Option Greeks - Are they useful or noise?

[OTM-Options]

Currently I have some long skew, long vol, delta flat trades on a popular ETF . It may work or it may not work, but I'm not even sure how I'd even start to set them up if I didn't have some basic ideas where the greeks generally were. If constancy of value were a criteria all financial variables/ratios/indicators would be useless since they all change with varying frequency.

Wow sounds complicated, all that option greek gobblie goo lingo. But your position is probably a very simple spread that can be visualized more efficiently by studying the underlying without the use of the option greeks - before entry and after entry.

Maybe the point is that traded price is the only thing worth watching in the markets, which I suppose is a school many here on ET adhere to.

Yes that is what I'm leaning towards. Focus on the underlying and overall market sentiment, and avoid noise such as the option greeks.

 

[OTM-Options]

Lots of negative posts, there is no need to be so defensive. I don't see the value in the option greeks that's why I started the thread, I wanted feedback on what you guys used them for. Get back on topic and answer the original question:


Option Greeks - Are they useful or noise?

Gamma
Theta
Vega
Impvol
Delta

IMO ..... Since the values continuously change based on the stock I find them to be useless. What do you guys use them for?

 

[stoic]

Option Greeks - Are they useful or noise?

• Gamma
• Theta
• Vega
• Impvol
• Delta

IMO ..... Since the values continuously change based on the stock I find them to be useless. What do you guys use them for?

Totally useless, except for those trying to sell you some software or a book.

 

[nomoremondays]

But your position is probably a very simple spread that can be visualized more efficiently by studying the underlying without the use of the option greeks - before entry and after entry.

Yes that is what I'm leaning towards. Focus on the underlying and overall market sentiment, and avoid noise such as the option greeks.

It's a spread sure. As to whether it simple. Maybe to some, maybe not to others, I dunno.
It has a otm long put a few months out and short a call spread farther out. I don't think the details are important here but the gist of the matter is that I just want vol exposure on this trade. No directionality (at least none on a day to day basis)as I have enough of that in other positions. Basically looking to diversify the risk factors in my book and not run too much beta. How do you propose I achieve that in option land without greeks and just by studying underlying(s)?
What you are saying, might, just might, have some merit if one was just holding one thing and one thing alone on a long (premium) levered basis, but once your universe expands...

 

[newwurldmn]

Currently I have some long skew, long vol, delta flat trades on a popular ETF . It may work or it may not work, but I'm not even sure how I'd even start to set them up if I didn't have some basic ideas where the greeks generally were.
If constancy of value were a criteria all financial variables/ratios/indicators would be useless since they all change with varying frequency. Maybe the point is that traded price is the only thing worth watching in the markets, which I suppose is a school many here on ET adhere to.

I don't understand why people are vague about positions that are very liquid. Either mention the trade or don't.

For example: I am long ibb April ATM gamma.

 

[OTM-Options]

I don't understand why people are vague about positions that are very liquid. Either mention the trade or don't.

For example: I am long ibb April ATM gamma.

OK .... So I had to Google "gamma" to decipher that position. With IBB at $339.70 it could be long the 340.00 calls, puts or both.

 

[nomoremondays]

I don't understand why people are vague about positions that are very liquid. Either mention the trade or don't.

For example: I am long ibb April ATM gamma.

Mainly because in this specific instance the detail doesn't really matter and I don't want to get sidetracked into a discussion on the merit of the position.
Why do you think it is required to mention the underlying in the context of the discussion.

 

[OTM-Options]

Mainly because in this specific instance the detail doesn't really matter and I don't want to get sidetracked into a discussion on the merit of the position.
Why do you think it is required to mention the underlying in the context of the discussion.

Good point ....... This thread is about the option greeks. Knowing the underlying will influence how the greeks should be interpreted. The same trader will handle two trades differently based on the underlying even though the greeks are nearly identical, making the greeks less relevant.

 

[Windlesham1]

I use the greeks to estimate what will happen to my positions when, or if 'X' happens and for comparitive pricing. Options are complicated and rightly so- directional trading is for other people who will get a big surprise sooner or later as the options will behave in an unexpected way

 

[taowave]

Lots of negative posts, there is no need to be so defensive. I don't see the value in the option greeks that's why I started the thread, I wanted feedback on what you guys used them for. Get back on topic and answer the original question:


Option Greeks - Are they useful or noise?

Gamma
Theta
Vega
Impvol
Delta

IMO ..... Since the values continuously change based on the stock I find them to be useless. What do you guys use them for?

If you dont understand/rely on the greeks,how can one determine the risk reward for a given move in the underlying?

How do you decide what percent of spot strike to choose And what quantity? Simply based on dollars spent? Wouldn't you like to simulate profitability for a given move?

If you are punting/buying and walking away till expiry, that's a bit different.