perfectly said.....
(what I was clearly poorly saying in my first post. Scenario 1)a), 1)b), 1)c) =potential/probable whipsaws.
sometimes I can be so dumb.)
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
option strategy question #2!
- Thread starter crayon851
- Start date
perfectly said.....
(what I was clearly poorly saying in my first post. Scenario 1)a), 1)b), 1)c) =potential/probable whipsaws.
sometimes I can be so dumb.)
Bingo! That is exactly the right explanation. Option-theoretic speak would be "a stochastic process can not be integrated locally since it's random at any increment size."
But you can still survive getting stopped out 24 times with a $0.02 stop loss and still breakeven.
edit: maybe only 12 times with slippage and commissions.
But you can still survive getting stopped out 24 times with a $0.02 stop loss and still breakeven.
edit: maybe only 12 times with slippage and commissions.
This then means you must be hedging intra day and End of day.
12 or 24 times could be an easy hit.
I have tried this in FX in a variation - with lots of liquidity - its amazing how quickly you rack up losses.
But you can still survive getting stopped out 24 times with a $0.02 stop loss and still breakeven.
edit: maybe only 12 times with slippage and commissions.
$0.02 max loss per stop cycle? That's less than the B/A spread on some stocks...You're really just taking vol exposure here, higher vol = more stopouts. Markets should be efficient in that regard.
This reminds me, I actually tried entering a long-term VXX short on Feb 5th this way. My rule was go short at 53, stop at 54, with 2k shares. Ended up getting whipsawed 4 times with 2000 shares each way, before it finally went my way. My breakeven was thus 49, and not surprisingly, I might as well have bought put options.