Trading Long Straddles

Ahhhh! That makes sense thinking of it that way.

"Think of vega as synthetic time. There is less time for the move implied (in the premium) to materialize. "

Definitely I don´t think there is much time to make enough move I want, when bucking against the overhead resistance at QQQ 60.

Thankyou!
 
Well the market is slow and I didn´t bother to enter a Straddle on the high. Want to close one straddle first, of the two I have open. Bit nervous about the money.

To those of you who sent me some private emails. I just more or less discovered them. Been going through them this morning. I certainly apologize if you were looking an answer earlier. I hadn´t thought anybody would even bother to send a novice like me, an email privately. Not having anything useful to contribute at this point.

Some confusion on my part with professional jargon, others take for granted. A fly I take it is a butterfly? Single options I think I understand. But an outright, I don´t.

Other than that I am sweating my long straddles into their 2nd week. Did use Sept. options, so believe I have the THETA time available. The slow market has played havoc with things at the moment.

Just when I thought I was getting a handle on things, some new information sent to me, lets me start back at the beginning again. Sheesh! However the challenge is what it is all about. Measured of course in your account balance, or my account balance, which is not yet doing so good so far.
 
Quote from falconview:

Well the market is slow and I didn´t bother to enter a Straddle on the high. Want to close one straddle first, of the two I have open. Bit nervous about the money.

To those of you who sent me some private emails. I just more or less discovered them. Been going through them this morning. I certainly apologize if you were looking an answer earlier. I hadn´t thought anybody would even bother to send a novice like me, an email privately. Not having anything useful to contribute at this point.

Some confusion on my part with professional jargon, others take for granted. A fly I take it is a butterfly? Single options I think I understand. But an outright, I don´t.

Other than that I am sweating my long straddles into their 2nd week. Did use Sept. options, so believe I have the THETA time available. The slow market has played havoc with things at the moment.

Just when I thought I was getting a handle on things, some new information sent to me, lets me start back at the beginning again. Sheesh! However the challenge is what it is all about. Measured of course in your account balance, or my account balance, which is not yet doing so good so far.
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I would avoid straddles if you're trading direction. You're going to get chewed-up unless you're hedging your deltas in the underlying. And if you are (hedging), you run the risk of missing a hedge.
 
Quote from falconview:

Let me see, I have a long straddle (CASH MONEY) put on at QQQ 57. 2 contracts. The delta was neutral when put on. Currently the market has moved and that straddle now has a skewed Delta. If I buy 2 more PUT options at -.28 Delta, which would be the QQQ 56 PUTS, I would be Delta Neutral again.

Now how does this help me?
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If you hold the existing position as is and QQQ drops several pts, you'll have a straddle that's worth less because of time decay.

If you add the 2 puts and it drops, you make out nicely, perhaps even handsomely. OTOH, if you add the 2 puts and QQQ trades in a box or goes up, you wasted that money. But if it goes up a lot, it won't matter.

Due to slippage and commissions, it's often more efficient to trade UL shares against the initial option position.

The short answer? it depends.
 
Spindro

I kind of got it and had sort of figured out something similar there. Nice to have it confirmed.

Hedging insurance.

Thanks a lot.

I´m still contemplating the biased STRANGLE, or whatever it is called doing it + 25 Delta. Don´t know whether to do it in paper trading, or just jump in and use cash. I´m expecting a breakout upside for a new trend. Since a bull trend would see premiums shrinking due to dropping IV, I was wondering if that biased bull STRANGLE would resolve any losses involved with a bull move?
 
There is nothing special about 25-delta. It will become "aversion therapy" as you will continue to bleed when buying these things.

Please trade something else. If you want to be long(short) then start with some bull(bear) vertical spreads.
 
Quote from falconview:

I´m still contemplating the biased STRANGLE, or whatever it is called doing it + 25 Delta. Don´t know whether to do it in paper trading, or just jump in and use cash. I´m expecting a breakout upside for a new trend. Since a bull trend would see premiums shrinking due to dropping IV, I was wondering if that biased bull STRANGLE would resolve any losses involved with a bull move?
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Your first consideration with long straddles/strangles etc. is direction (UL price change). Not far behind that is time decay. AFAIK, for an index option, change in IV is far less imp't than the first two.

Usng cash is a great idea for jumping into "whatever it's calleds". :)
 
Quote from atticus:

There is nothing special about 25-delta. It will become "aversion therapy" as you will continue to bleed when buying these things.
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C'mon man. 25-delta is kinda like halfway to 50-delta!

(Valley Boy grin)
 
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