This Forum overtrades options

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Quote from iceman1:

I thought the 33c was SOLD ? Once the 30c expires, if you keep the 33c. would you not be naked. Am I missing something, did I read it wrong?! How is the upside 'unlimited' in this diagonal - was the 30c sold and the 33c bought? ?
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Yes, arrogant, stupid people who forget their training if they have any don't know what they're talking about. That is indeed the case.

I will be 100% correct with regard to what will happen to this "trade."
 
Hank, I would not want to sell Mar at 75 cents, even if I were wildly bullish on the broad market. I am bullish and there are many preferable bull spreads here.

FWIW, your spread is long the market and I take your "nuke" comment to mean you're intent was bearish index/long SDS. This diagonal is not bullish SDS/bearish SPX.
 
Quote from bwolinsky:

Friendly dollar games not your forte? That's too much for me, and would be no matter what the bet was or what game I was betting.
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If I had to make an even money bet I'd put it on atticus.
 
If bwolinsky were on the otherside of the trade, I would put even money on a half eaten donuts and a cup of cold coffee

Quote from rew:

If I had to make an even money bet I'd put it on atticus.
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Quote from hankster:

You're naked after Dec expiration.
That's correct and I will be out of the trade by Dec 2011 expiration of Dec 17th, the red line on the graph. I am covered until Dec expiration which is all I care about.

It's a bear-delta term-structure trade (short "switch" (back month) and vola)) and I would not want to be short a naked SPX put (synthetically) in March.

Neither would I.

Your hedge has less than 5 weeks remaining. You need a rally into Dec and then a drop, unfortunately, the haircut will more than double and it offers you no opportunity to roll out of Dec either through time or price. Your haircut more than doubles after Dec rolls of as well.

Win, lose or draw, my termination is Dec 17th or sooner.

Are you comfortable holding the Mar naked call at a 75-credit? IOW, will the Mar call be trading +/- 0.75 on Dec 16 (in your estimation)?

I have no idea what will happen, but I am covered until Dec. expiration, my max loss is defined, my margin is reasonable and I have potential for unlimited upside.

For example, IRAN launches Nukes at Israel and the market dumps 1,000 points. This trade would increase almost 300%.

Most likely, there will be some theta decay by Dec expiration.
Lets say, its .25, then my return after closing the spread would be
(75-25) / 216 = 23.2%. I am happy to take that.

Hope this helps.
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Are you using Reg T margin? Because if you are that short March call has a big margin requirement right now; the shorter duration long call does not count as a hedge for margin purposes. Are you taking that into account in your return calculation?
 
LOL


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bwolinsky
 
Quote from iceman1:

who is laughing now? Who is being arrogant ? who is clueless?

He was correct - you were wrong!!!!
just saying!
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Ummm... did I ever specify for either party where their errors were?

We obviously now know the typo error by hank-- BWego within his response clearly showed he is not at all qualified to be judging an option trade...

So in answer to your Q-- yes still ROFLMAO...
 
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