Could you please clarify what you mean by 'itm outright'? Are you referring to the vertical? If so then how much itm? Thanks. db
MTE, what I meant was rolling the short call to a higher strike as the price of the underlying approaches the strike, to keep taking advantage of the move.
asap, my strategy with the spreads would be to do it with Leaps, as you are right, I don't know when the move would happen. Anyone here doing this kind of trade? I have done calendars when I buy Leaps and sell front month every month. Many times the sale of the front months, every month, allowed me to own the Leaps for free after 3-4 months. But I have never done verticals, same month different strikes, on DITM Leaps, rolling the short calls as price gets closer. Seems like it might be a good directional strategy, lowering the risk of vega.
Mushin, I take care of the "FDA, earnings, bad news" with money management/ position sizing. It is part of my directional strategy, the most important part in fact. Doing a vertical spread does not eliminate this risk, and certainly in no way that position sizing can't deal with. I think it is an error to think that spreads limit this kind of risk.
lmao. "Directional" is defined by delta. I was short thousands of deltas. I am considering this gag as my sig-line: I never understood why people would even consider simple 2 legs vertical spreads
I think you know exactly what I mean, no need to be a smart ass. The goal of a butterfly is to achieve a price target at expiration, or be as close as possible to it. if you don't see the difference between this and a truly directional spread such as a vertical, then you are right, ignorance is bliss. All spreads can be designed to not be delta neutral, it does not mean that the goal of the spread is for the underlying to strongly go one way.
Keep digging that hole deeper. Consider an otm fly... spot at 100, the trader buys the 105-115-125 fly at $.20. You don't consider a move to neutrality [115] as directional?
Good for you. Your life must be very sad for you to spend your time attacking and insulting people on a message board.