My Options Play

hajimow · Nov 28, 2005

you sure you want to be short gap and gamma going into the holiday season?
What do you mean? Do you think market will go up in 3 weeks or down? I mean in the holiday season.

sle · Nov 28, 2005

Quote from hajimow:What do you mean? Do you think market will go up in 3 weeks or down? I mean in the holiday season.

I'd not venture a guess which way it's going to go.

Historically, gamma is allways cheap across year-end, as there is a lot of willing sellers. At the same time, it is the time of major announcements and various other vol-inducing events.

hajimow · Nov 28, 2005

I'd not venture a guess which way it's going to go.

Historically, gamma is allways cheap across year-end, as there is a lot of willing sellers. At the same time, it is the time of major announcements and various other vol-inducing events.

I think everyone is guessing (speculating) when he enters a trade. I don't believe short term (daily or hourly) speculation is easier than longer term speculation. Since I am one of those traders that does not have a good taste in short term guessing, I trade on options. I had already sold naked Call for ADI 40. I sold PUT 35 today. I don't know where ADI will be tomorrow but I am willing to buy it at 35 and short it at 40. That is why I had those trades. All my trades are like that. I have 21 positions open as of today and my portfolio is up 21.34% this month. I had one losing month this year and that was October.

cnms2 · Nov 28, 2005

I don't want to scare you (too much

) but did you calculate what your positions will do if all your underlyings move against you 3, 4 or 5 sigma? Small probability doesn't mean impossible ...

Quote from hajimow:

I'd not venture a guess which way it's going to go.

Historically, gamma is allways cheap across year-end, as there is a lot of willing sellers. At the same time, it is the time of major announcements and various other vol-inducing events.

I think everyone is guessing (speculating) when he enters a trade. I don't believe short term (daily or hourly) speculation is easier than longer term speculation. Since I am one of those traders that does not have a good taste in short term guessing, I trade on options. I had already sold naked Call for ADI 40. I sold PUT 35 today. I don't know where ADI will be tomorrow but I am willing to buy it at 35 and short it at 40. That is why I had those trades. All my trades are like that. I have 21 positions open as of today and my portfolio is up 21.34% this month. I had one losing month this year and that was October.

hajimow · Nov 28, 2005

I don't want to scare you (too much ) but did you calculate what your positions will do if all your underlyings move against you 3, 4 or 5 sigma? Small probability doesn't mean impossible ...

You ARE scaring me. Seriously. stop it. Ok I won't short anymore.deal?

hajimow · Nov 28, 2005

to cnm2:

Did you read the book that I recommended? If not, shame on you.:eek:

cnms2 · Nov 28, 2005

You guessed right: I haven't. Mea culpa ...

Quote from hajimow:
to cnm2:

Did you read the book that I recommended? If not, shame on you.:eek:

hajimow · Nov 28, 2005

I just finished it. It was a great book. I learned a lot. It does not use your brian.It is like a story.

sle · Nov 28, 2005

Quote from hajimow:
Since I am one of those traders that does not have a good taste in short term guessing, I trade on options.

If you are saying that you are have fundamental opinions on the underlying, you should be trading the underlying. The point of trading in the options is that you can express directionless opinions and the actual traded asset is the volatility of the underlying.

Quote from hajimow:
I had already sold naked Call for ADI 40. I sold PUT 35 today. I don't know where ADI will be tomorrow but I am willing to buy it at 35 and short it at 40. That is why I had those trades.

You are hoping that ADI (whatever that is, I don't deal in equities) will stay in place and in a pretty narrow range (5 bucks).

Quote from hajimow:
All my trades are like that. I have 21 positions open as of today and my portfolio is up 21.34% this month. I had one losing month this year and that was October.

In other words, you are a seller of gamma, mainly in the form of strangles. What is your "disaster" plan? Are you delta-hedging or you actually have enough capital to handle an asignment on all of your positions at the same time?

Rob on Business · Nov 29, 2005

To CNMS2 - I bought that options "bible" and what a book! It just arrived in the mail and now I see why it cost $105. It'll be a while before I finish it if I don't skip all over the place in it. Thanks for the rec.