How will greeks help me?

I would like to improve my performance and it seems understanding and using greeks is necessary.

I currently trade iron condors and vertical spreads for credits. How I would like greeks to help me :

When to make adjustments?

Improve return on my capital. At the moment I keep my return between 1-2% per month. I go far out of the money so as to have minimum adjustments.

I dont mind making more adjustments and taking some losses as well if I can improve my overall performance

Plese explain how to use greeks and post some links as well which are easy to understand and gradually educate myself for higher levels of understanding.

Thanks and all help much appreciated.

 

Trading Option Greeks: How Time, Volatility, and Other Pricing Factors Drive Profit by Dan Passarelli (Hardcover - Jun 1, 2008)

 

Thanks for the title of the book.

 

You cannot know your returns in advance, so I assume you are saying that your target profit - if the options expire worthless - is 1-2% per month.

FOTM does mean fewer adjustments. But you must consider that collecting small premiums again and again means that if a disaster occurs, it can wipe out a year years of profits in one month.

But, it that's comofrtable for you, then continue.

Mark

 

Hello Mark,

Sage advice about FOTM positions. Most of your posts offer this type of observation about the strategies outlined in posts from other people.

But I'd like to know your specific preferences or setup's for constructing various combo positions. In other words, what underlying's do you prefer for IC's and how far OTM do you go. Exactly how do the greeks influence your picks and spread levels on specific strategies.

I'm not a rookie, but I am aware of (and scared of) the risk of every position I put on, and while I sometimes don't have a specific plan for either taking a loss or a profit on a position, I am old enough and experienced enough to know when to "pull the plug" on any given trade.

I trade verticals, calendars, ratios, IC's, butterfly's (not all at the same time since market conditions influence the positions I take on). Some trades I love, and some I am less than comfortable with. So I have some things to learn from others.

I miss Optioncoach's SPX IC forum. He took a lot of heat from the peanut gallery (Maverick74 and others), but Phil was forthright about his trading style.

BTW... where is Maverick74? He lured Optioncoach and Sailing (who I have a lot of respect for), and others to his prop firm. But one of the latest posts I saw from Mv74 indicated that he was "burned out" from watching his clients "blow their accounts".

Maybe a thread designed to layout some specific current trades with commentary from some of us could show both our savvy and stupidity (gosh knows I've got my share of both).

But anyway... I'd be really interested in knowing your's (and others) setups, criteria and positions. Specifically, I need to see how the more experienced traders here evaluate Greeks for position setups.

We will see where this goes (or doesn't go) based upon posts from you, myself or others who seem to know a hell of lot more about trading options than I do.

I'm not a natural leader, but there seems to be some here on these boards.

Regards,

Mech

 

Mark
http://blog.mdwoptions.com/

 

Thanks Mark for your comments.

I donot like very much collecting small premiums . I would like to learn more and do much better than what I am doing. This is the quest.

 

Thanks Mech Trade,

You have asked good questions.

Mark has given good explanations and I am studying his replies.

Thanks to both of you.

 

why would any trader want to be in the insurance business. isn't it better to let warren buffett and the guys on the floor handle this kind of business?

 

You trade, invest, speculate in what you feel comfortable with.