AIG - Sell Sep ATM Straddle

Discussion in 'Options' started by TM1982, Sep 3, 2009.

  1. TM1982


    Any vol traders thinking about selling the AIG front month straddle??
  2. Is this a trick question?

  3. valkyrie


    Hey Dagnyt

    why can't you provide an answer with substance - or just remain silent ?

    Someone like you with the aura of a options related 20? years bio and almost a 100 years experience ought to do better than snippy answers.

    Why would people open up to u ?

    Cheers .. OMG
  4. valkyrie


    Hi TM1982

    AIG is quite the hot rod.
    Rode it (options) 2 days ago and won $1k in one day.
    Saddled up again yesterday, only to get burned at the $2.5k level.

    Straddle ?
    Sure, tempting. But ultra-high vol keeps you guessing which way it'll go.
    Fundamentals dont support any move north. Last week it was short squeeze, this week whatever. If you grab it, you've got the literal tiger at it's ...

    What I was on - before my gambling additiction got the better of me - was a dbl diag, with a high vol diff (> 100% between front and back month) - so that even a vol crush would not have mattered.

    After all this - did u ever look at the risk profile of your strangle ?
    Never mind, but your question suggests that u didn't spend too much thought on the situation.

    Cheers .. V
  5. Tide31


    My concern is betting AIG closes between $38 and $47 two weeks from tomorrow, when this could be tomorrows range! Unless you spend a lot of time during the day chasing delta, but this will eat up your premiums. Think they are expensive for a reason, you know?
  6. ultra high iv itself does Not warrant a short vega trade.

    short vega only when you expect iv to drop soon.

    hope this helps
  7. Good question, without a good answer.

    Selling the front month straddle in AIG is a very risky proposition. I don't think the payoff is good enough to take the risk. Just my 2 cents.