My SuperCollar construct

Discussion in 'Options' started by Quanto, Dec 18, 2023.

  1. Quanto

    Quanto

    Also a LongStraddle can be used for such EventTrading (high ATM IV), but it's a NetDebit construct:
    LongStraddle.png
     
    Last edited: Dec 21, 2023
    #31     Dec 21, 2023
  2. Quanto

    Quanto

    One drawback of the above ShortLadders and the LongStraddle is that they work best if DTE is extremly short, like <= 5. This is impractical b/c usually the exact date of the expected event is not known in advance (exception: the quarterly Earnings Release (ER) dates).

    So, be cautious when using them. Always check the PnL diagram first for the percent distance of the B/E points.
    For such Event Trading (FDA decisions etc), they should not be more than about 40% distant from the current stock price; the less the better..
     
    Last edited: Dec 21, 2023
    #32     Dec 21, 2023