Butterfly options

Discussion in 'Options' started by met1989, Sep 26, 2019.

  1. taowave

    taowave

    bipeds,mopeds,im not following...

    2 legs as in a condor or Bfly??
     
    #21     Sep 26, 2019
  2. Math checked. Looks like the radix could stand a bit of repainting and a wax job, and the cap-sigma is looking a little bent, but a bit of hammering will soon put that right.

    Granted, you could structure what is nominally a debit trade to result in positive theta by selling more extrinsic than you buy. Whether it remains a debit trade after that, or whether that discussion is relevant to the level of the OP's question are not exactly matters of math. :)

    (Not saying you're doing this intentionally, but I believe it was Feynman who noted that you can make almost any assertion untrue if you change the scope.)
     
    Last edited: Sep 26, 2019
    #22     Sep 26, 2019
    tommcginnis likes this.
  3. met1989

    met1989

    but lets say im looking now at the delta its 0.49 theta 2.28 vega -25.59 but its expiring in 70 days so from my understanding its not really affecting the position so how can i know when it will turn to + and not minus ?
     
    #23     Sep 26, 2019
  4. met1989

    met1989

    thanks got one book lets see
     
    #24     Sep 26, 2019
  5. taowave

    taowave

    LOL,No intentions behind my assertion...

    Just found it curious that you wrote debit trades works against you not for you..

    Last thing the OP needs is to get led in that direction...





     
    #25     Sep 26, 2019
  6. taowave

    taowave

    Assuming the underlying doesnt move,how much would vol have to come in to make $100?? If vol stays unchanged,how many days of Theta do you need to make $100?? IMHO,its good that you are trading 1 lots(i hope),as you will learn the hard way,which is the best way

     
    #26     Sep 26, 2019
  7. Long FLYS generate profit from time decay and/or vol collapse or reduction. The actual value of theta or vega is not the meaningful thing here, it is what is actually happening with the position currently. 70 days to expiration means theta is meaningless as indicated by the low theta value. That is basically nothing.

    Vega is meaningful only if you bought the FLY when Vols were relatively high or average and are moving lower. If vols ar enot moving lower the vega number could be anything really and you are not focused on the right number.

    Negative vega just means the value goes up when vols go down. If vols are not going down and time to expiration is 70 days you got a lot of time to wait before anything happens and hope the stock stays between the breakeven points.
     
    #27     Sep 26, 2019
  8. easymon1

    easymon1

    #28     Sep 26, 2019
  9. destriero

    destriero


    You're wrong. You're describing a varswap.
     
    #29     Sep 26, 2019
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  10. taowave

    taowave

    You beat me to it..Not too mention he/she didn't mention delta hedging while bringing up actual vs implied..

     
    #30     Sep 26, 2019
    destriero likes this.