Falconview, do yourself a favor and learn options from the ground up. Get books by McMillan,Natenburg then Cottle. Once you read and mastered all of them go to TOS and use OnDemand for weeks trading simple long calls/short call/(and puts) then move to 2 sided spreads, then to 3 then to whatever. Don't short circuit your journey by getting into 4 sided position with real $ . Furthermore don't combine positions. If you have condors , then calendars, then .... on 10 tickers, and ur looking at your pnl, how are u going to learn the nuances of each strategy? They will all bleed into each other!
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Trading Long Straddles
- Thread starter falconview
- Start date
Quote from Dolemite:
I would choose a vertical if the volatility is up and the price is high. Especially to the upside. You will find that as a stock goes up the volatility typically comes out so the short you sold against the long drops in price and you will realize your profit faster.
Hmmm.... not sure I follow. The short leg will be slight otm when the position is initiated. So if the commodity, gold in this case goes up within a day or two the OTM vol will decrease you think ?
I simply thought it was case of the ATM I buy will increase almost 1:1 and the OTM with a delta of 25 will increase less, hence make the spread.
Of course depending on exact movement of underlying and buying of Vol. will determine how the spread acts but that is gist of it ?
Quote from optionbull:
Hmmm.... not sure I follow. The short leg will be slight otm when the position is initiated. So if the commodity, gold in this case goes up within a day or two the OTM vol will decrease you think ?
I simply thought it was case of the ATM I buy will increase almost 1:1 and the OTM with a delta of 25 will increase less, hence make the spread.
Of course depending on exact movement of underlying and buying of Vol. will determine how the spread acts but that is gist of it ?
Sorry, didn't realize that you were talking about gold. I don't trade it but I think it actually has a skew in both directions. Stocks typically drop vol going up and gain it going down. A lot of commodities gain vol. up or down (or up instead of down like bonds). You are right, the increase of a vertical in a couple of days would be due to the net delta of your position (long vs. short). Most of the time the ATM however is around a 50 delta so you won't get a 1:1. You just have to play around with the different strikes to see what makes the most sense based on your expected move.
Well all my trades are cleared out. I´m waiting for a bottom in this index move QQQ then will go long CALLS on the start of an eventual strangle.
I really went into CALLS in a big way for me in size. DOWN a lot and see people are crapping their pants on my other interesting " my option trader thread".
At 90 day options, I´m just going to sit tight on this for now, ride it out and see where this market goes. I have 2 std deviation already on this downside. The most I figure this will do is a 3 std deviation. Been debating buying PUTS as I did not complete my strangle. Think it is too late now and need to do something else and thinking about it. But sitting on my hands seems like a good choice. Sit and watch and see when I can work my way out of this to some kind of profit.
At 90 day options, I´m just going to sit tight on this for now, ride it out and see where this market goes. I have 2 std deviation already on this downside. The most I figure this will do is a 3 std deviation. Been debating buying PUTS as I did not complete my strangle. Think it is too late now and need to do something else and thinking about it. But sitting on my hands seems like a good choice. Sit and watch and see when I can work my way out of this to some kind of profit.
Falcon,
Are you still trading long straddles?
Are you still trading long straddles?
Not in the sense of trading a straddle per se. I am using the straddle situation for a set up to trade. Then I plan on a STRANGLE. Going 2 OTM strikes, to leverage the available cash. This past week, I got started by entering the movement breakout of the STRADDLE on one side, and it reversed on me, and never did complete the strangle. So after I get out of this trade, will do the next one as a complete strangle from the beginning. Though the movement this past week has been nothing to write home and talk about. The QQQ spent all week bouncing between .30 cents. I would like .40 cents to complete a trade. As 8 or 10 cents are commission.
In one sense I did get up to 15 contracts in CALLS, but they have not recovered yet. Probably not until next Wednesday? This was July options, but will move to August options next time around. This is a very slow way to trade, more like a six day swing trade. The hardest thing to do is sit on your hands and do nothing. Im still figuring out the nuances on how to do this. When it starts off right, it is a pleasant feeling though, to get a chunk of money in one shot.
In one sense I did get up to 15 contracts in CALLS, but they have not recovered yet. Probably not until next Wednesday? This was July options, but will move to August options next time around. This is a very slow way to trade, more like a six day swing trade. The hardest thing to do is sit on your hands and do nothing. Im still figuring out the nuances on how to do this. When it starts off right, it is a pleasant feeling though, to get a chunk of money in one shot.
Thanks for your reply Falcon,
I have sent you a private message.
I have sent you a private message.
A technical question. If are trading weeklies and trying to project where your trading vehicle will be in one week. I have had no problem while trading while the market was going sideways. But now we are in a BEAR TREND, I find it exceedingly difficult to project 7 days into the future. Other than the regression lines, in this down trend, I wind up with guesses all over the map. I´m wondering if anyone has a trick to doing this that works most of the time in a trend?