Short calls your short convexity... all the downside without the unlimited upside... we get a crash calls could actually go up in value relatively.... puts are the way
dont forget short calls are negative delta, which benefit from a crash. but yeah if the market crashes, the convexity is a problem, moreso on the far months. however the closer to expiry you get the more delta sensitive you become, and the less vega sensitive. i'm more worried about the unlimited downside to short calls, which is why i mentioned the stoploss if i were to do that. still pondering, so far im leaning towards long puts, or maybe a combination.
how does that relate? buying whole life would be like buying a put? whole life would be more like a knock out option to me.. hahha payout on touch.. the touch of death..
short calls went up in the 87 crash.... guys lost money .. i read that somewhere.. implieds went through the roof.. causing the calls to go up in value... i'd rather just outright be long vol on a downturn.. of course your talking a single ticker though.. what ticker are you talking about.... it would be easier to profile the trade with specifics.. IE strike space liquidity, skew, etc..
You're starting to sound like you are actually closer to 65% sure it's going down, than 99%. What % of the stocks float is currently being shorted?
it relates because only the lucky ones that die actually make money buying insurance selling a call on a slow deteriorating asset seems like a no brainer to me but the question was, how to get the most bang for the buck, and since I know nothing about options, that was just my less than 2 cents worth. The whole thing just seems kind of comical to me. The guy thinks he has identified an over valued stock which he thinks is going to go down but he's not sure how fast or when, and he asks what to do about it. But just shorting the calls isn't good enough for him.