This site helped me

[wxytrader]

No,it may not necessarily decay over time...
Any and Everybody with an IQ over 70 cares about the "premium"..You arent special..
Sellers dont care about spread premium fees???

Sticky Strike Scenario ??? Stay in your lane Bro..You are the same guy who said selling put was a bearish play...

It is a bearish play lol as I have explained.
No sellers don't care so much about spread or fees because we are receiving a credit...the buyer is opening a debit and must overcome all of these things to turn it into a credit.

I don't know why you and D have such a hard time grasping probability of P/L. Maybe you should both refresh yourselves with the basics reading the Larry McMillan book.

 

[taowave]

LOL!!!!!!!!!!!

So transaction costs,slippage have no bearing on selling premium...

Realised vol vs Implied vs Forcast vol has no bearing on the trade..

Probabilty of P/L??? Read up on William Eckhardt

 

[wxytrader]

LOL!!!!!!!!!!!

So transaction costs,slippage have no bearing on selling premium...

Realised vol vs Implied vs Forcast vol has no bearing on the trade..

Probabilty of P/L??? Read up on William Eckhardt

 

[taowave]

Im not debating buying premium vs selling, what you dont grasp is option pricing,fair value, distributions and expected return .

Your "way" of trading is limited by capital restraints, and the fact that you are soley attempting to maximize the likelihood of making money..

You will never grow your account in a meaningful way







I g

View attachment 334076

 

[wxytrader]

Im not debating buying premium vs selling, what you dont grasp is option pricing,fair value, distributions and expected return .

Your "way" of trading is limited by capital restraints, and the fact that you are soley attempting to maximize the likelihood of making money..

You will never grow your account in a meaningful way







I g

How do you quantify expected returns?

 

[wxytrader]

Im not debating buying premium vs selling, what you dont grasp is option pricing,fair value, distributions and expected return .

Your "way" of trading is limited by capital restraints, and the fact that you are soley attempting to maximize the likelihood of making money..

You will never grow your account in a meaningful way

I g

There is no way to know what fair value is until after the option expires. Until then, buyers and sellers grapple over price based on ATR/SD from the recent price action...unless there is some known catalyst upcoming.

I doubt me or you are going to price options better than the market. Since option prices are derived from Volatility/standard deviation and strike price, some simple math will verify if the price is fair.

 

[taowave]

Sure,there are simpler methods,but you will need some method of forcast vol,which could be a guestimate...

Here is what I know for sure. You are not,and you will not make real money with your approach.
Best case scenario,you ride the bull and grind out a couple of pennies..

Good luck with that

There is no way to know what fair value is until after the option expires. Until then, buyers and sellers grapple over price based on ATR/SD from the recent price action...unless there is some known catalyst upcoming.

I doubt me or you are going to price options better than the market. Since option prices are derived from Volatility/standard deviation and strike price, some simple math will verify if the price is fair.

 

[wxytrader]

In its simplest form, one would come up with a historical distribution based off similar holding periods and ones chosen method of IV to derive a theoretical value.

There are other filters involving forecasts, and of course nothing is foolproof and the past is no guarantee of the future.Regardless,I rarely trade long or short without edge,and risk control/money management reigns supreme

Yeah so basically you are looking at past trends to derive future price. The problem is even if you know how much price moves in comparison to how much IV changes...you still don't know what IV will be.

You might as well just look at Bollinger bands.

("an historical"...I notice people are starting to drop the "N" but I will not accept it!)

 

[taowave]

LOL....Yes,you should look at Bollinger bands...

You have all the answers,but no trading capital..funny how that works

Yeah so basically you are looking at past trends to derive future price...so basically a shot in the dark. You don't know what future conditions will be, what future IV will be or what future price will be. Even if you know how much price moves in comparison to how much IV changes...you still don't know what IV will be.

You might as well just look at Bollinger bands.

("an historical"...I notice people are starting to drop the "N" but I will not accept it!)

 

[wxytrader]

Sure,there are simpler methods,but you will need some method of forcast vol,which could be a guestimate...

Here is what I know for sure. You are not,and you will not make real money with your approach.
Best case scenario,you ride the bull and grind out a couple of pennies..

Good luck with that

You don't even know what my approach is lol.