falconview
Registered: Jun 2010
Posts: 1465 |
08-21-12 12:53 PM
Somebody was talking to me about A.J. Brown having a webinair on straddle trading.
I was looking up his last comments on the web, dated about a year and a half ago. Think I'll skip his webinair.
He had a strong sales pitch about trading a long option, and if you made it during the day, you won. If by closing time you did not make your profit goal, he said to put a debit spread on the other side, forming a straddle, with a long on one side and a debit spread the other side. In later reading, I got the part this trade was for earnings announcements or something?
I tried it in several TIMING versions but could not make it work, only got losses. So discarded it. Then this notice of a webinair made me look him up again. I was recalculating the strategy, more for ordinary trading with a TIMING SYSTEM. If you put on the debit spread, it can only show a profit of .30 cents at maximum. In the same contrary market movement, with the Long option, you would lose about a $1. So the losing would be net .70 cents, more or less counting commissions. He talks about an earnings report bet. But a big earnings report stock would, once it moved on the opening be unlikely to come back and make that losing long option bet successful. So still think his trade is a loser. I'm not sure if you had bet a long position OTM one strike, if that would make the difference? The debit spread is always OTM one strike. Too discouraged with the idea to follow up on it.
COMMENTS?
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