yeah no, the premiums are fat and too much to go long. Going long with a protective put too expensive. Call spread too expensive. short put+long call too much downside risk. Let me think about that 3 short puts at different strikes you talked about.
Right, but not a natural put. Simply differentiating between his two lot strangle, not dissecting. They're equivalent to two short ATM puts, but I assume he wants to be initially unbounded.
at anyrate, the exit strategy is, if the short puts go ITM I need to take my loss. 2 1/2 losers against 2 winners, hopefully the short calls will expire OTM. After all, I'm a bull and should be punished if I'm wrong. If the short calls go ITM I can take a small profit, 2 1/2 winners against 2 losers,and hope the short puts expire OTM. Or if there's any time left just add another UL and try to outlive the short calls. And then there's the middle ground which should be profitable. Keep in mind, this is just a one time deal. It will all be over sometime in AUG (if not sooner.)
You're missing the point. You risk is unlimited (well, bound to zero on shares) while your upside gains are capped to strike-spot+premium.
I like the fact that you understand the "punished if wrong" mantra. Most expect a nice smile on PNL which never dips below the x-axis. Don't use a binary condition to describe your win/loss. The ratio is meaningless bc it doesn't take into account intrinsic premium. My point is that you're limiting your upside to the "strike - spot + premium" which may be acceptable, but I would guess you would want something approaching 1:1 risk. Your position gears risk to the downside, so the PNL is asymmetrical against you (risk/reward >1).
ok, that's good enough for me. If I just flip a coin I at least have a 1:1 chance right? The problem is, if I just go long and get stopped out, I have no other plan than to just get long again. I don't understand everything you say, but I understand what "PNL assymmetrical against you means." Thanks