help with my butterfly

Discussion in 'Options' started by jonbig04, Jun 19, 2008.

  1. cdowis

    cdowis

    At this time the TOS backtester is not linked to the analysis page. You can backtest numbers -- profit and loss -- but cannot see the analysis as you can with optionvue.
     
    #11     Jun 20, 2008
  2. If you are looking to see if an entry would have been profitable or not, profit and loss is more than enough for backtesting. For many strategies I do not need to see the greeks on a given day as I can see how the position is reacting. Sure it is useful to have but not truly necessary to backtest positions. For free the tool is more than enough to test not only strategies but you can use to do combinations of different stocks or indexes together.

    I think for the price it is pretty useful.
     
    #12     Jun 20, 2008



  3. I see. So you bought the option back to close it, as opposed to letting it expire?
     
    #13     Jun 20, 2008
  4. Tums

    Tums

    You can wait for it to expire, but if you made 33% in 2 weeks, you don't let that get away.


    ;-)
     
    #14     Jun 20, 2008
  5. Yeah -- that's correct.

    Because if you try to carry the front month all the way to expiration, you run into the risk that those unrealized profits that were already available to be taken -- as I did with a 30%+ gain in 2 weeks -- could get away from you if the underlying price runs away from your option strikes.

    I use 20% as my profit target on the calendar. If it gets past that and I think it's going to stay around the strike price, I'll let it go a little more. If I'm past 20% and it starts to look like I'm going to lose some of the profit, I pull the trade off and take what I can get. An alternative is when the profit reaches 20%, then think about pulling the position and taking your $ if it dips back to 15%. Best to take the $ available rather than hope you'll get more later. Hope is a lousy strategy :)

    Also consider that volatilities on the front month can get crazy in the week of expiration on the front month, meaning buying back your short on the position could get expensive depending on how the trade went.
     
    #15     Jun 22, 2008