Ohhhh! I´m sorry, I didn´t realize it was of interest here.
I´m holding the 58 Sept. QQQ long straddle spread at $3.90 at 2 contracts. In my cash account.
It is already profitable. But I´m waiting a bit. I´m basically waiting until it goes to two strikes as a move. Or the 56 QQQ strike to exit. The market moves about 1.5 strikes in a weekly bar of the QQQ. Break even is about 75 ticks, but is variable depending on the IV effect.
I decided to enter because this was a bear trend and volatility is higher in a bear trend and there was a chance of IV expansion. When the market goes up, IV usually shrinks and you can lose. I am also holding another PAPER trade long strangle at the beginning of this trend, this was the 58 call and 59 put at a $4 spread.
Since IV is all important, I expect to close this paper spread, put on at 58.80 QQQ in two strikes. Which would be 56.80 QQQ.
When I entered, it was asking 3.91 for the 58 straddle spread and I bid 3.90 and it took about 45 mins to fill. Went up to 3.97 or so. before coming back to my bid.
I didn´t really have any particular reason for buying it, other than the price was fluctuating around the 58 strike. Otherwise you have to buy a long strangle. I did expect a downward move on the market, but that would be irrelevant in a long straddle. Since they are non directional. I just expected the market to move, probably down, but up would be okay as well.
From my minimal experience, straddles and strangles are delta neutral trades. Delta does not change.
I´m still not completely clear on the effects of IV, as the spread premium shrinks or expands with IV, and the ratio is not clear to my mind as to how to handle this intuitively.
I do not expect to lose, it is just a question of how much will I gain, or how long do I have to wait. Since this is Sept options, or 8 to 12 weeks to expiration. I have plenty of time. Couple of weeks anyway I expect and somewhere in there I should get hit by a semit trailer truck full of IV. Or I get the profit from market movement.
I´m holding the 58 Sept. QQQ long straddle spread at $3.90 at 2 contracts. In my cash account.
It is already profitable. But I´m waiting a bit. I´m basically waiting until it goes to two strikes as a move. Or the 56 QQQ strike to exit. The market moves about 1.5 strikes in a weekly bar of the QQQ. Break even is about 75 ticks, but is variable depending on the IV effect.
I decided to enter because this was a bear trend and volatility is higher in a bear trend and there was a chance of IV expansion. When the market goes up, IV usually shrinks and you can lose. I am also holding another PAPER trade long strangle at the beginning of this trend, this was the 58 call and 59 put at a $4 spread.
Since IV is all important, I expect to close this paper spread, put on at 58.80 QQQ in two strikes. Which would be 56.80 QQQ.
When I entered, it was asking 3.91 for the 58 straddle spread and I bid 3.90 and it took about 45 mins to fill. Went up to 3.97 or so. before coming back to my bid.
I didn´t really have any particular reason for buying it, other than the price was fluctuating around the 58 strike. Otherwise you have to buy a long strangle. I did expect a downward move on the market, but that would be irrelevant in a long straddle. Since they are non directional. I just expected the market to move, probably down, but up would be okay as well.
From my minimal experience, straddles and strangles are delta neutral trades. Delta does not change.
I´m still not completely clear on the effects of IV, as the spread premium shrinks or expands with IV, and the ratio is not clear to my mind as to how to handle this intuitively.
I do not expect to lose, it is just a question of how much will I gain, or how long do I have to wait. Since this is Sept options, or 8 to 12 weeks to expiration. I have plenty of time. Couple of weeks anyway I expect and somewhere in there I should get hit by a semit trailer truck full of IV. Or I get the profit from market movement.