Almost Risk Free Trade

hi

I thank everyone for contributing to this thread especially verbotenlaandia and daddys'boy. They offer valuable advice to my strategy.

I am in the midst of the trade. I will only really see result when my long options expire in march 2008. But I do think this strategy will work well.

I have seen my friend doing it and doing really well. And it make sense to me why the trade is setup in this way.

Wish me luck.

Any more discussion is welcome and I will check back often.

Should anyone need explaination do post I will try to reply if not I am sure someone else will reply.

 

for those following this thread.

QQQQ has hit 46.50 almost time for me to do adjustment. I will readjustment when it hit around 46.20 or 46.00.

There should be no loss. I will post here when I have done adjustment on my put

 

yo man, have u adjusted?

 

Rolling the short put down and out: the sep/oct short diagonal (buying the sep 46 put and selling oct 45 put) is currently around even (eod data 8/16/07).
db

 

At today's close the above trade could have been done for a credit of 0.10.
db

 

if u hit your max risk of -$700, that would possibly wipe out all the small profits you made throughout the year won't it?

i wonder if the max risk in either direction gets hit a lot historically to make this strategy not worthwhile anymore. Hmmm....

 

I roll my position to oct 44 (debit of about $30). I choose 44 so that it can allow more room for me to play.
I could have roll it to 45 with even money or rolling to dec 43 with credit.
So by expiry oct if it stay above 44 I could sell nov put for credit. All this while I would still be selling call side for credit.

As to max risk of $700 it is simple to do a test instead of doing what I am doing. Just do the opposite of what I am doing for a year and see how often you get the max profit of $700. From there you will be able to see how often max loss occur.

I have been selling options (mostly naked). The only event worth causing my heart pumping will be 911. The recent meltdown or crash is nothing to cause my heart pump a beat.

 

So far, so good .
db

 

It's called a Double Diagonal. Nice one db(ag).



Too Funny...calendarised iron condor ... man you made my Sunday

LOL!!!

Risk free trade ? They don't really exist. You have to leg those options in your favor (leg risk) or work some rolls to get a "risk free" trade. If you are looking for free money, stop now.

 

benysl,

I stand corrected. My apologies, cusses and thanks.

apologies:
I have no experience with ETFs and mistook QQQQ for having futures-like options when they actually behave more like stock options.

cusses:
Wasn't looking for a whole new instrument to learn this week but here we are!

thanks:
Wasn't looking for a whole new instrument to learn this week but here we are!

I am following this thread with great interest. Thanks for bringing it up.

Peace and gtty,

Lar