As a general rule, when the stock moves away from the strike, the straddle should benefit (assuming the straddle started at ATM strike). You are...
@sle When I say "we have been doing it" that means live trading, not paper trading. Our full track record -...
In my opinion, holding ANY option position (long or short) through earnings is pure gambling. Earnings are too unpredictable. Yes, there are...
Sure. You can also learn from the internet how to become a doctor or an engineer. The article you linked lacks two major things: It doesn't...
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Over the long term, going long SVXY or short VXX makes money 80% of the time. Yes, when volatility spikes, those trades will lose big time. This...
Maximizing your margin combined with holding short options through earnings is a recipe to disaster. "after earnings I usually "gain" more in the...
This is a wrong question to ask. Novice traders ask "how much I can earn if I'm right?" Professionals ask "How much I can lose if I'm wrong?"...
R/R is directly related to probability of success. With tight strikes, you have very good R/R but low probability of success. Read more: Risk...
I believe that over time, it makes sense to do IC on indexes like RUT and SPX. Can it work on individual stocks? Absolutely. We just closed FB IC...
But the loss from a 15% shock will likely be very similar to total spread minus credit?
This is how disciplined traders should manage those trades - but not everyone does it this way. Some people actually let them go into expiration....
Yes, I believe calculation should be the same in PMA.
100% agree. My rule of thumb is to close around 80% of the maximum gain. This is one of the reasons I believe you should not get credit less...
Yep. This is the only correct way to do it. If you get $50 credit on $500 spread, your maximum gain is 11.1% if it expires worthless.
In my opinion, aiming for 1-2% premium per month is not enough to justify the risk. Actually making 1-2% per month is a different story - but that...
Yes - but this is true for any hedge. Once the market goes up, the hedge becomes less effective.
Absolutely. But if you are willing to spend 6% per year for insurance, buying options with longer expiration will be much more effective. For...
The name of the game is consistency. Buying cheap speculative OTM weekly options can bring nice gains if you are lucky. Doing it as a strategy is...
There is one serious issue with this strategy: it aims to protect against 20% decline in the span of just a month. And it might achieve this goal...
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