Writing options for a living

[MAESTRO]

Quote from IV_Trader:

Riskarb is writing a book "Is blind archery possible?" .
The book will quote hundreds of ET's most knowledgeable members and their posts.
Should be a best seller.

Can I pre order? Where should I sign up?

 

[Cache Landing]

Quote from MAESTRO:

BTW, what happen to riskarb? anybody can fill me in?

You can find the answer on realforextrader's journal. Evidently he recieved a less than desireable PM after a disagreement on a journal. He lashed out on the realforextader journal. Too bad. I liked having him around.

 

[RichardRimes]

Quote from Cache Landing:

You can find the answer on realforextrader's journal. Evidently he recieved a less than desireable PM after a disagreement on a journal. He lashed out on the realforextader journal. Too bad. I liked having him around.

realforextrader journal ended up being a looser journal

 

[Prevail]

it has been answered many times but no one has proven the idea of zero expectancy minus costs. it is a matter of opinion.

Quote from MAESTRO:

You guys are doing it again! It does not matter whether you are short gamma or long gamma! The risk you are taking by trading options does not depend on whether you are trading debits or credits; it depends on your abilities to anticipate direction of the market or its upcoming volatility level or both. Read this thread from very beginnig. The original question has been answered 1,000 times already. I was not able to be around for a long time and I'm extremely surprised to find out that this thread is still going. It must be one of the longest running threads on ET. BTW, what happen to riskarb? anybody can fill me in?

 

[sle]

Quote from MAESTRO:
The risk you are taking by trading options does not depend on whether you are trading debits or credits; it depends on your abilities to anticipate direction of the market or its upcoming volatility level or both.

Dude, what do you trade? Debits and credits are meaningless, what matters is decay P&L vs delta P&L. It does not matter if you get into a butterfly as 1x2x1 or as strangle-straddle, but it does matter that you are short gamma, long theta.

Any view on undelrying, realized or implied vol can be expressed both in long and short gamma positions. If you are trading longer-dated stuff, you also have vega to worry about (if you are long 10y10y or 10y USDJPY Fx vol, you mainly care about demand from exotics desks, are you vega overpowers your gamma and decay).

If you want to be long, you can buy a call spread (long gamma), 1x2 (usually short gamma), collar (gamma neutral) etc. I have some positions on where I'm both long gamma and theta at the same time. But you should always have considerations with respect to gamma vs decay, no matter what your volatility and underlying views are.

 

[Buy1Sell2]

Quote from MAESTRO:

It does not matter whether you are short gamma or long gamma! The risk you are taking by trading options does not depend on whether you are trading debits or credits; it depends on your abilities to anticipate direction of the market or its upco

Very true that decent directional analysis is helpful. However, net credit using time decay is always a higher probability of profit. This point cannot be argued against effectively.

 

[MAESTRO]

Quote from sle:

Dude, what do you trade? Debits and credits are meaningless, what matters is decay P&L vs delta P&L. It does not matter if you get into a butterfly as 1x2x1 or as strangle-straddle, but it does matter that you are short gamma, long theta.

Any view on undelrying, realized or implied vol can be expressed both in long and short gamma positions. If you are trading longer-dated stuff, you also have vega to worry about (if you are long 10y10y or 10y USDJPY Fx vol, you mainly care about demand from exotics desks, are you vega overpowers your gamma and decay).

If you want to be long, you can buy a call spread (long gamma), 1x2 (usually short gamma), collar (gamma neutral) etc. I have some positions on where I'm both long gamma and theta at the same time. But you should always have considerations with respect to gamma vs decay, no matter what your volatility and underlying views are.

Could you please give me an example of a net credit option construct that always has long gamma?

 

[MAESTRO]

Quote from Buy1Sell2:

Very true that decent directional analysis is helpful. However, net credit using time decay is always a higher probability of profit. This point cannot be argued against effectively.

I'm sorry to say this, but it is sooo wrong! I don't want to repeat many of the posters on this thread; instead, you should read it right from the beginnig.

 

[CALCULON]

Quote from MAESTRO:

Could you please give me an example of a net credit option construct that always has long gamma?

short calendar spread

 

[IV_Trader]

Quote from CALCULON:

short calendar spread

Any/neutral conditions ? I trade short calendar spread , but only event (back month) driven. And like Maestro stated , I still have to be right on direction ( of vols , in my case).