Day Trading & Forex Forum

tech_trader

Has anyone tried the strategies from Capturing Theta?

grantx

Tech,

Short theta is no good if implied volatility increases.

A short theta position is best set up at high implied volatility, not low volatility.

The amount gained by short theta, ie the time value, could be erased by an adverse movement exceeding the time value on the underlying.

However, there may be strategies which can address all these shortcomings (I can't think of any off the top my head. Vertical spreads, possibly?).

I did a Google search for “short theta”. Look at this excellent explanation re the Greeks and theta (time) and its relation to delta, gamma, vega, p85-100:

Fundamentals of the Options Market - Google Book Search

Grant.

aspex

It would seem that many of the "systems" that are sold would take advantage of theta but added to the other benefits they claim.
I have used OPTIONSMART.COM : 3D Option Trading Strategies based QQQQ trading for over 3 months and the results have been quite good. They charge a reasonable amount for the service which offers "auto-trading". You do nothing and they advise the trades which are carried out by a recognised broker. You can change your settings with immediate effect.
So far so good. My USD10,000 has got to $15,200 in 3.5 months but at a time when QQQQ has risen by 10%. I am yet to experience how they do when there is a change of sentiment.
I probably could have done better with CFDs on NDX but at least my emotions cannot quickly interfere with the decisions made on my behalf.

rstevent

Greetings Aspex,
How has your trading been since your post on 13-05-2008 with OPTIONSMART QQQQ trading? I have been considering this service and would like your input.

evergreen3

Any updates from anyone on OptionSmart? I'd like to give it a try.

option911

Theta positive strategies can be pretty effective. Premiums are SUPER high right now, but the market has alot of speed. Just make sure you have a good plan in place

Mark
Option 911 Blog

kalkulon

Hello traders,
It seems this thread has gone quiet... I have recently subscribed to optionsmart QQQQ product and first couple of trades were ok but then they closed (rolled) position at a loss of $1500 (20 contracts per leg).
The interesting thing it is not reflected on their records as it is rolled. Some of their positions are rolled several times and although they mention it in their records it does not show that if position is rolled 3 times they lost $1500 x 3. What puzzles me is how this loss of $1500 gets recuperated by rolling if average win is c. $200? Can anyone shed some light on this for me?
Nik

evergreen3

I've noticed the same thing the last 2 months. I don't expect a healthy profit every month, but my balance is now where it was 60 days ago. Losing over $1000 on a rolled option really hurts the profit margin. I'm going to see how things go in July and if I'm still not moving forward (as I was the first two months), I will terminate my agreement. Which is too bad as I really thought this was going to be a long-term subscription.