Recent content by vladimir

If we could predict future volatility of the underlying price changes, the theoretical prices would give buyer and seller equal opportunities over a large number of trades to average otherwise random results. The fact that option has negative theta (its price decays with time) may seem a bit...

Well, it would be wrong to say about options that 1:7 bet may bring 7 pounds against 1 invested, because it is a bit more complicated. A buyer's chance to get 7 is lower than 1:7 but he has a chance to get 8 or 9. Equally a seller has a good chance to retain his 1 as a premium but his risk...

I agree, but I do not see a big difference between 5, 7 or 9 gradations of market movement. If those 7 things (possible outcomes) are evenly distributed on the price scale, they have different probabilities with highest for the thing at the middle where buyer looses. Hence, 1:7 is already a...

You could break medium movement rate in 2 grades to proof 1:9 theory. :cheesy:

Interesting strategy. The key here is to know which shares are going down so to sell call spreads on them and which shares to choose for put spreads. If you are not sure about this choice, you might be better off with index options.