no analysis of greeks when trading options

[tradingjournals]

Quote from spindr0:

CC writers are generally selling the call for the premium and usually aren't concerned with vega. The underlying is their issue and as long as it cooperates, they don't care how high or low IV goes as long as the call expires and they get to write again and again....

The OP is doing verticals. Since they're directional, again the underlying is the concern. Granted that IV can affect the value of the spread but to some degree, the IV change of the short leg offsets that of the long leg.

IMHO, the Greeks are far more useful in complex combo positions where the position mutates with adjustments.

Good post!

 

[The Big D]

Quote from tradingjournals:

Are you joking or are you serious?

Does it matter?

 

[sws2179]

Quote from tradingjournals:

Are you joking or are you serious?

It's true especially for day trading; anything below .01 will not change the premium even if the stock moved by 1-2%.

 

[Jerkstore]

Quote from The Big D:

Many responses above seem to be missing OP's statement that he uses charts. A lot of these effects would show just fine on a chart.

Now the real question is "what do the greeks tell you that isn't on a chart?"

Read what rew wrote again.

 

[sonoma]

Quote from The Big D:

Many responses above seem to be missing OP's statement that he uses charts. A lot of these effects would show just fine on a chart.

Now the real question is "what do the greeks tell you that isn't on a chart?"

There's a bit of confusion here. Greeks indicate semi-quantitatively/qualitatively where risk exists for an option position. Position greeks of an inventory can't be discerned from a price chart.

 

[Martinghoul]

Greeks only matter if you're properly sensitive to the mark-to-mkt of your position before expiry.

 

[dagnyt]

Quote from spindr0:

I'll probably catch flak for this but I don't think that your everyday retail investor who employs basic positions really needs the Greeks. If you're doing a covered call (or equivalent) or a vertical and employing a stop, it's pretty clear where that is.

OTOH if one has a combination of many CC's, spreads, etc and one wants to manage the overall risk of the portfolio then it's a different story.

Hey Spin,

No flak. The Greeks are used to measure risk. If a trader doesn't want to measure risk, that's his/her business.

Mark

 

[dagnyt]

Quote from nixodian:



l use IB as my broker, almost always IB will give u a price worse than mid price for the credit spreads on OEX XEO index options.
is your broker any better?

You have some very bad misconceptions.

1) A broker doesn't give you anything

2) The person with whom you trade - the person who takes the other side of the spread - that's the person who fills your order. that's eh person who 'gives' you a price.

3) The market maker is thee to get 'better than mid-point' prices. Why would you anticipate hat anyone would want to fill your order at such prices. As the retail trader, you pay worse than mid-point.

Mark

 

[spindr0]

Quote from dagnyt:

No flak. The Greeks are used to measure risk. If a trader doesn't want to measure risk, that's his/her business.

Hey Mark, LTNS

No flak back atcha

As I stated, I just don't see what Greeks will do for a covered call writer. You know you buy price and premium received. You know your cost basis, return if unchanged, return if assigned, etc. Every day you know where you stand - stock gain or loss and premium decay/change. What's alpha, beta, vega and schmega going to tell you that's so important?

 

[OddTrader]

Quote from nixodian:

... dont look at the greeks, am l missing out on something / at a disadvantage to someone who analyzes greeks for eg?

imo, both yes and no, very much strategy-, timeframe- and style-specific! Just 2 cents!