if your going to be straight buying premium.. you need to really consider stocks that aren't always over priced... look at a comparison of the historical vol compared to the implied vol.. see if you can find stocks that the implied sometimes breaks up to the historical.. that means the options are cheap.. obviously if historical always stays below implied.. they are expensive.. plus you can look for stocks that frequently make large deviation moves.. etc.. its a bleed slow and be patient strategy with otm .. and if you do in the money you can be a value investor.. buy writes excetera.. theres a cost to carrying a stock.. so sometimes DITM calls are better and less risky then the actual stock considering the cost of carry.. and the fact that you can buywrite.. or even buy overwrite
Trading Long Straddles
- Thread starter falconview
- Start date
Most papers I've read tend to favor short vol strategies over long, which shows the market actually overstate "rare events" rather than understate them. Obviously it's impossible to correctly price this since we can't really know the probs or impact of all black swan events, so the risk premia the market puts on for this is a bit of a "guess". This is where human psychology comes in.
As for long vol blowouts, just ask the longs in 2000 what happened if they didnt quicky switch to another trade. Or in 2008 where fundamentally long convexity positions (short stock) lead to total annihilation. This risk runs in every trade, it's not unique to short vol.
I've got a bit of trouble reaing and understanding my MONITOR page in TOS?
There are three columns on the monitor page for all trades that are open.
One is lable p/l Day and I get that. It more or less is covering the profit since the open for the day.
p/l OPEN I'm not too sure how to read this one? At least from a profit view point, using debit spreads. I know in a debit spread I have a negative cost I'm carrying, plus my commissions of .20 cents cost. Does this profit figure in the column take account of my original debit when I put the spread on? I can mentally figure the commission costs, rounded up to .20 cents, in and out.
The last column says p/l ytd. Which means every time I have traded this stock, the amount given, I presume represents the total profit accumulated trading this stock, during the current year?
When the second one; P/L OPEN shows a figure, is that number representing the profit before taking out the original debit setting up the trade? Or does it take account and subtract the debit in setting up the trade? Giving me net profit before subtracting my commission costs?
I'm having trouble trying to figure out on the run, so to speak, whether the debit spread is profitable or not? By just looking at this trade monitor page. Not sure how to intrepret it.
There are three columns on the monitor page for all trades that are open.
One is lable p/l Day and I get that. It more or less is covering the profit since the open for the day.
p/l OPEN I'm not too sure how to read this one? At least from a profit view point, using debit spreads. I know in a debit spread I have a negative cost I'm carrying, plus my commissions of .20 cents cost. Does this profit figure in the column take account of my original debit when I put the spread on? I can mentally figure the commission costs, rounded up to .20 cents, in and out.
The last column says p/l ytd. Which means every time I have traded this stock, the amount given, I presume represents the total profit accumulated trading this stock, during the current year?
When the second one; P/L OPEN shows a figure, is that number representing the profit before taking out the original debit setting up the trade? Or does it take account and subtract the debit in setting up the trade? Giving me net profit before subtracting my commission costs?
I'm having trouble trying to figure out on the run, so to speak, whether the debit spread is profitable or not? By just looking at this trade monitor page. Not sure how to intrepret it.
Buddy... Pick up the phone make the customer service at TOS do their job... There is an Api you can drag down your porfolio to excel if you want to.. But learn how to go into the settings and adjust which columns you see so that you can tell what your realized pl is etc.. Definitly call tos
As you say with the little amount of data on rare events.. Its hard to say anything at all.. Besides any strategy that blows up at point isn't a good one.. Alot of times short vol trades can realize losses so quickly that it can take months and months to make up gains.. I personally like the idea of being long vol in single stocks... Small bets on big moves.. The wings theoretically can never be priced right based upon the little amount of data related to moves outside of 2 standard deveations. .. But i'm new at all this.. And i'm a big taleb fan.. So you can obviously see my bias.... Its easier to sleep at night being long vega anyway.. And i realize its not just short vol that can kill ya.. You can demoralize and bleed to death to 
obviously without some quanitative analysis about some parituclars its all just speaking in abiguities..
obviously without some quanitative analysis about some parituclars its all just speaking in abiguities.. now obviously .. if your super long volatility short tons of theta.. in a crazy leveraged trade.. one would expect to get blown out! i've learned that myself.. my first real options trade was long options near expiration.. maybe three weeks away on aapl ... lost 6 grand on it.. which was most of the entire investment... took a long time to make that up considering my account was at that time around 32 grand.. after it was like 25.. A good friend of mine blew his entire 30k account in expiration trades... you could define his trade as long vol to.. but i guess my referrence was more towards a portfolio with a smaller part of it in very small otm options instead of a hugely leveraged iron condor portfolio with no more money in margin for adjustment.. meaning to roll the trade more otm with more money then the original spread.. i guess homeboy is right.. any strategy used the right way you can kill yourself with :0