Tonight the cost of 1 AAPL straddle is ATM (605) is $2253 + $6 in commish. So you are saying the OP should buy...(selling can't happen in his account because he started with $10K) On Monday AM or whenever the magic ball says to then close it for a profit the same day?? Obviously you would leg out...but what if you are wrong? good money management won't always bail you out.
So AAPL & GOOG and even BIDU are to expensive for a $10K pot.
IBM? with a sub 20 vol its too slow to make any money.
I just have not seen anyone make money consistently trading straddles on a daily basis. If you do then more power to you.
Basically I don't want to HAVE to be at the computer watching my indicators every second to work out of a trade. Its too stressful. If your looking for just a $100 or $200 for each trade then the commish and slippage is usually to much.
So it is just personal preference. The only time I have daytraded options is on the ES if I have made more than 50% on a trade that day I'll cash in. Most of the time I hold for at least a few days. Also I almost always sell the options..very rarely I will buy some OTM...but most of the time its just insurance and usually eat them.
LOL no...not saying anything of the sort!!! You clearly missed a key point in one of my previous posts...I said Thurs/Fri and sometimes Wed...and by context of weeklies I am referencing the front week option...in other words in most cases only 1-2 days left to expiration. Huuuuge difference between that & the premiums involved with 1 week remaining.
You clearly have no idea how these straddles with minimal time to expiration work.
For a better understanding-- look up books by Jeff Augen on the subject of options at expiration.
I'm sorry but you are looking in entirely the wrong time frame for straddles. Do yourself a huuuge financially life changing favor and study trading strangles/straddles in high beta/high ATR equities with high volume and tight bid/ask weekly options on Thurs/Fris and sometimes Weds...the returns are phenomenal, the probabilities for success are extremely high, and even much higher if you know how to read a chart and the patterns that help signal a price move outside of 1-2 std deviations.
Towards the end of the weeklies also has the most time decay though, which is a problem. And if stock has high ATR, that just means higher volatility, which would be priced in via higher IV, no? Not sure if I see any edge here...not that EMH has merit anymore, but just saying. Also transaction cost, B/A spread and etc matters a lot more in intraday trading than larger timeframe...
Towards the end of the weeklies also has the most time decay though, which is a problem. And if stock has high ATR, that just means higher volatility, which would be priced in via higher IV, no? Not sure if I see any edge here...not that EMH has merit anymore, but just saying.
Time decay on expiration day in the last 2 hrs of trading presents some challenges-- which is why I avoid it. Again-- you must be familiar with all aspects of how time decay functions intraday. High ATR does NOT mean high IV!
Folks-- until you study the intracacies of what I am talking about, and put in the screen time involved to understand and confirm first hand, it comes as no surprise that u will formulate an uninformed an erroneous view.
Time decay on expiration day in the last 2 hrs of trading presents some challenges-- which is why I avoid it. Again-- you must be familiar with all aspects of how time decay functions intraday. High ATR does NOT mean high IV!
Folks-- until you study the intracacies of what I am talking about, and put in the screen time involved to understand and confirm first hand, it comes as no surprise that u will formulate an uninformed an erroneous view.
With it being said that time decay in last 2 hrs is challenging, it is not without it's opportunities... consider the 610/605 straddle in AAPL at around 2:45 pm-- the cost was around .62....by 3:15 it was $ 1.10. The call side couldve been closed out for $ 1.01... a 65% rtn or so, with free puts to hold for potential reversal... which is exactly what happened-- the last 10 mins of trading saw aapl go near lows-- those puts traded at .50 bid...
Towards the end of the weeklies also has the most time decay though, which is a problem. And if stock has high ATR, that just means higher volatility, which would be priced in via higher IV, no? Not sure if I see any edge here...not that EMH has merit anymore, but just saying. Also transaction cost, B/A spread and etc matters a lot more in intraday trading than larger timeframe...
Btw-- bid ask spreads are not an issue if...once again... u r in the right equities.
With it being said that time decay in last 2 hrs is challenging, it is not without it's opportunities... consider the 610/605 straddle in AAPL at around 2:45 pm-- the cost was around .62....by 3:15 it was $ 1.10. The call side couldve been closed out for $ 1.01... a 65% rtn or so, with free puts to hold for potential reversal... which is exactly what happened-- the last 10 mins of trading saw aapl go near lows-- those puts traded at .50 bid...
