Open Interest Pinning and Butterflies

caroy said:
Another piece was the selling iron butterflies at the pinning strikes on Wednesday's close and taking them off Thursday morning.
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I might have missed it, but wasn’t he favoring ratio spreads where he is long 1 ITM and short 3 OTM?
 
qlai said:
I might have missed it, but wasn’t he favoring ratio spreads where he is long 1 ITM and short 3 OTM?
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Yes good point. He writes much about the 1:3 ration spread as a strategy for the last couple of days of expiration.
 
Thats my bread and butter,but it's really margin arbitrage.Cant get very big even with PM. You have to be long wings to keep the margin police off your nutsack..

caroy said:
Yes good point. He writes much about the 1:3 ration spread as a strategy for the last couple of days of expiration.
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First met me say I do this in stocks like MSFT and AAPL.
I will do it in TSLSA,but I proceed with extreme caution..

I do not trade the ITM/ATM options. My long Delta is probably in the 30 range,maybe less..There is always one option that gets bid up,and that's what I nail.If the stock rallies and sticky Delta holds,I SHOULD do very well..

The major constraint is margin.You can't get big without capping your exposure with the cheapos..



qlai said:
He is suggesting to have ratio where initial deltas are close to neutral (ex +80x1;-20x4). Same for you?
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taowave said:
First met me say I do this in stocks like MSFT and AAPL.
I will do it in TSLSA,but I proceed with extreme caution..

I do not trade the ITM/ATM options. My long Delta is probably in the 30 range,maybe less..There is always one option that gets bid up,and that's what I nail.If the stock rallies and sticky Delta holds,I SHOULD do very well..

The major constraint is margin.You can't get big without capping your exposure with the cheapos..
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If you're doing the 1:3 ratio. How far out are you buying the wing to reduce the margin? Using a profit target or a delta target?
 
caroy said:
This happened before with a expiration day straddle. Maybe I logged out for a coffee break earlier and had to click it again when I logged back on. Needless to say if I want to experiment with expiration day plays I need to find a way to have my broker stop choosing my exits when I'm waiting for a move. Maybe I can bitch and get a free coffee mug out of it or something like that. If I do I'll post a picture of it
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Off the phone with TastyWorks. They exited even though I clicked monitoring as the account could not have handled assignment. Shouldn't be a long term issue as I will be adding more funds and am using this account to test some ideas. Still frustrating. No free mug forgot to ask. Cheers.
 
Yes...and it is against my "religion"...Had (have:) a terrible habit of sometimes being penny wise and dollar foolish.. A recent example..was in the TSLA 1/22 1120-1260 call spread for .20 credit..1260's got down to .20...I stared at them,thought about buying at least half back(spending the credit),but cheaped out.The went to over 5 bucks.Not too mention,if TSLA ever really rips,I will face a very large margin call...

qlai said:
Does this mean you are always on lookout for cheap far OTM options in your preferred stocks?
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If I like the spread and want to get big,I buy the ..01/.02 options to cap margin...However,if I can buy a .04 option 4 strikes lower.Ill buy them on a ratio..Im talking 3 days and in for DTE..

If I am trading TSLA,where Margin is stressed on +- 50% stock move,I have started to buy wings at much higher prices..Ive shifted my approach by doing ratios "cloder" to the money with much higher theoretical edge based off of price distributions/vol


caroy said:
If you're doing the 1:3 ratio. How far out are you buying the wing to reduce the margin? Using a profit target or a delta target?
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