That's the idea, indeed, although nobody (that I know of) uses delta measured in Eurodollar contracts for swaps. In general, people use DV01 and delta interchangeably in the context of portfolios of swaps and options. For purely linear portfolios it's all just DV01.
options . . . very hard to make money
- Thread starter billyjoerob
- Start date
SIV66 trades sugar, because as Homer Simpson said, first you get the sugar, then you get the power, then you get the women!
Options are fantastic tools if used properly and if one understands the risks properly.
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Bingo. I have made and continue to make money with options. However, you have to understand not only the Option and its "GREEKS" but the underlyer. And you must hedge with percise % based on the ration of "Option" to the underlyer. In other words if your long 50 Calls of IBM at X strike....and you hedge with Ibm stock...you better buy the proper amount of stock to hedge or it will kill your profits. This applies to whatever "OPTION" your playing a hedge on. Ratio Option Size to "Underlyer" must be spot on.
Most people do not hedge Equity Options or Options in general because its capital intensive.
Most people try to trade options directionally and get smoked because the Delta is .020 then time decay takes the delta to .50 plus and ZOOOOOOM the option moves faster than they can handle.
Of course my post is very simple in description. I leave the Technical Speak to McMillian and Sheldon Natenberg.....but I understand.
Options isn't for you typica Trader. Lets just say that.
But I agree.....with Sugar. The more Sugar, the power, the more VIP access.
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Bingo. I have made and continue to make money with options. However, you have to understand not only the Option and its "GREEKS" but the underlyer. And you must hedge with percise % based on the ration of "Option" to the underlyer. In other words if your long 50 Calls of IBM at X strike....and you hedge with Ibm stock...you better buy the proper amount of stock to hedge or it will kill your profits. This applies to whatever "OPTION" your playing a hedge on. Ratio Option Size to "Underlyer" must be spot on.
Most people do not hedge Equity Options or Options in general because its capital intensive.
Most people try to trade options directionally and get smoked because the Delta is .020 then time decay takes the delta to .50 plus and ZOOOOOOM the option moves faster than they can handle.
Of course my post is very simple in description. I leave the Technical Speak to McMillian and Sheldon Natenberg.....but I understand.
Options isn't for you typica Trader. Lets just say that.
But I agree.....with Sugar. The more Sugar, the power, the more VIP access.
Off topic, but whats the best book for volatility in general and skews, etc... natenbergs book is good, but looking for something more focused on vol as used today. Closest I could find is Adam Warner's book, but Amazon reviews (if to be believed) are less than stellar. Plus his blog has about 10% relevant to options and the rest sports, politics, and chicks in bikinis showing their rears
Delta decay, isolated to time. A 2-delta option will lose delta as it must trade to zero at expiration, if it remains otm. Negative Ddelta/Dtime. Think of a 2-delta call vs. a 98-delta put at the same strike. The deep itm put will converge to 100 as time passes, provided it remains itm.
A 2-delta option will lose delta as it must trade to zero at expiration. Negative Ddelta/Dtime. Think of a 2-delta call vs. a 98-delta put at the same strike. The deep itm put will converge to 100 as time passes, provided it remains itm.
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Thank you Sir Atticus! Well said.
I like Sheldon Natenberg...CBOE has all their "MMs" and most floortraders have to read that book. He may be outdated on Examples but overall concept is spot on.
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Thank you Sir Atticus! Well said.
I like Sheldon Natenberg...CBOE has all their "MMs" and most floortraders have to read that book. He may be outdated on Examples but overall concept is spot on.
uh, what's wrong with that mix?
I read about five pages deep. You will not find a way to consistently make money on options at Amazon. By the time the sheep know it, it's over. There is simply no other way to utilize a NON PREDICTIVE high probability system of removing credit from the market than options. I consistently make money for my clients with options. I have a double digit alpha, a beta of less than .6 and an average portfolio delta of + or - 4. with a failure rate of two out of one hundred. I've many times wondered who could possibly buy the crap I'm selling ... now I'm starting to get it. Who would take the other side of a bet that has a 97% chance of failure ????? The same guy that thinks the holy grail is for sale at Amazon. If you are using options as a way to use leverage on a trade that is predictive you will be fucked almost every single time. As for the spread, I average 7% price improvement. Where else can you actually screw a market maker by trading in the box on a low volume summer day? If you don't know how to use the emini's on their pivot points with a pit caller, the trin, bank, tick, ticki, tickq, vix, eprem, currency pairs, program trades and know when they are firing...
I will be there to take your money.
I will be there to take your money.