For those of you that trade options

Discussion in 'Options' started by cashmoney69, Aug 2, 2006.

  1. mo you better watch out. his proprietary formula might give your premium selling system a run for its money.
     
    #21     Aug 12, 2006
  2. I don't monitor absolute greeks beyond gammas. I assume that I will be hitting +/-100 under a shock; so I am rarely suprised. I talk about greeks on ET because that's where the risks lie. FWIW, I monitor my $VaR, gammas and vols.
     
    #22     Aug 12, 2006
  3. Funny thread this one. Surely you people aren't suggesting trading without knowledge of the greeks. You may think you don't use greeks, but whenever you place a trade you are looking at volatility, time, delta, gamma and choose your option/strategy based on these. So you may not consciously be aware of that process, but if you don't understand the greeks then you won't know how to pick which option and quantify your risk. By simple example, if volatility (a greek) is particularly high I won't place a straight call/put but choose a spread instead. And if you don't understand how your position is affected by vol/time etc. then you won't understand the risk/profit in your positions.
    Daddy's boy
     
    #23     Aug 12, 2006
  4. I agree. Entering and managing trades without being aware of one's risks (greeks) seems a bit like gambling to me. I always lose money in Vegas. I guess to each their own...
     
    #24     Aug 12, 2006
  5. Yeah, thanks for the remedial trading lesson. I can give you the vol within 200basis on any atm option you like with only the expiration, stock price and premo; sans model. I've not stated I don't use greeks, to the contrary. Ask daddy to help you with reading comprehension.
     
    #25     Aug 12, 2006
  6. I just thought of a better example. A trader (let's say his name is Arnie) goes long a sraight call. The underlying moves up and at same time iv collapses and time decays. Trader thus loses money and wonders why. Answer: lack of understanding of the greeks.
    Daddy's boy
     
    #26     Aug 12, 2006
  7. Wow... you've really mastered it.
     
    #27     Aug 12, 2006
  8. Hey riskarb - chill. Post wasn't meant to get at you, just pointing out to other posters the idiocy of their statements and using your post as an example of someone using greeks. As you know (or maybe not) I'm big fan of your posts and obviously you understand your greeks back to front.
    Best
    Daddy's boy
     
    #28     Aug 12, 2006
  9. Not very nice. So you think my example is not a good one to illustrate the point of understanding greeks? Unfortunately now you come across as an arrogant smart ass prick.
    daddy's boy
     
    #29     Aug 12, 2006
  10. My point was that over-reliance on model output is building a house on mud. Anyone who's clueless enough to ask why the stock is up and the call is down should consider euthanasia.
     
    #30     Aug 12, 2006