Do any of you employ strategies which instead of using the proverbial 100 shrs of XYZ against a put or a call use 50 shrs against your put or call? Or say 150 shrs, or 200 shares against one put or call? Or 2 puts or calls against 100 shares? Sorry if this is kind of elementary. After I read the book I knew everything there was to know about options. Then they started inventing butterflys and condors and who knows what all.
to be exact long 1 Dec corn at 673 1/4 short 2 700 calls at 42 3/8 I'm pretty sure we'll see 700 corn before DEC Then I'm gonna convert the short calls to a short strangle But I know you guys over here are kind of white shoe, so I tried to use words like shares.
ok, now I get it. 1x2 call spreads are great for selling vol, when you think the future or stock will move up slowly, or move sideways. I was confused by your description.
yeah, that's exactly what I think is going to happen. The only problem is, in the end I think it will break pretty violently to the upside. Actually, I'm thinking about getting out of the trading business and into the insurance business. Due to the fact that most times most markets chop. So unlike most traders, it's the trends that I fear. I was kind of joking about the short strangle. But if it breaks 700 it will probably spike higher. I can let my long UL run and hopefully take some great profit, and when everything settles back down see if there's any profit left on the short strangle.
You can use any combination of UL and options that achieves a P&L spectrum that you desire. Some standard strategies include: BACKSPREAD: sell lower call strike, buy more at higher strike RATIO SPREAD: buy lower call strike, sell more at higher strike RATIO CALENDAR: sell more near term options than long term bot RATIO WRITE: buy UL, sell more callls DELTA NEUTRAL: options against options, UL against options ETC. All of these can be done with puts as well.
thanks spindro, I've never traded future options. They're kind of thin. Some days only 150 trade, and I wonder what I think I know that they don't. But I'm really enjoying it. Premium and time adds a whole new demension I never got to experience when I was just scalping ES.