Trading Long Straddles

I buy OTM options either call or put, sofar so good, almost a year now. my feeling is the simpler the better.

not the cmore complicated the better.

try aapl 650call or 480put in the earning, you will see simple buy OTM is pretty awesome. you will not lose much, but if you win, you win multiples of risk, at least 2, even 10, 100.


Quote from falconview:

Having failed at credit spread trading, Gap trading and straight buying of options. I´m now trying LONG STRADDLES in options. Got one week in it now, but probably run through the month. Any body got any advice on making money with lONG STRADDLES?
:D
More...
 
Quote from trader198:

I buy OTM options either call or put, sofar so good, almost a year now. my feeling is the simpler the better.

not the cmore complicated the better.

try aapl 650call or 480put in the earning, you will see simple buy OTM is pretty awesome. you will not lose much, but if you win, you win multiples of risk, at least 2, even 10, 100.
More...

What month are you referring to?
 
trader 198

I´ve heard this several times, but never actually spoken with anyone making any money at it. At least confirmable. I also wonder which months. Plus I´m guessing you are talking big moving stocks like Bidu and Appl ? Can you give more technical details and the results you experience in the time frame please?
 
Just looked it up. A STRANGLE, 16 strikes OTM in AAPL.

Be interesting to see what happens to it.

I get the AAPL 650 call at $10.95, 480 PUT at $10.05

___________________________________
 
Hi Riffraff, got a couple of questions if you don't mind.

These hi beta/atr stocks like appl /bidu/amzn often have really bad alphas i.e. gamma/theta. Does that not bother you when you put on these intra day positions? If I buy premo I always have been conditioned to put on long juice trades with an alpha above 3. Stox with low iv/low stock prices < $50 tend to have alphas > 3 . BUT BIDU with 2 days before exp has a gamma =17 and theta of 50 which means alpha of .34! AAPL is even worse. you don't even look at alphas..just curious.

Furthermore I find that the best time of get in on these trades is no earlier than 10am and obviously no later than 2pm since you need some time to get out of the trade due to intraday nature.

Any insights please?
 
Quote from MushinSeeker:

Hi Riffraff, got a couple of questions if you don't mind.

These hi beta/atr stocks like appl /bidu/amzn often have really bad alphas i.e. gamma/theta. Does that not bother you when you put on these intra day positions? If I buy premo I always have been conditioned to put on long juice trades with an alpha above 3. Stox with low iv/low stock prices < $50 tend to have alphas > 3 . BUT BIDU with 2 days before exp has a gamma =17 and theta of 50 which means alpha of .34! AAPL is even worse. you don't even look at alphas..just curious.

Furthermore I find that the best time of get in on these trades is no earlier than 10am and obviously no later than 2pm since you need some time to get out of the trade due to intraday nature.

Any insights please?
More...

Not concerned with alpha in the least when trading weekly straddles intraday near expiration. Alpha becomes a concern if holding overnite. You are spot on with the timing.
 
Riffraff, do you ever do the backspreads which is dovetailed in Augen's chapter on Straddle trading? Seems like a little lower return BUT u don't have that time pressure of getting a move in 3-5 hours but is spread out over 2-4 days. Furthermore , what about putting on these straddles with 7-5 dte (after all weeklies are introduced prior thrusday giving you 8 days till exp)not just 2-1 dte which is the thursday/friday.If you are getting rid of them at day's end, why does it have to be 1-2 days to go. My guess is that the 1-2 dte gives you the most gamma ?
 
Quote from MushinSeeker:

Riffraff, do you ever do the backspreads which is dovetailed in Augen's chapter on Straddle trading? Seems like a little lower return BUT u don't have that time pressure of getting a move in 3-5 hours but is spread out over 2-4 days. Furthermore , what about putting on these straddles with 7-5 dte (after all weeklies are introduced prior thrusday giving you 8 days till exp)not just 2-1 dte which is the thursday/friday.If you are getting rid of them at day's end, why does it have to be 1-2 days to go. My guess is that the 1-2 dte gives you the most gamma ?
More...

Mush-- never have really been a fan of ratio backspreads. Augen does a good job discussing it though and definitely has its merits. I want unlimited profit potential in either direction however. With the backspread- u need to be relatively sure of direction...albeit the ability to make a small profit is still there if you're wrong.

Due to the fact that ATM premiums are extremely expensive when new weeklies come out... I have no interest on taking the extra risk with so many DTE left. Can they still work? Sure-- but this is an example where the wrong alpha can really lower probabilities.
One needs an extended move directionally over multiple days to overcome this obstacle. One reversal day is all that is needed to really hurt the position and suck premium out.

1-2 days remaining is ideal due to the significantly lower cost...therefore the magnitude of required move in the underlying is significantly reduced. And once again spot on Mush-- since gamma near expiration on ATMs increase...all you need is to have the right basket of stocks that regularly make multiple std deviation moves to really increase probabilities.
 
What I meant about buying the weeklies 5-7 days out is to still keep it as a daytrade. I am not advocating buying on monday and holding till wednesday. Lower gamma BUT lower theta rate-so it evens out.

I can definitely see the cheapness though since I have a measure of straddle cost / projected sigma move 5,4,3,2,1 day(s) out and what I have found is from monday-Wed noon the ratio hovers 1.4 which means on a stock with a projected 1 sigma move of $1, the straddle is 1.4 Once wed noon hits, the ratio starts plunging down to about .85 thursday 10am.

That being said, using your reasoning, buying mondays with a ratio of 1.4 seems ok as long as you sell it same day still on a ratio of 1.4.

Will "TOS ondemand" that today.

BTW I got sigma charts on TOS using thinkscript . It calculates variance ratios between Op-Cl/Cl-Cl and PrevCl-Op HistVol. U want it? say the word..
 
Quote from falconview:

I don´t think there is going to be any market movement today at all. Everybody is waiting on APPL earnings to move the market.

I´m reading a couple of books and checking every hour or so, to see what is what? Be interesting tomorrow.
More...

Take your money and run falcon.... 2.43 bid right now.
 
You must log in or register to reply here.
Back
Top