And, Atticus is a champ at this. We may not agree on everything, but he knows his stuff. And, yeah, paying that last nickel might be ok, you never know. Don
I just don't know how frowned upon it is to not close the whole position at once. At any rate, I got stopped out for no loss on the trade at 137.48. That's why I prefer this to straight calls like Don suggests, at 137.48 I would have lost almost 25%. The butterfly provided a nice cushion and I get to see which way it would head today without losing any money, with the possibility of a nice profit on the upside.
on my basket of equities that calls are sold against i constantly buy them back...i rarely ever let them expire. doing such has saved me a lot of money. same goes for sold puts...never ever look for last 10 cents.
Just turned 62 on Valentines day (born at 2:14AM on 2/14, LOL). OK, back to whether to buy or sell. From Investopedia: While there are certainly many viable options-buying strategies available to traders, options expiration data obtained from the CME covering a three-year period suggests that buyers are fighting against the odds. Based on data obtained from the CME, I analyzed five major CME option markets - the S&P 500, eurodollars, Japanese yen, live cattle and Nasdaq 100 - and discovered that three out of every four options expired worthless. In fact, of put options alone, 82.6% expired worthless for these five markets. Read more: http://www.investopedia.com/articles/optioninvestor/03/100103.asp#ixzz1nytSffu6 And, if you do the math, well, you see what I mean. Betting on stocks staying in a range instead of some wild breakout, just seems like the "prudent thing to do." I just hate seeing that time decay fade everyday if long. Love it when I see it hit the account daily. Again, just FWIW, Don
Okaaay! Let me see if I understand this? I have a calendar spread. First month sold, third month bought. Price moves down, I buy back, the sold front month options. To keep the delta numbers even. Price moves up, I start selling the front month options. To keep the delta numbers even with the third month. The speed with which the DELTA number changes is called GAMMA?
Aaagghh, no. Since we're counting on the percentages, the near term likely going out worthless. Leaving a long naked call, yipes, sell that sucker and a few more and buy the next quarter. You'll be selling higher vol and buying lower. The higher goes to zero sooner, and the far out holds it's price better. And, yes, gamma is speed of delta. Try a simulation with 20 short near term atm's and maybe 25 far out atm, see what you see from today to say, 20 days out. Move price up and down 10%. This is the easy way. Your sheets, provided by your broker should have all this in nice chart form for you to visualize. Don
You lost me there. Just buying back and selling the first front month, sold options. Leaving the third month alone. Which are long calls. Not running to expiration, but trying to catch the fluctuations on the first month.