The IV risk with short strangles

BMK said:
That's an interesting observation, but it is functionally very similar to buying shares in a fund that uses derivatives. The fund may hold positions that have theoretically unlimited risk, such as naked short calls or short futures contracts. But shareholders are not personally liable.
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i think that’s exactly what these guys are doing.
 
Leverage is the not so silent killer...

Exploding Vol is the kick in the balls after Gamma bites you in the ass


MrAgi1 said:
Why is it that most often when people talk about the risk of a short strangle, it is mostly only mentioned that price moving outside the strike and breakeven points causes losses?

To me the biggest risk is IV exploding(maybe due to a sudden event like a pandemic, political crisis or a disaster). In theory IV could keep rising and my losses keep on piling up and up even without price moving outside my wide range strangle. This could wipe out years of hard earned profits. I am not sure how that is an efficient way to trade.

What do you think, or am I getting something wrong?
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Overnight said:
Do they wear a Rolex?
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Rolex is a dumb, unoriginal, cliche, boring watch....for guys....who are simple and unoriginal and insecure and status-seeking.
I just bought this Citizen watch on eBay today. I highly doubt, I will ever randomly see this watch on another person's wrist.
fvsgsdtg564rdeg.jpg
 
MacBookProHo said:
Rolex is a dumb, unoriginal, cliche, boring watch....for guys....who are simple and unoriginal and insecure and status-seeking.
I just bought this Citizen watch on eBay today. I highly doubt, I will ever randomly see this watch on another person's wrist.
fvsgsdtg564rdeg.jpg
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You do not understand what I was alluding to. It was a meme regarding James Cordier.
 
taowave said:
Leverage is the not so silent killer...

Exploding Vol is the kick in the balls after Gamma bites you in the ass
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my experience has been that if you lose on gamma, you rarely have any vega left to lose on.

But when you do, you might as wheel put your head in a plastic bag.
 
Lol @ putting your head in a plastic bag!!!!!!

I think I blocked those wonderful moments from ever entering my thought process..That sheet was painful





newwurldmn said:
my experience has been that if you lose on gamma, you rarely have any vega left to lose on.

But when you do, you might as wheel put your head in a plastic bag.
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I used to calculate the Ansbacher index religiously for about 4 years-it didn't help. Options prices are as predictive as Tarot cards. FYI Do not trade strangles because =Vol will kill you and you will wake up one morning and see a margin call as prices blow through your safe zone. I've seen short OTM puts go from 3 to 35 to 120 to 300 in a week. At 35- it'll bounce back, at 120- thi sis just a blip, at 300 ....close out, sit in a corner and cry!
 
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