Selling Puts with distant expiration dates

[destriero]

If you could advise a rookie starting over, what strategies would you tell him to concentrate on, and what risk reward numbers to stay within?

Synthetic straddles (short) with upside long call.

Long 100 XYZ; short two 20D calls; long one 5D call

(or if you don't want to commit to full lots...)

Long 50 XYZ; short one 40D call; long one 10D call.

 

[traction]

Synthetic straddles (short) with upside long call.

Long 100 XYZ; short two 20D calls; long one 5D call

(or if you don't want to commit to full lots...)

Long 50 XYZ; short one 40D call; long one 10D call.

Instead of long the stock, why would you not buy say a 95D call?

 

[taowave]

Interesting that Dest buys the 5 Delta call when he's already long 60 delta's..

 

[destriero]

Interesting that Dest buys the 5 Delta call when he's already long 60 delta's..

These are ostensibly LEAPS and I buy the deep call to allow the trade in an IRA. Ppl get nervous when you suggest a neutral trade and it is unlikely to invert D.

 

[destriero]

Instead of long the stock, why would you not buy say a 95D call?

Because you're adding some prem (5D put); you're not securing the div; perhaps tax-deferral on the shares.

 

[getthatintoya]

Short duration? < 30 days?

Quarterlies and further out. You want to be shorting vol not gamma.