How is that trade today? Price ran up and Volatility dropped. A double whammy if you had bought a put. Now tomorrow, after the first 30-60 minutes, if the price is trading a little bit closer to the 20 EMA but not above, then I would look at making a credit play of some sort to the downside.
You are a little late with your criticism, trade is long over. When it comes to options you have to be quick. You snooze you lose.
That's not necessarily true because it depends on what your strategy is. For example, if you have a long delta neutral synthetic straddle, you want the big move but smaller back and forth zig zag will also reap reward. In this situation, it's time decay and IV deterioration that get you.
Funny I never saw a call telling him to sell. So as far as I am concerned based on the advice being given he would still be in. Second while yesterday would have seen a 10% in the underlying the volatility actually dropped a little bit eroding some of that gain. Considering the advice claimed that he would recoup all of his money I highly doubt it was intended that he be out after a 8% to 9% gain.
i always viewed e.g. bull put spreads and bull call spreads as pretty much identical. there may be some margining differences (here favouring the use of calls) but other than that the performance is the same. in other words if you buy bull call spread at vol_60 and then sell it at vol_80 then you make exactly the same profit as when you buy bull put spread at vol_60 and sell it at vol_80. it is as simple as put-call parity... therefore what are you talking about?
if he pulled 10% in a day, well then good for him, but he would have had to been really quick on his feet when the market reversed hard. all shorts were killed. but since this is the internet, most trades are winners.
Not going after a home run. 10% here, 8% there etc. And then within a few months PurpleOne's account would be in the green. --------------------- Option Expert
The difference is positive Vega vs negative Vega. They are almost identical in terms of Delta but NOT Vega.
I don't get it either. In a fair priced market, the credit from one spread equals the risk from the other and vice versa. If IV changes and the price of each leg changes, this relationship still holds (put call parity). IOW, a $2.60 call debit spread has the same R/R of the equivalent $2.40 put credit spread. If IV causes the spread to go from $2.60/$2.40 to $2.70/$2.30, both make a dime. Neither side prevails.