Switching strategy 180 degrees

E

earth_imperator

Up until now I was focused on shorting highVola options.
But since shorting becomes more and more problematic with the brokers (demanding exorbitant margin or cash requirements), I'm planning to change my strategy to non-shorting trades only, ie. LongStock, LongCall, LongPut only.
But then one must throw away the current watchlist of highVola tickers and replace it with lowVola tickers...
Ie. finding some boring titles with no current action in them :), for "buy low now, sell high later"...
What do you think? Any tips?
 
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earth_imperator said:
Up until now I was focused on shorting highVola options.
But since shorting becomes more and more problematic with the brokers (demanding exorbitant margin or cash requirements), I'm planning to change my strategy to non-shorting trades only, ie. LongStock, LongCall, LongPut only.
But then one must throw away the current watchlist of highVola tickers and replace it with lowVola tickers...
Ie. finding some boring titles with no current action in them :), for "buy low now, sell high later"...
What do you think? Any tips?
More...

It's the most brilliant idea I've ever heard!

Now, excuse me while I go build a transmission with five reverse gears and one forward; there's a lot of bugs smashing against my windshield as I drive, and I don't like spending all that money on windshield washer fluid...

Also:

...brokers (demanding exorbitant margin or cash requirements)
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Have you ever heard of wings, or risk-limited trades? Just wondering.
 
earth_imperator said:
Up until now I was focused on shorting highVola options.
But since shorting becomes more and more problematic with the brokers (demanding exorbitant margin or cash requirements), I'm planning to change my strategy to non-shorting trades only, ie. LongStock, LongCall, LongPut only.
But then one must throw away the current watchlist of highVola tickers and replace it with lowVola tickers...
Ie. finding some boring titles with no current action in them :), for "buy low now, sell high later"...
What do you think? Any tips?
More...

curious what is on your high vola options list?
 
What do you mean by shorting options or do you mean buying puts on them?

It is usually a bad investment to take puts on options with high IV their just too expensive.
 
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GotherL said:
What do you mean by shorting options or do you mean buying puts on them?
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No, indeed meaning shortsellling especially Puts, ie. the correct term is "Writing Puts".

It is usually a bad investment to take puts on options with high IV their just too expensive.
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Exactly, but therefore doing exactly the opposite, ie shortselling b/c they are indeed expensive, meaning getting much credit :)
 
earth_imperator said:
Tell me more. Do you mean the wings of multi-leg option strategies like butterfly or condor?
I was doing PutSpreads (ie. ShortPut + LongPut).
More...

If you were doing spreads, then there couldn't be any "exorbitant margin or cash requirements"; the max requirement would be equal to spread width less credit/debit paid. So what are you talking about?
 
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BlueWaterSailor said:
If you were doing spreads, then there couldn't be any "exorbitant margin or cash requirements"; the max requirement would be equal to spread width less credit/debit paid. So what are you talking about?
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I'm doing this in a CashAcct, then as CashSecuredPut plus LongPut. But it's not treated as a spread by the broker system but rather each leg treated for itself. Meaning: the spread is just virtually created from two independent parts.
This is ok for me, b/c I need to do it in a CashAcct, not MarginAcct.

I'm ok if the CashRequirement is "Strike - Premium" for the CashSecuredPut part,
the total requirement for this virtual spread then being "ShortStrike - ShortPremium + LongPremium".

But now the broker seems to change it to "ShortStrike + LongPremium", which is way too much of cash requirement.
I say "seems" b/c it still is unclear whether it maybe was a system bug or glitch, as it had worked fine till yesterday.
 
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Ya know, I examined this post with a Raman spectrometer, sent it away for genetic analysis, had it inspected by a licensed mechanic, and evaluated by an experienced psychologist - and not a single one of the results implied the slightest bit of rationality in changing trade direction and vol perspective without an equivalent change in the market. I'd hate to tell you what either the psychologist or the mechanic actually SAID about it.

Hint: if your broker is that fucked up and weird, the thing to change is...

Let me think about this one for a while. I just don't know; there MUST be an obvious answer somewhere.
 
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