Option Straddle

[Zwaen]

Correct. At least I try to.
Although I am not focusing on delta neutral adjustments. More concerned about tail risk, and understanding vega and IV changes and effect on premiums.

About that hedging tail risk, something i've also been thinking about, what could be an approach is to 'collect' otm with long exp when they are relatively cheap. This in asuming you can use them as tail hedge in your 'normal business'. One point is off course is determing what cheap actually is.

Myself i am experimenting in a similar way. Now doing research in a simple pivot in price in combination with stallment in price. It looks like (for long)a fly approach (5 legs) in combination with puts in different exp to hedge the tail could be interesting. But still, very research-stuff

 

[cesfx]

About that hedging tail risk, something i've also been thinking about, what could be an approach is to 'collect' otm with long exp when they are relatively cheap. This in asuming you can use them as tail hedge in your 'normal business'. One point is off course is determing what cheap actually is.

Myself i am experimenting in a similar way. Now doing research in a simple pivot in price in combination with stallment in price. It looks like (for long)a fly approach (5 legs) in combination with puts in different exp to hedge the tail could be interesting. But still, very research-stuff

By "collect" you mean buy and collect? Like shop to buy a few cheap otm?


I am also looking at flies, diagonals/calendar, doubles, long and short.
Looking at iv terms structure when choosing the different exp. At least that is what I did when I picked the 5th of may. Volatility looks relatively low now. So at the moment I am looking at buying shorter term otm, and if I feel there might be movement, maybe even add for a ratio. With the idea of rolling wings, buying different strikes or cover it all. I don't like to go around naked. Volatility spikes is my main worry when I am selling premium, but... and take my words with a pinch of salt... I kind of expect price to move with a vol spike, hence looking at hedging the tail.
I try to keep it simple with price, I don't think I am good at forecasting stall or movement, and I did my share of technical analysis.

So, as I read from experienced traders that options are mostly priced efficiently, I prefer to learn more about the greeks, options pricing and volatility, and use those data.

I just started reading Option Volatility and Pricing from Natenberg.
As adviced here on ET on older threads.

 

[Zwaen]

By "collect" you mean buy and collect? Like shop to buy a few cheap otm?


I am also looking at flies, diagonals/calendar, doubles, long and short.
Looking at iv terms structure when choosing the different exp. At least that is what I did when I picked the 5th of may. Volatility looks relatively low now. So at the moment I am looking at buying shorter term otm, and if I feel there might be movement, maybe even add for a ratio. With the idea of rolling wings, buying different strikes or cover it all. I don't like to go around naked. Volatility spikes is my main worry when I am selling premium, but... and take my words with a pinch of salt... I kind of expect price to move with a vol spike, hence looking at hedging the tail.
I try to keep it simple with price, I don't think I am good at forecasting stall or movement, and I did my share of technical analysis.

So, as I read from experienced traders that options are mostly priced efficiently, I prefer to learn more about the greeks, options pricing and volatility, and use those data.

I just started reading Option Volatility and Pricing from Natenberg.
As adviced here on ET on older threads.

Sorry for my bad english, not native us or uk. With collect i just meaned buy indeed.

I certainly also think options in liquid markets are priced efficiëntly. I do think it is usefull for creating more efficiënt structures which suit particular profit/loss diagrams or events, more then simply go long or short.

 

[blueraincap]

Straddle: /ˈstrædl̟/ to sit or ride with a leg on either side of (something)

 

[cesfx]

Sorry for my bad english, not native us or uk. With collect i just meaned buy indeed.

I certainly also think options in liquid markets are priced efficiëntly. I do think it is usefull for creating more efficiënt structures which suit particular profit/loss diagrams or events, more then simply go long or short.

It's fine, I am not native speaker too.
I just wanted to make sure I understood what you meant, as premium could be collected by selling