Options: First Paper Trade

[ondafringe]

Hmm. it seems my prog did calc it wrongly. It should be something like 42 or so, instead of my said 38 :-(
I just verified it: DTE=38 on 8/9 is correct for ExpDate Sep-16!

But when you say DTE=52, do you still mean Sep-16, or maybe a later ExpDate?

No. I mean it was 52DTE at the point of inception, when the trade was made on 8/9.

 

[zghorner]

im not hating...so I will start with a compliment...you are ahead of me when I was 9 months into trading options. Primarily because I was gambling on long options only like a child.

but...but...if you are trading options without a clear understand on something as rudimentary as theta curve...I would personally recommend, pausing and going back to the basics. You must have a strong foundation in anything you seek success in, and it almost seems you are putting the cart in front of the horse a bit.

I would also consider reading through all of the old threads by destriero/atticus as part of your research/education. He is a real deal options OG and although difficult to decipher sometimes...throws out some tips and tricks not commonly found in books.

 

[ondafringe]

No. I mean it was 52DTE at the point of inception, when the trade was made on 8/9.

Oh, yeah. I see my mistake. 38DTE. Numbers are starting to get jumbled up! lol

 

[earth_imperator]

With credit spreads, I don't see how you can have anything but an upside-down risk:reward because premium received will always be less than your risk. Either that or I'm missing something.

Opps. I was thinking of only ShortPut (w/o the LongPut part), and in that case the ratio indeed should be like I said.
I'll need to study/research/test also the credit spread case; I'll then post my findings...

 

[ondafringe]

im not hating...so I will start with a compliment...you are ahead of me when I was 9 months into trading options. Primarily because I was gambling on long options only like a child.

but...but...if you are trading options without a clear understand on something as rudimentary as theta curve...I would personally recommend, pausing and going back to the basics. You must have a strong foundation in anything you seek success in, and is almost seems you are putting the cart in front of the horse a bit.

I would also consider reading through all of the old threads by destriero/atticus as part of your research/education. He is a real deal options OG and although difficult to decipher sometimes...throws out some tips and tricks not commonly found in books.

Well, I thought I did have a handle on theta decay, which works in favor of the seller.

So you have intrinsic and extrinsic value, with extrinsic being primarily made up of theta. From the long perspective, if intrinsic value for a put is strike minus spot, and you have 3 points of intrinsic, and the premium paid was 4, you would still have 1 point of extrinsic value working against you, representing remaining theta. But if the intrinsic was 4 and the premium was 3, 1 point above parity, then intrinsic would have overcome remaining extrinsic.

Am I off on that?

BTW, I appreciate the compliment.

 

[earth_imperator]

I would also consider reading through all of the old threads by destriero/atticus as part of your research/education. He is a real deal options OG and although difficult to decipher sometimes...throws out some tips and tricks not commonly found in books.

You must really be joking! That @destriero idi? Really? I was thinking he is just an elite spammer.
Just show me one of his postings that is really worth to read for learning something.
And what is his track record in trading? -100% ?

 

[zghorner]

Well, I thought I did have a handle on theta decay, which works in favor of the seller.

So you have intrinsic and extrinsic value, with extrinsic being primarily made up of theta. From the long perspective, if intrinsic value for a put is strike minus spot, and you have 3 points of intrinsic, and the premium paid was 4, you would still have 1 point of extrinsic value working against you, representing remaining theta. But if the intrinsic was 4 and the premium was 3, 1 point above parity, then intrinsic would have overcome remaining extrinsic.

Am I off on that?

I said Theta curve...CURVE. rate of decay change via DTE.
Your OP seemed like you were saying: "I only bought these because I read this time frame was best but I need to look into that more". You really need to look into that more and know exactly why certain time frames are better or worse for various trades.

 

[zghorner]

You must really be joking! That destrio idi? Really?
Just show me one of his postings that is really worth to read for learning something.

You aren't being serious...right? Bc it's hard to tell sometimes on forums.

 

[ondafringe]

I said Theta curve...CURVE. rate of decay change via DTE.
Your OP seemed like you were saying: "I only bought these because I read this time frame was best but I need to look into that more". You really need to look into that more and know exactly why certain time frames are better or worse for various trades.

Oh, okay. I can see where that would help with choice of timeframe. Will make that high on my ToDo list. Thanks.

 

[ondafringe]

I said Theta curve...CURVE. rate of decay change via DTE.
Your OP seemed like you were saying: "I only bought these because I read this time frame was best but I need to look into that more". You really need to look into that more and know exactly why certain time frames are better or worse for various trades.

Wow! I just looked that up. One of the critical missing links! Damn... that is exciting! I know how I'll be spending my day. Than you, again, for pointing that out.