Good point. I certainly have the available margin as I usually trade conservatively. A high theta capture strategy combined with small outright position, even with undefined overnight risk, should still be acceptable. I supposed I’m attracted to the asymmetric payoffs on profitable trades versus losing trades with OTM ‘flies, where I typically risk 30% of debit in exchange for a potential 100 to 200% return if price moves in my direction. Limited risk with high leverage is highly attractive to someone who still believes they can predict short term price moves. Time for some calculations...
FWIW, I tend to trade in a very similar manner to you ( asymmetric bets),but have been shifting towards more neutral positions with higher theoretical edge and taking a moderate Delta stock..Jury is still out
Yes, my theta costs are high on the legs of my ‘flies as their deltas either move away from 0 or 100. Of course, the body is intended to “Pay for” the legs for at least the first few days. Also, positive gamma can be a beautiful thing as intimated below. Another idea would be to combine a wide winged iron condor for higher theoretical edge and an OTM ‘fly instead of a naked moderate position in the underlying for directional exposure. After all, the deltas can grow with the directional ‘fly with favorable movement of the underlying and as time passes, whereas the delta on the underlying remains fixed. I suppose the simplest way for a non math whiz to compare each structure is to take selected price points of the underlying and multiply the payoffs versus the probability of that point being reached. This should give one a rough idea of the relative merits of each position type. To the maths, with me!
Sorry, that sucks! Today felt like America wiped its ass of a dirty cling on. Things felt good today, finally!
I thought Trump's farewell party would be less crowded, easier to get a seat, so I looked into that. They said no peasants allowed, so no luck there.