Weight the volatility based on their beta to each other see what you come up with..im sure theirs a pair or vol swap trade there
Uhhhh.... Me no pair 'em, swap 'em before. What's left of my brain has a hard enough time with Singles, Spreads and Condors! Let me know if you do it, so I can follow along.
I'm just learning about pairs and comparing volatility... the volatility in one might tell you a bit about the other.. you could sell vol in gld and buy in slv if you think their cold have swung to far away from each other.... I'm a noob at that stuff but I'm wanting to find pairs and stick my toes it.....things are only as complicated as you make them... I got overwhelmed and cross eyed at first even with just options but over time they become more friendly and the language doesn't scare you anymore
Yes, the terminology barrier in Options World is not always easy to deal with. There are several ways of saying the same thing too, which adds to the complexity. Still, I'm starting to get a handle on some of the handles, and have been enjoying the journey more and more. Especially on money making days like today! Oops. Better not say that too loud - might jinx it...
so what are you doing.. just trading it outright with leverage or something?? these are things i would rather do then own the underlying.. on a Gld break out.. 1. Price the otm call butterfly 2. look at a debit spread IE 3. ratio backspread ATM for a credit 4. Synthetic long
No bailout plan in this one. It's a win or lose proposition. Hoping to hold as long as possible to expiry. If position winning say 80% of maximum reward in the coming few days (because of a GLD fast run up) then I would close it before expiry.
UL vs. Synthetic... margin requirements Short Put Position Short 1 Sep 160 puts(s) at $2.56 Underlying stock at $160. Put is out-of-the-money Initial Margin Margin requirement: $3,412.80 Proceeds from sale of short put(s): $256.00 Margin call (SMA debit): $3,156.80 + Long Call ââ¬â 9 months or less until expiration Position Long 1 Sep 160 call(s) at $3.15 Initial Margin Margin requirement: $315.00 Margin call (SMA debit): $315.00 Synthetic Margin Requirement on 100 shares.. $3,156.80 + $315.00 = 3471.80 Margin Requirement on 100 shares of the UL @ 160.84 Margin requirement on stock purchase: $8,042.00 It costs $4,570.20 or 2.3 times more to trade directly in the underlying.. this is the margin calculator i used.. http://www.cboe.com/tradtool/mCalc/default.aspx