Keeping track of deltas

[Profitaker]

For max theta you want to be ATM, not OTM. Also OTM are much move levered when compared to ATM, so £ for £ of selling premium, a sharp move in the underlying would see OTM showing the biggest percentage loss (or gain if you're long).

Good luck.

 

[bulldozer]

For max theta you want to be ATM, not OTM. Also OTM are much move levered when compared to ATM, so £ for £ of selling premium, a sharp move in the underlying would see OTM showing the biggest percentage loss (or gain if you're long).

Good luck.

====================================================================

Prof,
So in yur opinion a good Short Strangle player wiv 1000 + contracts should be on DELTA ONE / 0.5 / ATM and NOT on>> OTM >>DELTA ZERO??
WE ARE NOT TALKING about ONE or TWO CONTRACTS HERE! my friend. If yur doing one or two yes! thats fine.
I'm talking about the REAL PRO! who is NOT trading to collect peanuts in prem's! HE is out to collect some serious cash!

Paul Getty once said " he would be better off with 1 per cent from 100 people than a 100 per cent from ONE person. PG would make a BRILLIANT SHORT STRANGLER! Judging by his comments he would most deffinatly opt for the DELTA ZERO [on heavy contracts]
The whole object of WRITING STRANGLES is for positions to STAY OTM and finish at ZERO!

How long have u been in options?

Bull

 

[bulldozer]

For max theta you want to be ATM, not OTM. Also OTM are much move levered when compared to ATM, so £ for £ of selling premium, a sharp move in the underlying would see OTM showing the biggest percentage loss (or gain if you're long).

Good luck.

===================================================================
Prof,
Heres 2 questions for you: :?:

1 Take in [recieved from short strangle] 120 pts and close out at 60pts = 60 pts profits [50 %]

2. Take in [recieved from short strangle] 60 pts and close out at 10 pts = 50 pts profit [ more than 70 % ]

Both openned and closed at the same time.!
Which of the 2 would you chose? and remember that No 2 has a better percentage returns than No 1.

Bull

 

[bulldozer]

Prof,
Which would you chose:

1. Recieve 50 % of 2 million Dollars

2. Recieve 90 % of 1 million Dollars

I'm happy to let YOU collect No 2 wiv 90 % and i guess YOU would be happy if i get to keep No 1 wiv less % than you.

Bull
Points = money! and % = chance! [on shrt strangles] :cheesy:

 

[Profitaker]

Bulldozer

Lost for words !

Hope you do well in your option trading.

Bye bye.

 

[bulldozer]

Bulldozer

Lost for words !

Hope you do well in your option trading.

Bye bye.

===============================================================
Prof,

No comments on post 22 too? :cheesy:

 

[wal]

Prof,
Which would you chose:

1. Recieve 50 % of 2 million Dollars

2. Recieve 90 % of 1 million Dollars

I'm happy to let YOU collect No 2 wiv 90 % and i guess YOU would be happy if i get to keep No 1 wiv less % than you.

Bull
Points = money! and % = chance! [on shrt strangles] :cheesy:

Bull, Trying to understand yor logic:

1/ The problem with your scenario 1. is that you need the 2 million to make 1 mill (your 50%)

2/ presumably, if 90% of 1 million dollars is achievable, then 90% of 2 million is also achievable.

3/ So why not choose 90% of 2 million?

Cheers

 

[bulldozer]

Bull, Trying to understand yor logic:

1/ The problem with your scenario 1. is that you need the 2 million to make 1 mill (your 50%)

2/ presumably, if 90% of 1 million dollars is achievable, then 90% of 2 million is also achievable.

3/ So why not choose 90% of 2 million?

Cheers

===================================================================
Wal,
Thanx for your post.
The discussion was on " Short Strangle" wiv 1000+ contracts. Delta Zero , Delta one, and Delta 0.5 >> ITM, ATM, OTM.
If you dont understand options or the above? Nothing will make sense/ logic to you.

Short Strangles should NOT be calculated on percentages! like you can with Long call/puts positions!
Long calls/puts are DEBIT positions! and Short Strangles are CREDIT positions. He [profitaker] cant see the logic either! Well he did say Bey bey :cheesy: and i guess thats good enough for me.

Bull

 

[Profitaker]

Bull, Trying to understand yor logic:

1/ The problem with your scenario 1. is that you need the 2 million to make 1 mill (your 50%)

2/ presumably, if 90% of 1 million dollars is achievable, then 90% of 2 million is also achievable.

3/ So why not choose 90% of 2 million?

Cheers

I can't be sure, but I think he was attempting to compare selling ATM Vs selling OTM premium where scenario 1) was selling ATM (bigger £ premium but smaller % keep) and scenario 2) selling OTM (smaller £ premium but bigger % keep).

I just wish it was that simple !

Robertral - still busy ?

 

[Pitscum]

Answer this: How do I perform arbitrage from mispriced options in the market?

hmmmmmm...can i trade against you please?????????

 

[Pitscum]

For max theta you want to be ATM, not OTM. Also OTM are much move levered when compared to ATM, so £ for £ of selling premium, a sharp move in the underlying would see OTM showing the biggest percentage loss (or gain if you're long).

spot on geezer..whats with the other beef jerkie on here having a pop at you??????

 

[Profitaker]

spot on geezer..whats with the other beef jerkie on here having a pop at you??????

No idea.

But I would have been interested to know whether the options were "mispriced" synthetically (Put/Call parity), or mispriced when comparing option strike IV using a pricing model. The former would be very unlikely I think, the later very subjective. And there just might be another interpretation of "mispriced".

Alas, we may never know !

 

[bulldozer]

For max theta you want to be ATM, not OTM. Also OTM are much move levered when compared to ATM, so £ for £ of selling premium, a sharp move in the underlying would see OTM showing the biggest percentage loss (or gain if you're long).

spot on geezer..whats with the other beef jerkie on here having a pop at you??????

=====================================================================

Pitscum,

Answer this:

If your account was £2 ml + And your a HEAVY writer collecting prem's and using Theta to your advantage, would you write on DELTA 1 or DELTA zero? ATM ITM OTM and give reasons why! THINK! before you make a decision. Give reason on all 3 and why you reject 2. I'm very interested to see what you have to say.

If an option is "mispriced" meaning overpriced yes i would take advantage and collect the prems. I'd be a fool not to!

Bull

 

[Pitscum]

sorry..but i have completely no idea what you mean when you say would i write on delta 1 or delta 0. writing premium is a mugs game. the only people who do it work for big corporates who then choose to stick their fingers in their ears when the risk manager comes to them and asks them what are they doing about hedging their screwed position. writing premium isnt really trading options. you may as well go and sell every strike at the beginning of a contract and go and hide for a few months till expiry. in 17 years i have never seen one person get rich from selling premium. not one.

yes, any monkey worth his salt who had trading sheets would sell an over priced option but then look at buying something fair or undervalued to lock in the vol differential. thats, um, trading isnt it?

 

[bulldozer]

sorry..but i have completely no idea what you mean when you say would i write on delta 1 or delta 0. writing premium is a mugs game. the only people who do it work for big corporates who then choose to stick their fingers in their ears when the risk manager comes to them and asks them what are they doing about hedging their screwed position. writing premium isnt really trading options. you may as well go and sell every strike at the beginning of a contract and go and hide for a few months till expiry. in 17 years i have never seen one person get rich from selling premium. not one.

yes, any monkey worth his salt who had trading sheets would sell an over priced option but then look at buying something fair or undervalued to lock in the vol differential. thats, um, trading isnt it?

====================================================================

Pitscum,
When you'v done another 17 yrs in options and learned a few more fings like "the greeks" and writing options!? Perhaps then we can continue the discusion on this topic?!.
As for trading: It does not matter one iota how you trade options! so long as yur in profit at the end of the tax year!! So trading 2-6 times a yr and have a hefty profit is better than trading 1,000 times a year and making small profits or NO profits! cause the real winner is your broker by the fees you'v paid on ALL those trades!!! :cheesy:

Writng options is the only way to make money!! I'm NOT askin you to believe me!!.

ONE last tip for you: Before you shout your mouth off next time like you did 2 -3 posts ago just remember there are sharks option players on this forum!! and that way you wont keep making an ass of yourself!! You can get advice from our friend profitaker cause you both sing the same tune,[well almost] but he has far more knowledge than yourself on Delta's and writing options.

Dear ADMIN, I hope your not going to ban me again for speaking my mind and using my rights to express my opinions?? If we all agree wiv each others comments than there will be no need for any forums or debates! I hope you get my drift?


Bull

 

[bulldozer]

bull, calm down .....highly stressed there.....probably from writing all those options.......why u paying a broker too? just hit the bids on your screen.....and duck under your desk big man

spitting all that venom will cause you to blow a few blood vessels matey.. you need to keep your syrup on for when the old grim reaper comes over that hill and takes out your p/l, career and house.......hohohoho

and i still have no idea what you want me to answer as well, your first question read like a chappie who learnt options at some course or two......

================================================================
Pitscum,

Just check'd out yur profile, You must have been 20 yrs of age when you got into options? Most guy's of that age get into their girl friends not options?

I'm 56 and been doing options since late 1984 mostly writing them.

As for seminars/courses i have not gone to one yet as a student! but i do give seminars and one to one courses. So if your interested in a course? just give me a shout.

Happy trading!
and keep on buying options, we [writers] are always more than happy to recieve the premiums :cheesy:

Warning to all readers: Writing options is very dangerous they are UNLIMITED LOSS WITH LIMITED GAINS!

Bull

 

[Profitaker]

writing premium is a mugs game.

Are you refering to specific market(s), or a generalisation ?

Personally I've no strong view as to who has the edge over the long run (writer or buyer), as there is no consistency for either side of the fence. If there was, the market would spot it and bring it back to equilibrium PDQ. One thing I do know is that option "edge" isn't "knowable" in advance. It's only when the option has expired you can look back at HV against IV bought or sold to determine which side had the edge, not before unfortunately.

 

[bulldozer]

Are you refering to specific market(s), or a generalisation ?

Personally I've no strong view as to who has the edge over the long run (writer or buyer), as there is no consistency for either side of the fence. If there was, the market would spot it and bring it back to equilibrium PDQ. One thing I do know is that option "edge" isn't "knowable" in advance. It's only when the option has expired you can look back at HV against IV bought or sold to determine which side had the edge, not before unfortunately.

=====================================================================

Prof,

Writing OTM has more chance to expire worthless than writing ATM or ITM.

Writng OTM has more chance of success than buying OTM or ATM or ITM

So all in all the writers have the edge over the buyers.

Bull

 

[Profitaker]

Prof,

Writing OTM has more chance to expire worthless than writing ATM or ITM.

True.

Writng OTM has more chance of success than buying OTM or ATM or ITM

Not so.

So all in all the writers have the edge over the buyers.

Definitely not !



This is a good read, if you can get hold of a copy (out of print now)
http://www.amazon.co.uk/exec/obidos/ASIN/0070382964/qid=1128087420/026-2185221-3242052

 

[bulldozer]

True.



Not so.



Definitely not !



This is a good read, if you can get hold of a copy (out of print now)
http://www.amazon.co.uk/exec/obidos/ASIN/0070382964/qid=1128087420/026-2185221-3242052

=========================================================

Prof,
So you would argue that the buyers have the edge over the writers.?

Most brokers tell you that the writers have more success than buyers. Evidence is from their records on clients!
The link you gave, where does he get the evidence from?or on what does he base his fidings on? any one can write something, that does'nt mean its true! Unless its based on hard facts wiv real evidence i'm not going to believe it! a option broker has hard facts. is he an option broker? [just curious]

Bull