Searching for TOP mentoring program in options

[mark trader]

Quote from optioncoach:

ToS gives the dollar value of the greeks which can be confusing. Think of it this way. You have a 510 Call in the analyzer. The price slices give the greeks for the call at different prices whereever you put the slices. Under Mode, you can click on LIVE where it will show the current price of the underlying. You can also move one of the red dotted lines to the strike of 510 to get the current greeks of the position at that stock price.

Now to get the actual greeks divide the dollar value by $100 and then by number of contracts. So at $540 where one of the slices are and close to where the stock price is now ($545). $68.18 is the dollar delta value so divided by 100 the delta is .68 at $540 underlying price.

So to make sure I am not confusing you, first step is divide by $100 per contract to convert dollar value of greeks to actual greek values.

Click on the LOCK word under MODE on the slices and turn it back to live and all 3 will move the vertical dotted red lines to the current price of the stock and give the current greeks of your call.

Ok on the main graph, the green line is the expiration risk/reward profile and the white line is the risk/reward profile for today. In between the white and green lines is the decay that will take the position to its max profit or loss.

As you change the strike price in the bottom simulated section you can see the changes in the risk profile and dollar greeks and the changes in sensitivities. Remember to unclick the lock next to the price of the option you are looking at as that will ensure it lists the current price to buy or sell and does not freeze the price at the $53.60 you have there.

Get familiar with this page as we can use it next to look at decay in your position. This analyzer is the best tool to understand the greeks. After just a week playing with this you got what you need to know to move into strategies.

Hi Coach, thanks very much for the explanation, I really appreciate it. I understand how to work the screen now, however have the below questions:

Q1: The greeks from the analyzer screen are diff from the Trade screen. Using GOOG $560 as strike price, the delta from the Trade screen shows .45 (please see attached), I then plugged $560 into the analyzer, it shows the delta is .5375?(please see attached).

Q2: What parameters am I looking for when considering risk/reward? would you give an actual example, so I can apply it to others.

Q3: I now know how to work the analyze screen but don't understand how this relates to actual trades?

Q4: GOOG gamma is pretty much all zeros from the Trade screen?

 

[mark trader]

here are the greeks from the Trade screen.

 

[opt789]

Dethkultur,
Off topic so this will hopefully be my last post on the topic so I will try to be clear. Your first post where you write:

"have been profitable for 8 months straight now, and getting better with each trade. I shoot for 3-7%/month"

tells everyone here, who understands options, what you are doing, and that you may not know enough about trading or options to be trading at all let alone giving any advice.

Selling options for income has been discussed to death and the result is always the same. Some newbie swears it works and all of us are stupid for saying it doesn't, then they eventually blow out and are never heard from again.

There are a few people here that know options better than you ever will, even if you spend the rest of your life trading them. I would suggest you start a thread with your actual trades and ask for any input. You will get useful advice that may keep you in business.

 

[atticus]

Quote from dethkultur:

What's a position a retail trader could open with positive theta AND gamma? (and from the other side, perhaps more importantly, why would a floor trader willingly open a position that is both negative theta, AND negative gamma?)

A long fly at a credit trading outside the wing-strikes. Any other lock at edge [conversion/reversal, box/roll, discount arb, etc.]. I still don't see the point.

 

[dethkultur]

Quote from opt789:


There are a few people here that know options better than you ever will, even if you spend the rest of your life trading them. I would suggest you start a thread with your actual trades and ask for any input. You will get useful advice that may keep you in business.

That's good advice.. think I'll take it shortly. My question was sincere though - wish you had a better answer than that, seriously.

Atticus - a long fly outside the wings will have negative theta. I really don't get the dispute either.

 

[atticus]

Quote from dethkultur:

That's good advice.. think I'll take it shortly. My question was sincere though - wish you had a better answer than that, seriously.

Atticus - a long fly outside the wings will have negative theta. I really don't get the dispute either.

You don't get it because you're incorrect in this instance. I stipulated a long fly at a credit, which is an arbitrage and satisfies your long theta at all points, and long gamma if trading outside the wings.

 

[kinggyppo]

Quote from mark trader:

I am sorry but for a newbie, I am confused at this point (going flat? short puts gamma?, etc). Would it be possible to use actual trades and I will just follow along and ask questions? I am lost at this time unable to bridge the materials discussed with actual trades and feel like I am just reading, at the same time unable to fully understand what I am reading since there are no actual example of trades to associate the materials with.

Sorry this is typical of option guys, tend to go right over your head. My point is understand delta, that is the relationship between price movement of the underlying (stock) to the movement of the price of the option. An option with a .50 delta should move .50 for each $1.00 move in the stock. Remember a lot of option guys are or were market makers. Put yourself in their shoes, someone drops a 500 lot into the pit, you take 100 now you are long or short 100 calls and will probably want to hedge till you figure out what you want to do. Hedge, get flat, delta neutral are what market makers do to reduce their risk. Think of it as inventory, some stuff you want to keep other things you get rid of. Lets say you buy 100 shares of Goog at 500 and the postition starts moving against you but you think it will go up. You can buy 2 puts with .50 delta and you will be pretty close to being hedged. I hope I didn't confuse you more, good trading.

 

[mark trader]

Quote from kinggyppo:

Sorry this is typical of option guys, tend to go right over your head. My point is understand delta, that is the relationship between price movement of the underlying (stock) to the movement of the price of the option. An option with a .50 delta should move .50 for each $1.00 move in the stock. Remember a lot of option guys are or were market makers. Put yourself in their shoes, someone drops a 500 lot into the pit, you take 100 now you are long or short 100 calls and will probably want to hedge till you figure out what you want to do. Hedge, get flat, delta neutral are what market makers do to reduce their risk. Think of it as inventory, some stuff you want to keep other things you get rid of. Lets say you buy 100 shares of Goog at 500 and the postition starts moving against you but you think it will go up. You can buy 2 puts with .50 delta and you will be pretty close to being hedged. I hope I didn't confuse you more, good trading.

Thanks for the explanation. I find myself looking at premium %change more & more as I papertradel, I think it give me a better idea which strike offer the highest return given it still fall within my delta range.

 

[kinggyppo]

Quote from mark trader:

Thanks for the explanation. I find myself looking at premium %change more & more as I papertradel, I think it give me a better idea which strike offer the highest return given it still fall within my delta range.

You may want to create a $100,000 paper portfolio and hedge it with spy options. If you learn basic hedging like a mutual fund manger does, I believe that you will have a much easier time with option synthetics. Maybe coach can explain the delta neutral idea better in terms of synthetic equivalents.

http://www.schaeffersresearch.com/s...ns+for+hedging+purposes/Education.aspx?ID=202

 

[mark trader]

Does anyone know in TOS Analyzer what is the difference between the probability of expiring and the delta of a particular strike? please see attached.