. just because you sell high iv doesn't mean you won't lose.. the trend isn't your friend in that case.. you could sell a strangle it could go slowly in one direction and the variance could be low but still you can lose.. or you can sell what you think is high vol , and it can double
That's why I'd prefer to be a strangle buyer when trading earnings IV. Limited risk, and gamma scalping can hedge.
When trading earnings vol, delta and gamma must be neutralized.
Quote from TSLexi:
That's why I'd prefer to be a strangle buyer when trading earnings IV. Limited risk, and gamma scalping can hedge.
When trading earnings vol, delta and gamma must be neutralized.
i thought you said sell strangles.. my bad.. .. i've never tried gamma scalping but i imagine its a pretty saturated market...
yes thats what she saidQuote from cdcaveman:
i thought you said sell strangles.. my bad.. .. i've never tried gamma scalping but i imagine its a pretty saturated market...
and since you'd be ''trading IV not direction'', why you mention that 90 percent of all options expire worthless
all you write here is ridiculous lexi
Quote from Georgi90:
yes thats what she said
and since you'd be ''trading IV not direction'', why you mention that 90 percent of all options expire worthless
all you write here is ridiculous lexi
I stand corrected. I researched more about that quote, and it's a myth...most options are closed out prior to expiration, and only about 25% expire worthless.
I have no idea what I was trying to use that quote to support...
my opinion is close this trade out here. You should probably (luckily) be in an overall profit.
tips for next time:
do not under any circumstance revenge trade, which is what you did here and got away with.
tips for next time:
do not under any circumstance revenge trade, which is what you did here and got away with.
Just closed the trade. BTC'ed the short call for $2.18, so I made a $0.54/share profit. STC'ed the long put for $0.77, so I made an $0.11/share profit.
Overall, trade profit was $0.65/share, or $260. Since I put $2000 at risk, my ROI was 13%.
I think what I should do from now on is simply analyze stocks for value, and write back-month DOTM puts to acquire the shares, then write front-month DITM calls to protect the shares and earn monthly premium income.
If I get assigned, I get shares in a quality company for a nice discount that I can write calls against to lower the cost-basis and make monthly income; if I don't get assigned, I get free money
Overall, trade profit was $0.65/share, or $260. Since I put $2000 at risk, my ROI was 13%.
I think what I should do from now on is simply analyze stocks for value, and write back-month DOTM puts to acquire the shares, then write front-month DITM calls to protect the shares and earn monthly premium income.
If I get assigned, I get shares in a quality company for a nice discount that I can write calls against to lower the cost-basis and make monthly income; if I don't get assigned, I get free money