Quote from maninjapan:
Thanks for the reply. Guess I just threw them out there to illsutrate without really thinking.
Probably oversymplifying things here but if I wanted to trade gamma, the more gamma I could get for my theta the better right? therefore I would want pick a stock with a@higher gamma/theta ratio.
But is there a reason though why one would have a higher/lower ratio than another stock? Or is this a valid point to compare different stocks on?
minj, I can't give you good answers, since your questions are about equities, about which I know very little...
In general, in the world of options, the thing you care about is not so much theta/gamma per se (as this ratio is easy to calculate and is implied in a simple fashion from Black-Scholes; it's, approximately, -0.5 * S^2 * sigma^2, if memory serves). What I do, instead of looking at theta and gamma, is look at the expected implied/realized vol ratio (you can use the historical ratio as your guide), as well as daily breakevens.