Registered: Feb 2011
04-24-12 04:40 PM
Quote from falconview:
I don´t accept your intrepretation at all. Whether Appl goes up or down tomorrow, only means one thing to me. If it goes up, I will be closing off the straddle as a completed deal. If it goes down, then I will not be interested in any adjustment until the trend finishes and the volatility dies down, so I can lock in the difference by buying PUTS. That scenario would maybe mean a day or two, perhaps longer. At some point that down trend will stop, the volatility will start to die off, from the PUTS and I can then re-establish the straddle, though it most likely will be a STRANGLE then. Once back in either a STRANGLE or a STRADDLE I can buy and sell and adjust the sides. I´m already ahead by 11%. Now I would work it by adjusting to get it up to 20% possibly.
If you can do 20% a month, I think that is a pretty good return? Not there yet, but I´ve done this with overlapping straddles for several months, using them solely as straddles, which returned about 3%. Never lost. The whole point is not to take a loss. The straddle, strangle is perfect for that.
Like a tennis ball, the market bounces up and down. It does so in short term fluctuations. But overall, the average of those bounces follow a trend, either a longer one, up, or perhaps down. This works out to the high/ low of your monthly bar. Which in the QQQ is about 5 strikes. Now we are in a sideways market and maybe heading for a bear market. The bar might be longer. It doesnt really matter, either way. Thats why you trade a strangle or straddle. The strategy stops theta decay pretty much. With that on your side, you can buy and sell either side to balance it off.
Thats my current theory anyway ( laugh). I´ve noticed when trading overlapping straddles, that a strong trend move will occur sometime, mostly unexpectedly. It´s just a matter of waiting. Keep your buys at low volatility, your sells at swollen premium, and it should ( fingers crossed ) work out. ( grin )
Stop bothering me with short term bounces and movements please. It is distracting. I don´t care if I´m winning or losing $200 on an intra day fluctuation. When it gets to be a $400 or $500 fluctuation, THEN I´M INTERESTED, but only to SELL to take a profit.
Falcon... your thinking is flawed. You are NOT up by 11% by any means shape or form. If you were, your account balance would reflect a higher balance right now compared to what it was prior to establishing the position. Currently on your $ 7500 your account is down over 3%.
Don't use smoke and mirrors in justifying your trades. Why in the world would you buy puts AFTER a downtrend finishes and volatility dies down??? Makes no sense.
Remember-- you are new at this. Im not. Your looking to dig yourself a deep hole. Never lost? Famous last words.
Im done here. Good luck.