Selling short straddles is like printing free money convince me I'm wrong

[ironchef]

It doesn't matter where the stock ends when you delta hedge. And a short straddle is 100% not a fire and forget trade

Agree on both counts. Very few option trades are fire and forget.

I posted some counter points just to show sometimes the obvious may not be so obvious that Elite Traders who can successfully trade directional can certainly trade straddle successfully.

Best wishes to you sir.

 

[Saltynuts]

Are you guys still not done circle jerking over this trolls shitpost??
Selling naked gamma has never been like printing money. It's a bet against realized vol. If underlying moves less than IV you win. If it moves more you lose...and sometimes it moves a lot more and then you're broke.

And by the way: You are talking about a position, not a strategy. A short straddle is a position.
You could also argue how long SPY is like printing money...same thing

/thread

Dude, are you seriously saying that MY post is a troll post? This thread I mean? LOL, that is hilarious if so. I CLEARLY explained the whole logic behind it in my initial post and subsequent posts. I advise you to re-read my initial post and my subsequent posts to completely follow it. Its not that complicated, just complicated in a very minor way. Good luck with that.

 

[Saltynuts]

May I?...



It doesn't matter where the stock ends when you delta hedge. And a short straddle is 100% not a fire and forget trade

"not a fire and forget trade".... LOL, like I said it wasn't in my INTIAL FREAKING POST on this thread???? You literally cannot make this shait up....

 

[MrMuppet]

"not a fire and forget trade".... LOL, like I said it wasn't in my INTIAL FREAKING POST on this thread???? You literally cannot make this shait up....

Sorry...didn't think you were THAT (manic caps lock) stupid. So you were SERIOUS (manic caps lock) about this?

Not only are you short gamma and short vega. By diversifying short straddles (wtf) you're also short correlation meaning that when everything comes down and correlation shoots up to 1 you have one big super nuke in your account.

KIDS...KIIIDS...LOOK AT THIS GUY, YEAH HIM (manic caps lock and fingerpointing)...BECAUSE OF HIM IB KEEPS INCREASING MARGINS!


No, seriously...your proposal is just bat shit stupid. This stuff IS (manic caps lock) complicated and not in a minor way. In fact it's way over your head.

EDIT: sorry, I forgot to use the manic question marks..????????????????

 

[Bekim]

We’re you selling short straddles last March?

 

[bobw]

Some people be like "yo, if you sell both a put and a call your risk of a disaster trade doubles dude!!!!".

Others be like "whoa bro, if you sell a call you loss potential is unlimited!!!".

Maybe all that is theoretically true, but realistically is there any easier way to print money, other than printing money itself if you are the Fed?

I mean, you sell both a put and a call. If the underlying goes up, not only do you have the call premium to cover you, but you got the put premium as well. The put guy is literally eating what would have otherwise been your loss. Reverse if the underlying goes down, the call buyer is eating your loss for you.

Now, of course, if the underlying goes up or down TOO much, it could cut into your profitability (or actually cause a loss). HOWEVER, at the point in which it would become unprofitable (or thereabouts, whatever makes you comfortable), you close out your initial positions and sell new calls and puts closer to the market. That way changes in the prices of the underlying are effectively being borne by the guy that bought your puts/calls, not you.

Its like money in the bank. Hell, I wish I knew how to start a hedge fund, I'd make a hedge fund that does just this and earns ROIs of hundreds of percents a year...

 

[bobw]

Some people be like "yo, if you sell both a put and a call your risk of a disaster trade doubles dude!!!!".

Others be like "whoa bro, if you sell a call you loss potential is unlimited!!!".

Maybe all that is theoretically true, but realistically is there any easier way to print money, other than printing money itself if you are the Fed?

I mean, you sell both a put and a call. If the underlying goes up, not only do you have the call premium to cover you, but you got the put premium as well. The put guy is literally eating what would have otherwise been your loss. Reverse if the underlying goes down, the call buyer is eating your loss for you.

Now, of course, if the underlying goes up or down TOO much, it could cut into your profitability (or actually cause a loss). HOWEVER, at the point in which it would become unprofitable (or thereabouts, whatever makes you comfortable), you close out your initial positions and sell new calls and puts closer to the market. That way changes in the prices of the underlying are effectively being borne by the guy that bought your puts/calls, not you.

Its like money in the bank. Hell, I wish I knew how to start a hedge fund, I'd make a hedge fund that does just this and earns ROIs of hundreds of percents a year...

Every few years the market gets locked up or down and by the time the market opens back up your account is devastated.

 

[jbt]

Sorry...didn't think you were THAT

KIDS...KIIIDS...LOOK AT THIS GUY, YEAH HIM (manic caps lock and fingerpointing)...BECAUSE OF HIM IB KEEPS INCREASING MARGINS!

RFLMAO - the best post here It's a haiku of all YOLO trading

 

[taowave]

And what sort of leverage would you disclose in your prospectus in order to attract capital in your Printing Money Hedge Fund?? You know,in order to acheive "ROI's of Hundreds Percents a year"..

Some people be like "yo, if you sell both a put and a call your risk of a disaster trade doubles dude!!!!".

Others be like "whoa bro, if you sell a call you loss potential is unlimited!!!".

Maybe all that is theoretically true, but realistically is there any easier way to print money, other than printing money itself if you are the Fed?

I mean, you sell both a put and a call. If the underlying goes up, not only do you have the call premium to cover you, but you got the put premium as well. The put guy is literally eating what would have otherwise been your loss. Reverse if the underlying goes down, the call buyer is eating your loss for you.

Now, of course, if the underlying goes up or down TOO much, it could cut into your profitability (or actually cause a loss). HOWEVER, at the point in which it would become unprofitable (or thereabouts, whatever makes you comfortable), you close out your initial positions and sell new calls and puts closer to the market. That way changes in the prices of the underlying are effectively being borne by the guy that bought your puts/calls, not you.

Its like money in the bank. Hell, I wish I knew how to start a hedge fund, I'd make a hedge fund that does just this and earns ROIs of hundreds of percents a year...

Some people be like "yo, if you sell both a put and a call your risk of a disaster trade doubles dude!!!!".

Others be like "whoa bro, if you sell a call you loss potential is unlimited!!!".

Maybe all that is theoretically true, but realistically is there any easier way to print money, other than printing money itself if you are the Fed?

I mean, you sell both a put and a call. If the underlying goes up, not only do you have the call premium to cover you, but you got the put premium as well. The put guy is literally eating what would have otherwise been your loss. Reverse if the underlying goes down, the call buyer is eating your loss for you.

Now, of course, if the underlying goes up or down TOO much, it could cut into your profitability (or actually cause a loss). HOWEVER, at the point in which it would become unprofitable (or thereabouts, whatever makes you comfortable), you close out your initial positions and sell new calls and puts closer to the market. That way changes in the prices of the underlying are effectively being borne by the guy that bought your puts/calls, not you.

Its like money in the bank. Hell, I wish I knew how to start a hedge fund, I'd make a hedge fund that does just this and earns ROIs of hundreds of percents a year...

 

[qlai]

And what sort of leverage would you disclose in your prospectus in order to attract capital in your Printing Money Hedge Fund?? You know,in order to acheive "ROI's of Hundreds Percents a year"..

There’s appears to be no shortage of clients chasing these kind of returns

https://finance.yahoo.com/news/crypto-kid-had-23-000-120000170.html