Having a plan is not for the market; it's for ourselves. It's a way for us to have consistent profit unlike what somebody does: This is not the kind of trading that suits us retail traders because we retail traders all have fixed and systemic cost and payment obligation that requires us to have a more stable and consistent profit pattern to match. You, like I said many times before, are more of an institutional trader who doesn't have as much budget constraint as we do so therefore are really not qualified to give us retail traders advice because they are not suited for us. You want to come in here to troll to show off just to boost your ego, sure but retail traders need to be cautioned not to take your advice by face value.
Dropping decimals for deltas is a fucking noob move. NOBODY in professional or amateur options trading does that or discusses delta like that and no options prices are ever listed with delta with no decimals. And I stand by what I have said, gamma DOES become infinite even though in theory with static IV, it does drop once the option becomes ITM and eventually approaches zero when the delta is 1 but in reality IV changes and constantly adjusts so when volatility explodes, IV explodes with it and that's why a particular option never becomes ITM enough for gamma to become zero; it will ALWAYS have some positive value exacerbating delta so in a way, gamma really becomes infinite. I stated this very clearly in the original thread where I first made this observation and illustrated it with the Oct. 19, 1987 Black Monday phenomenon: You two POS can't understand it and refuse to understand it because you two were too busy protecting your pathetic ego so you two can continue to troll here. If gamma all becomes zero there should be no reason why people would not able to buy back their options when it was DITM even paying several times over the intrinsic value since if gamma is zero when delta is 1 then that means there is no more extrinsic value between the options price and the underlying; intrinsic value is all that's left. But that's NOT what happened on that Black Monday, Oct. 19, 1987. Put sellers who were losing were offering to pay several hundred times over the intrinsic value in order to close their positions and their orders were refused. And the MM's who refused their orders all cited "risk" as the excuse and that the price was fast moving. Given that what they were saying is legit, this proves my point that gamma can become infinite when pushed by IV that's fast ballooning and increasing in real-life trading which is entirely different from what's statically in theory that it is zero when delta is 1. "Options markets losers have complained that prices became unreasonably high during the day on Black Monday, that professional options traders at the Chicago Board Options Exchange were gouging individual investors. Exchange officials dispute that. With the stock market in free-fall, the risk of buying was too great and traders had to demand steep premiums to protect themselves from disaster. "It's like walking into a burning house and trying to buy fire insurance. Of course it costs a lot," said a CBOE spokesman." https://www.washingtonpost.com/arch...ped-out/090c57f7-fc75-4f02-9d22-585cf53c8548/ Premiums, steep premiums!! If gamma is 0, delta is 1, WHERE did these premiums and steep premiums come from??!! Everything should be intrinsic value; there should've been no premiums. If you look at an DITM option right now with delta of 1, gamma of 0 from any option table, its price is exactly the intrinsic value but that's not how it happened that day. If it could happen back then, it could happen today and it does happen today, just on a muted level because of circuit breakers. If the underlying of SPX on that day was 250 let's say, and the strike was $350 let's say, with a gamma of 0, delta of 1, the option price should've been (300-250) just $150, and yet the guy in the article was offering to buy back his options at $5,300 to get out, a premium of (5300 -50) = $4650!! If the intrinsic value determined by delta of 1 was only $150, then the entire extrinsic value of (4650 - 150) = 4500 would be due to gamma. It didn't reach infinity only because the market closed at 4:00 pm. If it hadn't, I am sure it would've gone further due to the exploding IV that was determined by whom?? Yes, our best friend, the dealers who cited "risk" and using the wonderful analogy of buying fire insurance for a burning house. Sure that insurance would cost a lot, but how much is a lot?? Infinity??!! Anyway I don't expect you two bozos to understand or ever wanted to understand it as like I said, you just wanted to troll with your ego (cuz that's the only thing that you have left). This is really for me and for everyone else on ET who's interested in options and wanted to learn more about it instead of or at least besides trolling. And it's really off-topic to this thread here but I can't believe you two shitheads would drag a topic from another thread to this one just to troll because you are just that pathetic.
I thought the whole reason behind having a rigorously tested trading plan was to take the emotions and subjectivity out of it as much as possible? Ad libing it while under stress can lead to disaster?
That was @deaddog's response to OP's post that contains the question "regarding two of the most likely problems they will encounter".
lol you’re a fucking lame. Infinite gamma! Delta is for noobs! As vol rises, gamma falls… really it’s true. The price was due to wide vol-mkts in a panic represented by the vol-line, not gamma you tool. vIx hit 120. Vol as synthetic time. As vols drop, premiums fall, gamma increases. Ballooning Infinite Gamma! Aaargh! Dude, put it in a book!
Just proved to you, gamma does NOT fall when vol rises. In theory it does, but in reality it doesn't otherwise how do you explain the rising extrinsic value?? When vol drops, theta takes over (and that's another topic that I am not wasting any more of my time and energy to explain to you bonehead) and gamma does not increase either as gamma is highest only when options are ATM and actually approaches zero also the more OTM an option is. Gamma is also zero when an option's delta is 0 not just when it's 1. https://www.optionseducation.org/advancedconcepts/gamma Yeah you are full of shit. I just proved it to your face with a real example and now you can't take it. You can't admit that you know shit. EXACTLY as I thought, you've got nothing to offer but is just here to troll your life is shit. I did already but you two lowlifes decided to egg me on with your pathetic sarcastic remarks even when I am posting on different threads so I decided to prove the matter once and for all to shut the two of you shitheads up! Now that I have, I am putting the two of you, you and @newwurldmn on "Ignore" since you two have shit to offer and I am not wasting my time and energy on shit. Lord knows I have already wasted too much. Good riddance!!
lol when vol drops theta takes over, you say!? You’ve fucked it sideways yet again. I already schooled you on peak gamma in the other thread, you’ll remember bc I used the huge font. Stop with the self flagellation or delete these when your Amygdala calms down. You fucking loser lol.
For the rational among you. When vol rises; the gamma of the ATM strike falls. The effect on OTM gamma is to rise symmetric (10/90 deltas gain = if skew flat) but that’s meaningless as ATM gamma sens is an order of mag > in value and notional impact. Douchey is stating that the rise to extrinsic values on the strips during the crash was due to gamma which is fucking absurd beyond reason. The gains to Dgamma/Dvol are moot as the thing trade deep. Price the Greeks on a 10D put on an increase in vol from 20 to 120 and look at the values for vega v. gamm or higher moments. It’s a fucking IQ test. So you shorted the 20D put and the market dropped 20% in your face. What’s the gamma-positions contribution to your loss? Greater than the impact of the cum-delta? Vega? lol. Vol as synthetic time; time as synthetic vol.