What options out there tracing the sp nasdaq or russel have tight spreads ?
Options adjustment
- Thread starter met1989
- Start date
and can you suggest a way to lower the delta on such a spread that it will lose less?
Robert Morse
Sponsor
Sorry, but no. You lose less by playing smaller and choosing the strikes that will work for you, not by balancing delta. These are spreads with limited P/L. You need to be comfortable with that. Over trading them only benefits your broker.
So do u think trading delta neutral stragties there is more place to make money?
Robert Morse
Sponsor
I’m not allowed to provide trading advise so i have to be very general.
Every option trade that is not an arb has risk by design. The risk is represented by the Greeks. I’d you do it right, you target the Greek that you want risk in. E.g. delta for directional bets, Vega for betting on Vol changes, theta/gamma for targeting stock movement or lack of it.
Your desire to sell a butterfly, if ATM, is a bet that the stock will move outside the strike range but will look like Long gamma/long theta. Your risk is that the stock does not move.
If you worry about that and then delta or any other Greek, you are no longer focusing on the trade you choose. As this has limited risk, it makes little sense.
I do not recommend a delta neutral strategy for retail accounts. Too many trades with no thesis.
why did you say that the brokers make only money from those spreads ?
No one wants to navigate your fog, to facilitate your doom.
Clue.
Clue.
I cannot help you because I don't know how to trade butterfly. I studied, backtested, simulated butterflies using BSM for almost a year and only last week made my first trade.
Best help you got from @Robert Morse: Question, why did you sell the butterfly? Your answer should come from there.... If you don't know, you shouldn't trade butterfly, if you insist, then backtest and sim, perhaps after that @destriero @Kevin Schmit, tommiginnis... might answer your questions.
Best help you got from @Robert Morse: Question, why did you sell the butterfly? Your answer should come from there.... If you don't know, you shouldn't trade butterfly, if you insist, then backtest and sim, perhaps after that @destriero @Kevin Schmit, tommiginnis... might answer your questions.
The only way would be to take a directional bet as Robert says this adds more risk. Your either closing a short in hopes of it going in the direction of the long side or adding to the long said in hopes of it going in that direction either way more risk.