Is trading Implied Vol, the real edge here? And anything directional has no edge?

Discussion in 'Trading' started by Tall Mike, Aug 19, 2023.

  1. newwurldmn

    newwurldmn

    yes. It’s a form of risk premium and not free money.

    It’s compensation for taking on unhedgeable risks.
     
    #11     Aug 20, 2023
    longandshort and TrailerParkTed like this.
  2. qwerty11

    qwerty11

    I don't see (in relation to IV trading) what disadvantages there are (nowadays) "at the retail level".

    If you read some old topics here from Dest you will learn a lot (about IV trading)!
     
    #12     Aug 20, 2023
  3. destriero

    destriero


    You won’t know if it’s an edge until after you’re out!
     
    #13     Aug 20, 2023
  4. destriero

    destriero


    My old threads with trades generally suck unless they are arb-positions. I was generally long spot into some target -> synthetic straddle -> fly conversion. If you earn over the day1 straddle mark then the hidden gigi is the opportunity gain on stickiness in the wing purchase. So there is some value add, but you have to be somethwat successful trading direction. The alternative is short the straddle with delta position but your initial deltas limit your opp as you limited to your initial deltas. IOW it makes no sense to short a 99-100D straddle/combo.

    The problem with it is that you’re in shares at inception. The completed (call) fly is on at a credit, but the share gain isn’t an edge; it’s artifact of a successful share buy.
     
    #14     Aug 20, 2023
  5. qwerty11

    qwerty11

    OK, I don't specifically mean the old threads "with trades" but point taken about those!
     
    #15     Aug 20, 2023
  6. What risks are unhedgeable?
     
    #16     Aug 20, 2023
  7. newwurldmn

    newwurldmn

    gap events mostly.
     
    #17     Aug 20, 2023
    Flynrider and destriero like this.
  8. destriero

    destriero


    What I meant was it's all that I was willing to show. In the "dest everything journal" showed that most of my trades were in single name positions (L/S shares) with an eventual option-add or cover. Too difficult to convey here due to frequency.
     
    #18     Aug 20, 2023
  9. destriero

    destriero


    You don't understand layers and programmatic-dynamic hedges.
     
    #19     Aug 20, 2023
    Option_Attack likes this.
  10. What about selling options spreads? i.e. selling VXX Call Spreads. You can hedge your risk there. Or at least define it to what you are comfortable with.
     
    #20     Aug 20, 2023