I started out trading this in May with a 44 Call Calendar spread out to SEP. When my short 44 for May melted away I just went "diagonal" and sold the May 40 instead, then when that melted away, sold the Jun 40. In between there I made a little 2 day bearish swing trade with a put to make a little side money. Whew 30! Sounds like I should consider my plan to layer on bear call spreads !!! This implosion sounds like it is happening sooner rather than later. The open interest on the entire put side is enormous with a 7.64 put to call ratio. Another cheap little trade which allows one to capitalize on this .. is buying a 30 put calendar by selling the JUN 30 and buying the 30 SEP put. That gives you -11.62 Delta, +.61 Gamma, +.13 Theta and + 4.29 Vega. Just the associated volatility explosion alone will help this make money and this trade sorta says "I know it'll reach 30 eventually, I just don't know when" whereas the butterfly makes a definite timing prediction (and pays off accordingly). Thanks to the author for this interesting thread.
thinkorswim ... but I assume all options trading platforms provide this .. trading options without knowing the greeks is like driving a car with no eyes ... how do you know what you are getting into or where you're likely headed? I sorta wonder how much options activity is just random put or call buying .......
If you short 30 put june and buy 30 put sept then don't you need to secure cash? Wouldn't that be a problem with say IB with their auto liquidation? So you dont gain anything by copying this bet in this way? Thanks I dont have a TOS account though. How would you compare IB with TOS option analytics?
No .. when you short the near term put and buy the far month .. you pay for that spread and then make your money back by rolling (or closing). I'd pay about .92. Yes interesting that you bring up that nightmare thread about IB. What if EEM crashes to 20? Of course the short -30 put will be worth a lot more but the long 30 will offset it. That's what horrified me about that IB robo-liquidation program ..... no one at ToS would do that. If what that person wrote was accurate ... you would NEVER EVER want to do options with that firm. It's a defined risk trade allowed even in my IRA which ONLY allows defined risk trades. See the attached picture of the risk profile ... the most I could lose would be 0.92 .