I have never played those ones and would appreciate if you could steer me into some good educational reading or maybe some old threads on the topic.
Thank you.
So what works then?
- Thread starter Corto
- Start date
I have never played those ones and would appreciate if you could steer me into some good educational reading or maybe some old threads on the topic.
Thank you.
The problem is that most options sellers will take profits as soon as minimally profitable, just the same way that day traders etc do. It's just human nature.
Well, human nature aside, there are strategies where time works in your advantage and there are strategies when it works against you. Day traders use high leverage and looking to capture small moves quickly and often. They are not looking to milk the trend. Option sellers take huge risk compared to rewards (on individual trade basis) and want to be out preferrably as quickly as possible. That's what makes me so hesitant to use these strategies as the risks grow as you scale(I guess that's true for everything, but options often behave unexpectedly). So why even waste my time?
I am far from expert in options, so this is just my opinion and very possibly very wrong
I am trying to keep an open mind.Both are fine. If you sell for premium and you don't mind take delivery and hold it on the book until you can get rid of it you let it go to expiration. If really don't want to get assigned you should exit in advance and take the bulk of vol/theta.
I would go to amazon and look up books on FLYS/Calendars. I am not sure what currently covers this as I learned them from various sources. If options are still pretty new to you then these are not really beginner strategies and might take some time to understand but you got to start somtime...
@El OchoCinco, in one of the books I liked, the author had something like this to say about Flies. Wander what your opinion on this is.
Trading Flies (long the wings) is like shooting fish in a barrel ... low risk low reward strategy ... not worth the effort.
Trading Flies (long the wings) is like shooting fish in a barrel ... low risk low reward strategy ... not worth the effort.
The last one I bought is Options as a Strategic Investment by Lawrence McMillan. Many were saying if you only have to have one options book, this is the one you need. It seems indeed pretty comprehensive and detailed; on almost every strategy he describes methods on how to adjust , some more superficially, some more in depth.
If any member knows one that's more focused on calendars, please chime in.
Thank you.
By the way, do you mean selling butterflies for a credit or buying them? With a market that's all over the place buying may make some sense, but I might be wrong.
Yes that will give you a good overview on options and strategies. I am sure they discuss calendars and FLYs but knowing what a strategy is and how to apply it are unfortunately two different things. The former you can studya nd read about, the latter comes from experience and understanding volatility.
For the most part buying FLYs. You can make FLYs non-directional or directional but the way many play them is the same way they would shorting a straddle but look at the fly for reduced risk. SOme here also do what we call broken wing flys which is basically shifting the strikes unbalanced or the number of contracts. Lots of flexibility.
Having a good analyzer like Thinkorswim has is a good way to put on a fake positoin and watch the risk profile to see how it behaves.