Trading Long Straddles
- Thread starter falconview
- Start date
I believe long straddles work the best for the weekly options...why? ...short time until expiration = great option price movement per smaller underlying stock moves...I'd check out the weekly options. They are getting more and more popular...
Google "weekly options"
Google "weekly options"
Increasenow
Theta is maximum in Weekly Options. For credit spreads they work great. I doubt it for Long Straddles, vulnerable to Theta decay.
Theta is maximum in Weekly Options. For credit spreads they work great. I doubt it for Long Straddles, vulnerable to Theta decay.
Here is one for you rich professionals and money makers.
I´ve been trying to make sense of IV and Vega. I have not yet got the picture in my mind completely. Perhaps you would care to comment?
I have a memo here contributed by somebody that told me that VEGA hurts the Long Straddle if going up. But VEGA helps the Long Straddle going down.
The last couple of days in trying to puzzle things out, I realized that if one side of the Long Straddle, ( the CALLS ) has the IV going up, it is bad for the Calls, as the market is going down I´m not clear what the opposite would be for PUTS?
Can you using both the IV for both the Calls and Puts in a Long Straddle figure out future immediate direction. I read someplace that if VEGA turns negative, you can trade a direction. Not sure which way this would be?
Anyway I was trying to put it all together and come to some miracle of understanding, utilizing VEGA and IV to forecast the market direction for a short distance. Is this possible?
I´ve been trying to make sense of IV and Vega. I have not yet got the picture in my mind completely. Perhaps you would care to comment?
I have a memo here contributed by somebody that told me that VEGA hurts the Long Straddle if going up. But VEGA helps the Long Straddle going down.
The last couple of days in trying to puzzle things out, I realized that if one side of the Long Straddle, ( the CALLS ) has the IV going up, it is bad for the Calls, as the market is going down I´m not clear what the opposite would be for PUTS?
Can you using both the IV for both the Calls and Puts in a Long Straddle figure out future immediate direction. I read someplace that if VEGA turns negative, you can trade a direction. Not sure which way this would be?
Anyway I was trying to put it all together and come to some miracle of understanding, utilizing VEGA and IV to forecast the market direction for a short distance. Is this possible?
dunno if this has been mentioned because I didn't read all this shit but thinkorswim has a simple way to understand increase/decrease in vola, go to
Analysis -->Risk Profile-->plot lines --> Vol Step--> +1 Vol Step.
in the next box change step to +/- percentages. The red line will plot your p/l taking the vola change into account.
If you are in SPY/ES options just use VIX as an approximation for recent values to get an idea how vola would affect your positions. i.e. change step to +5.00% to see how your long straddle would look like if vix moved up to 24% from 19 currently.
Analysis -->Risk Profile-->plot lines --> Vol Step--> +1 Vol Step.
in the next box change step to +/- percentages. The red line will plot your p/l taking the vola change into account.
If you are in SPY/ES options just use VIX as an approximation for recent values to get an idea how vola would affect your positions. i.e. change step to +5.00% to see how your long straddle would look like if vix moved up to 24% from 19 currently.
That looks interesting. Will give it a look tomorrow. Thankyou.
demo it...worth it...get a "mini" huge move and...ultimate profits!!!
falconview,
Perhaps I missed it, but what are the specs of the straddle you put on?
Perhaps I missed it, but what are the specs of the straddle you put on?
I'm mystified about what the management plan might be.