Name of Option Position?

[oldtime]

Quote from atticus:

You're missing the point. You risk is unlimited (well, bound to zero on shares) while your upside gains are capped to strike-spot+premium.

Yeah, I got it. I'd be better off just buying a call. And if that's too expensive I can't afford to play.

So the price of a call would be a good starting point to determine the risk of a trade, and maybe I could fine tune it from there.

It may be simple to you, but that is a very valuable piece of information to me.

 

[atticus]

Quote from oldtime:

Yeah, I got it. I'd be better off just buying a call. And if that's too expensive I can't afford to play.

So the price of a call would be a good starting point to determine the risk of a trade, and maybe I could fine tune it from there.

It may be simple to you, but that is a very valuable piece of information to me.

There are methods which retain some collection of decay and are limited-risk bullish. You cannot lose more than the debit-requirement.

Shares at 50:

Short vol-
Buy the 45/50 call spread at 3.50
Buy the 45/50/55/60 condor at 2.50
Buy the 50/55/60 fly at 1.25

Long vol-
Buy the Aug/Sep 55 call spread at 1.00 (2.00 x 3.00)

There are many others... you need to ask:

What's my target?
What duration?
Do I want to be long or short vol? (Or neutral. Trade 2x1 time spread to fly or condor)

 

[oldtime]

Quote from atticus:

There are methods which retain some collection of decay and are limited-risk bullish.

Shares at 50:

Short vol-
Buy the 45/50 call spread at 3.50
Buy the 45/50/55/60 condor at 2.00
Buy the 50/55/60 fly at 1.40

Long vol-
Buy the Aug/Sep 55 call spread at 1.50 (2.50x4.00)

Really appreciate you taking time on elementary stuff.

so call long 45 short 50

not sure I understand condor long 45 long 50 short 55 short 60?

fly long 50 short 55 short 60?

 

[oldtime]

Quote from oldtime:

Really appreciate you taking time on elementary stuff.

so call long 45 short 50

not sure I understand condor long 45 long 50 short 55 short 60?

fly long 50 short 55 short 60?

yeah that doesn't make any sense, the condor would be long 45 short 50 long 55 short 60 right?

 

[atticus]

Quote from oldtime:

yeah that doesn't make any sense, the condor would be long 45 short 50 long 55 short 60 right?

long, short, short, long.

Long the 45/50 call spread, short the 55/60 call spread.

 

[oldtime]

Quote from atticus:

long, short, short, long.

Long the 45/50 call spread, short the 55/60 call spread.

thanks atticus, I need to go read the book..

The one I read was excellent written by a Thomson Mckinnon broker, but that was before butterflys and condors.

 

[spindr0]

Quote from oldtime:

Last time somebody asked this questions the answers were "Who cares?" and "Get a book."

It's basically just a short straddle with a UL in between. 2 x 1 (or 1 x 2 depending on how you look at it.)

The idea is I'm long term bullish but not expecting anything spectacular short term. So from the top down it's

short 2 otm calls
long 1 ul
short 2 otm puts

I know I'll get hurt if ul gets close to strike, but that's a risk I'm willing to take.

All I want to know is if there's a name for it.

Don't get a book, get a life

Like all option positions, where you get hurt depends on time remaining until exp. At exp, you get hurt outside the strikes. Before, inside.

Eliot described it accurately. It's equivalent to 3 short puts at two different strikes with an extra short call (I think atticus misplaced one short call in his description).

You can save on complexity, slippage and commissions by doing an unbalanced short strangle and achieve a similar risk profile (sell 3 puts at lower strike and 2 calls at higher strike.

But the real question is, what are you looking to achieve? Are you forcing your foot into a shoe that you found or are you trying to find a shoe that fits you?

 

[spindr0]

Quote from oldtime:

No, I just want to be flat out long, but even the minimum contract is too volatile for my account (and I probably shouldn't even be trading it) so I have to give up something somewhere...

The premiums are fat and too much to go long. Going long with a protective put too expensive. Call spread too expensive. Short put+long call too much downside risk.

One way or another you gotta pay to play... or accept something that has a limited payoff with a limited risk. Depending on the strikes utilized, an OTM iron condor could achieve roughly a 1:1 R/R that you mentioned in one of your replies (sell 2 OTM spreads).

 

[oldtime]

Thanks spindro, you and atticus and eliot have given me a lot to think about.

Let me just lay low for a while.

I need the book so when someone tells me I'd be better off just shorting a condor and going long a broken fly I don't have to bore them asking what they mean.

I had a life, it was pretty nice for a while, but you're a mathmatician so you'll probably understand.

Out where I live the power goes out during a big storm and I sit on my front porch and listen to it rain and thunder and watch the lightning and think until the TV comes back on.

When the power comes on and I realize more than 50% of my thoughts are nothing but memories, it's time to get a new life.

 

[spindr0]

Quote from oldtime:

I need the book so when someone tells me I'd be better off just shorting a condor and going long a broken fly I don't have to bore them asking what they mean.

I had a life, it was pretty nice for a while, but you're a mathmatician so you'll probably understand.

I used to have a life but then I discovered the internet

I recommend that you find something that graphs multiple option legs and displays a risk graph. A picture is wotha 1,000 internet words. DL something for Excel, get a program, use a broker's tools. Life will eb easier.

A demain...