Encountered a fishy-looking behavior of Delta: gives for DTE=3y, S=100, K=10 and IV=10 a Delta of 1, for IV=50 a Delta < 1, and for IV=500 again a Delta of 1. Isn't this illogical? Or is this caused by some internal floating-point rounding errors? It seems Delta is "oscillating"...
Finding IV for a DITM strike (here K=10) with Delta=0.999, using these other specs/params: Code: find_IV_for_Delta fCall=1 Delta=0.999 S=100.0000 K=10.00 DTE=1095.00 IVstart=100.00 IVend=1000.00 IVstep=1.00 rPct=0.00 qPct=0.00 : fFound=1 cSteps=204 IV=303.00 DeltaX=0.999
I don't use margin. To afraid of screwing up. I did not say I could pick market beating stocks. I said, you can pick stocks that will go up. It is actually very hard to beat the market over a long period of time for most investors.
The value of the call is priced to the forward + put premium (reversal). The difference between the call price as proxy and the shares is the put. Sure, the call is a cheaper outlay but there is no free lunch.
So you want to trade based on generalities, fear and ignorance of standard tools, and no ability to pick stocks - but want to focus on option strategies. Hint: changing the color of your screwdriver will not grant you the ability to design a nuclear power plant. Incidentally - I'm not trying to be mean or insulting; I'm trying to tell you that your approach has nothing worthwhile in it. Not even a learning opportunity, since your basic premise is flawed. But it seems you're banging ahead regardless of what you're told, so... good luck at the slot machine, I guess.
I have an ability to pick stocks. I know technical analysis and fundamental analysis. Can I beat the market, maybe not, or if I can, by 1.5% per year. Unless you have a very concentrated portfolio of 8 stocks or so, which you spend an enormous amount of time studying, it is hard to beat the market by more than 1.5% per year. I have been picking stocks for 27 years, it is much harder than people realize to beat the market by more than a small amount. At one point, you could beat it by picking small value stocks, but that stopped working.
Anyway, I am risk adverse, so I will paper trade before committing real money to these strategies. I sold options before, and it took a lot of time, and then I made a terrible trade. One of those you sell a cash secured put, and it goes down 20% in an hour.
If you can't beat the market and are risk-adverse then, paraphrasing (Bruce Lee's "be like water"), be like the market. Buy an index, get good steady returns, while lowering your transactions costs considerably. Leave a check with the receptionist on your way out.