Dependingon the IV's of options involved, there are probably better ways of capitalizing on a mkt call of a slow grind down much like the mkt call involved in a covered call which is a grind up. For instance, you could buy OTM calendars on the lower strikes, maybe an asymetric fly where you buy 3 A puts, sell 5 B puts and buy 2 C puts to take advantage of the skew. positives are limited risk, theoretical advantage coz of skew and no blow-up risk. negatives-pain in the ass to leg in/out, commish. Check out books by Cottle, Natenberg., Mcmillan, Taleb
Opposite of covered calls?
- Thread starter almostatrader
- Start date
metooxx, how are the Bahamas? I was hoping to ask a couple of q's if you are up for it as you are one of the most knowledgeable people here.
How many traders do you have working at your firm? What kind of returns on the firm do you target/attain? 50-100 stocks is a good deal for one person, do you break it up among the staff such as 10 for each person?
thanks, take care.
How many traders do you have working at your firm? What kind of returns on the firm do you target/attain? 50-100 stocks is a good deal for one person, do you break it up among the staff such as 10 for each person?
thanks, take care.
If I sell the call for a whole dollar, that means that I collect $100 per contract I sell, what's the worst thing that can happen ? Maybe I can sell the put for a dollar too and make $200 being short the strangle. Geez, if I keep doing this I can have a nice steady income coming in. And I'm so sure that the stock isn't going to move against me. I mean, it's not like one trade can actually break me !
Vega
key-- =sarcasm
Personally I would never sell naked calls or puts, there are times to sell options due to high vol, however if you do this, PLEASE cover yourself buy at least purchasing a further out of the money call/put against the option you're short in the "strange" event that the market moves against you severely. Remember seeing guys on the floor back in the day saying "Yahoo will never hit $150, I think they were forced to cover somewhere between $250-350:eek: :eek: :eek:
Vega
key--
=sarcasmPersonally I would never sell naked calls or puts, there are times to sell options due to high vol, however if you do this, PLEASE cover yourself buy at least purchasing a further out of the money call/put against the option you're short in the "strange" event that the market moves against you severely. Remember seeing guys on the floor back in the day saying "Yahoo will never hit $150, I think they were forced to cover somewhere between $250-350:eek: :eek: :eek:
I think there is PDT rule in options. I spoke with at least 3 brokers and all of them echoed the same thing -that options are subject to PDT.
Eg. Buy x contracts of IBM Jan 80 call incurring a $3000 debit with your account @ $18,000. You can do this round trip 6 times per day since 3K debit * 6=18K. HOWEVER, doing it the 7th time will get you over your acct (i.e. 3K * 7 = $21,000) . You'll probably get a margin call for 3K which needs to be satisfies within 5 days else Mr. Freezeo el accounto !
If you do only 6 round trips of said options, you are ok (6 times is over the PDT limit) SINCE options settle next day, you then have your same 18K next day for options trades.
So people might have the illusion that they can trade more than 3 times a week due to above example, but in reality it is covered under PDT not to mention that option longs are not margined but bought for cash.
Any one else hear differently?
Eg. Buy x contracts of IBM Jan 80 call incurring a $3000 debit with your account @ $18,000. You can do this round trip 6 times per day since 3K debit * 6=18K. HOWEVER, doing it the 7th time will get you over your acct (i.e. 3K * 7 = $21,000) . You'll probably get a margin call for 3K which needs to be satisfies within 5 days else Mr. Freezeo el accounto !
If you do only 6 round trips of said options, you are ok (6 times is over the PDT limit) SINCE options settle next day, you then have your same 18K next day for options trades.
So people might have the illusion that they can trade more than 3 times a week due to above example, but in reality it is covered under PDT not to mention that option longs are not margined but bought for cash.
Any one else hear differently?