Trading Long Straddles

Except in this case I'm really selling to gain time decay from a debit spread? A weekly trade, so the buy side would shrink also, and I buy it back cheaper, as well as the sold side, I would sell off for whatever.


Alright I got that wrong. I bought it, so I have to sell it. Hmnnnn! Selling cheaper doesn't sound right somehow? Have to get my dunce cap again. I gain a bit on credit, but lose on what I bought. ??? :confused:
 
Quote from falconview:

Except in this case I'm really selling to gain time decay from a debit spread? A weekly trade, so the buy side would shrink also, and I buy it back cheaper, as well as the sold side, I would sell off for whatever.


Alright I got that wrong. I bought it, so I have to sell it. Hmnnnn! Selling cheaper doesn't sound right somehow? Have to get my dunce cap again. I gain a bit on credit, but lose on what I bought. ??? :confused:
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Falcon, I believe you have been at this longer then me.. (Since March) ... I have moved away from Naked Puts and Covered Calls... as equities have burned me by 20% (of the equities, not the acct).... More thenmade that on vertical spreads... all Credit spreads.

Have looked at the Calendars, Straddles, Butterflies, Double Diagonals... but I will keep focused on these Verticals for now... Have not looked at and Debit items at all yet.

Good Luck
 
Quote from falconview:

Ha! Ha! On the sellers Don.

Just to make things a bit more interesting. There is a guy on the internet with a webpage that uses a STRADDLE in a different way.

He bets directional with a long option on one side, but the other side of the STRADDLE is a DEBIT spread going out the other direction. I've looked at this method a couple of times, but really haven't figured it out yet, to the nuances of making it work.

The idea is you are looking to make money on the long contracts in your directional bet, but you insure with a debit spread on the other side. I"ve thought about it, but never actually worked this, either on paper, or real time. I would presume if you could get OTM debit spread not to far away. This OTM and the fact of a cheaper debit spread would minimize your directional bet effects and would only take place if the market decided to go contrarian to your view. Any comments on anybody using this STRADDLE would be interested to hear about it. It sure sounds like a winner, but the devil is in the details. The tricks and nuances of timing and applying it.

He said he was doing so well, his option club group started ignoring him in shame. Which I thought was a cute pitch. Be nice to hear from anybody using this?
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ok, now i see how this works...you open your long straddle, then you cap the one side you think has the lesser chance to run with a short (creating a debit spread) and leave the other side you think has the better chance to run open.
 
Traderlux


Now YOU brought up an interesting idea. I was never able to make his method work. But I simply opened with a long option on one side and a vertical on the other side. I had never thought of converting a Long Straddle on the losing side with selling something, to convert it into a vertical. That makes a bit of sense, or at least different. Let me see if I can remember so long ago. Darn, I'm not sure what I did back then. Nor am I at the moment familiar with the types of vertical spreads. I seem to have forgotten the differences. Will have to re-read again on them.

Right now, I'm still confused with ATTICUS contribution. With dropping one side of a condor, or butterfly. I know that they are made of two verticals, with the sold side in the middle. But can't picture in my mind since they would be both CALLS, or PUTS. What do they name those Verticals in a Condor, when both are CALLS? Then I can look them up and freshen my memory. Maybe I can figure out how they work mentally.
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webnickell

Credit spreads, I traded for about 7 or 8 months over a year and a half ago. You compound your account, by using all of it and you double your account in about 5 months. The fly in the ointment; is that in my case, there were two or three corrections. There were more but they came back into the channel so it worked out, but when it didn't, total disaster. ATTICUS explained it at the time, sort of. Something about accelerating volatility on the premium. I never understood that exactly, but the practical side was it WIPED YOU OUT, YOUR WHOLE ACCOUNT. You could be tootling along, happy as a lark with a doubled account, then whammo, in one day, EVERYTHING gets wiped out in an hour or two. In a market drop, things move too fast. Your left gasping like a fish out of water, the thing is running away from you so fast. Usually you have on an Iron Condor. I've thought about that often. If you could exit at the mid point of the channel, you might save something. Trouble is, psychologically it doesn't work out that way.
 
Quote from falconview:

Traderlux


Now YOU brought up an interesting idea. I was never able to make his method work. But I simply opened with a long option on one side and a vertical on the other side. I had never thought of converting a Long Straddle on the losing side with selling something, to convert it into a vertical. That makes a bit of sense, or at least different. Let me see if I can remember so long ago. Darn, I'm not sure what I did back then. Nor am I at the moment familiar with the types of vertical spreads. I seem to have forgotten the differences. Will have to re-read again on them.

Right now, I'm still confused with ATTICUS contribution. With dropping one side of a condor, or butterfly. I know that they are made of two verticals, with the sold side in the middle. But can't picture in my mind since they would be both CALLS, or PUTS. What do they name those Verticals in a Condor, when both are CALLS? Then I can look them up and freshen my memory. Maybe I can figure out how they work mentally.
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webnickell

Credit spreads, I traded for about 7 or 8 months over a year and a half ago. You compound your account, by using all of it and you double your account in about 5 months. The fly in the ointment; is that in my case, there were two or three corrections. There were more but they came back into the channel so it worked out, but when it didn't, total disaster. ATTICUS explained it at the time, sort of. Something about accelerating volatility on the premium. I never understood that exactly, but the practical side was it WIPED YOU OUT, YOUR WHOLE ACCOUNT. You could be tootling along, happy as a lark with a doubled account, then whammo, in one day, EVERYTHING gets wiped out in an hour or two. In a market drop, things move too fast. Your left gasping like a fish out of water, the thing is running away from you so fast. Usually you have on an Iron Condor. I've thought about that often. If you could exit at the mid point of the channel, you might save something. Trouble is, psychologically it doesn't work out that way.
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F*ck. I didn't state to drop it. I stated that it's a poor choice to trade a condor that offers an additional $0.03 in premium over the vertical bull spread. WHY limit the upside (in the condor) when you receive an additional $0.03 in premium over the 26/27 vertical?

The condor is a bull vert and a bear vert. You sell the call spread (bear vert) to reduce the debit. BUT selling the vert to reduce the TOTAL spread debit by $0.03 gross is nuts.

I can't explain it in simpler terms. The ORCL was a poor wager as constructed. You were not compensated for the potential to invert delta position.
 
ATTICUS

I'm an old man. It is dark here at night. What the devil are you doing sitting at your computer on a Saturday night? :D :D


Thanks for the bull vertical and a bear vertical.
Both I presume debit spreads? I'll look it up, but not clear on that yet.

I am sort of getting the picture but not to the point it is natural yet. Like picking runs on the banjo, it takes a lot of practice. I certainly ADMIRE YOUR FACILITY and familiarity with all the intricacies and ins and outs of everything. I'll get there though.

WEBNICKELL If you are doing credit spreads, the only thing I can tell you, is CLEAR OFF YOUR PROFITS, at the end of the calendar month, and start fresh with your beginning account for the next month. One of those months are going to take all the money you got in speculation.
 
YIKES! Just delving into the Condor Verticals. Darn I feel so ignorant.
Don't know a darned thing.
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"The Condor Spread is an option strategy that is still confusing many option traders and option trading information websites. Almost 90% of the websites out there today (March 2007) still confused Condor Spreads with Iron Condor Spreads. Iron Condor Spreads are credit spreads while Condor Spreads are debit spreads. "
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Oooookay! The lower spread in the CONDOR is a debit spread. You sell the strike and buy the lower strike.

What the devil is the upper spread then? It says in the quoted paragraph above, that it should also be a debit spread. My looking at it, says it is a credit spread?
Which is it then?
 
Quote from falconview:

YIKES! Just delving into the Condor Verticals. Darn I feel so ignorant.
Don't know a darned thing.
___________________________

"The Condor Spread is an option strategy that is still confusing many option traders and option trading information websites. Almost 90% of the websites out there today (March 2007) still confused Condor Spreads with Iron Condor Spreads. Iron Condor Spreads are credit spreads while Condor Spreads are debit spreads. "
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Oooookay! The lower spread in the CONDOR is a debit spread. You sell the strike and buy the lower strike.

What the devil is the upper spread then? It says in the quoted paragraph above, that it should also be a debit spread. My looking at it, says it is a credit spread?
Which is it then?
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If you had taken the time to source that options book you would be way past all this. Instead you read one misinformational site after another.
 
Well I ordered one. Being international, it will take a few weeks, or months, to get here if it ever does. Not much luck with ordering books by international mail.


Did pretty well with my desktop the other week. Only took me ten days to get a mother board and power supply, to replace the one not working here. It ain't easy retiring in the third world, but it has it's compensations.
 
Traderlux

Since you understand the A.J. Brown long straddle. The one where one side runs, and the other side is a vertical as insurance. Please explain it to me. In the process you will learn it stronger and I will get an idea of what is involved from your viewpoint.
Appreciate it. Blind men, got to help each other mon!

Us novices got to stick together. :)
 
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