Spreads versus Butterfly

[wxytrader]

The put and call have the same extrinsic value. You're long the call and short the put so the extrinsic val cancels which results in D1/shares.

Ok but what about the fact that the stock doesn't have extrinsic value at all, so if the price drops $2, the long call will not lose $2, and the short put will not lose $2....ohhhhhhhhhhhhhhhhhhhhhhhhhhhhh...wait...processing....the long call will lose <$2 because of extrinsic value, and the short put will lose <$2 because of extrinsic value...so they will be equal...and the stock will lose $2....

 

[wxytrader]

You removed the word "discovered" with the phrase "pointed out"

I'm also not wrong about a long call option losing less value than a short stock position gains value after a drop because of extrinsic value. If the stock drops $2 the long call will not lose @2 in value...it will lose something less prior to expiration.

 

[poopy]

Ok but what about the fact that the stock doesn't have extrinsic value at all, so if the price drops $2, the long call will not lose $2, and the short put will not lose $2....ohhhhhhhhhhhhhhhhhhhhhhhhhhhhh

My last, ever.

The difference between the call and the put (marked to the fwd) is mark - intrinsic.

I can't block you so I am just going to stop replying to your gibberish.

 

[wxytrader]

I think this is how MM hedge...they buy calls to attain 0 delta on a short stock position, so if price drops the long calls, due to their extrinsic value, will lose less than the short position gains...so they make $ on the difference when they re-center to 0 delta.

 

[wxytrader]

Wait...did D just give a price projection?

Actually my trade was pretty simple...price typically retraces at least .38, and the MACD confirms so the timing put it @ about 17 on Aug23...hopefully it doesn't blow through the other side...but between 16.50-17.50 I profit $300-$800. The trade only cost me $200 so the return on risk is good.

btw the price action also confirms it...if you watch enough charts you will see that on the open they sucked in a lot of traders and stopped them out before the move up. The day will probably finish with a doji (dragonfly) or a hammer.

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I guess they say a picture is worth a thousand words...but I will just mention that I was in the position a few days even before I posted the first chart.

 

[wxytrader]

So I had a break even of 19.75 so if I sold this morning I would have taken a loss of 19.75-18.47=$1920

Instead I sold a call for AUG30 CALL for .93 and received $1395 bringing my break even down to $1880

Wait...did D just give a price projection?

Actually my trade was pretty simple...price typically retraces at least .38, and the MACD confirms so the timing put it @ about 17 on Aug23...hopefully it doesn't blow through the other side...but between 16.50-17.50 I profit $300-$800. The trade only cost me $200 so the return on risk is good.

btw the price action also confirms it...if you watch enough charts you will see that on the open they sucked in a lot of traders and stopped them out before the move up. The day will probably finish with a doji (dragonfly) or a hammer.

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If the .38 level holds then into a triangle...otherwise triangle will likely form at the next level .50 or .618

 

[Overnight]

My last, ever.

World's worst lie, ever.

 

[wxytrader]

So I had a break even of 19.75 so if I sold this morning I would have taken a loss of 19.75-18.47=$1920

Instead I sold a call for AUG30 CALL for .93 and received $1395 bringing my break even down to $1880


If the .38 level holds then into a triangle...otherwise triangle will likely form at the next level .50 or .618
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OK well yesterday expecting this to triangle, I sold an AUG30 18 call @.95 so I am up $706.22. I was busy binge posting so I forgot that maybe I should have taken my profits...but I kind of want MAX profits. THIS is why I prefer selling options. If price retraces back up to 18.30 level I'm still up $413...if price stays flat another day I make $1058.31.

For all the TA folks out there who claim 20/20 is hindsight, I hope you see that I am drawing in triangles BEFORE they form...anybody can draw them after and play break outs.

 

[wxytrader]

OK well yesterday expecting this to triangle, I sold an AUG30 18 call @.95 so I am up $706.22. I was busy binge posting so I forgot that maybe I should have taken my profits...but I kind of want MAX profits. THIS is why I prefer selling options. If price retraces back up to 18.30 level I'm still up $413...if price stays flat another day I make $1058.31.



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For all the TA folks out there who claim 20/20 is hindsight, I hope you see that I am drawing in triangles BEFORE they form...anybody can draw them after and play break outs.

That was an easy $380! I knew price was going to retrace back up to the top of the triangle, so wanted to make some money with AUG30 17.50 CALLS. I still have my short AUG30 18 CALLS open letting the theta kick in. I probably left $200 on the table because I wasn't watching it. I don't use the phone apps so no alerts...but should have put a limit order nearer the top.

It's worth mentioning that I've been making money off this triangle that most punters haven't even drawn in yet.

 

[wxytrader]

That was an easy $380! I knew price was going to retrace back up to the top of the triangle, so wanted to make some money with AUG30 17.50 CALLS. I still have my short AUG30 18 CALLS open letting the theta kick in. I probably left $200 on the table because I wasn't watching it. I don't use the phone apps so no alerts...but should have put a limit order nearer the top.


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View attachment 347752

It's worth mentioning that I've been making money off this triangle that most punters haven't even drawn in yet.

Well I played that perfectly. I was expecting price to bounce yesterday so I bought some calls and closed for a profit. I then waited for price to come back down to close my short calls for a profit...both trades combined pnl = $950. That would not have been attainable had I just held the short calls to expiry, as price is looking to finish itm...currently .30. I purchased the short calls @.69, so I would need price to finish @ 16.55 at expiry to profit $950...we'll see how it plays out. Currently the position would be worth $630