Elitethink, interested to read you are not a fan of adjustments on monthly spreads, why is that? How do you decide where to put your stop loss? Thanks Michael
Elitethink Thankyou for the feedback on the Butterfly on the weekly OEX. Haven´t a clue at this point what you are talking about. But the info gives me a starting point to study. I like the weeklies, because you are over with the trade in a given 5 day trade period. You mentioned short straddles. After my experience with them and the margin requirements ( $9000 ) I gave up on them. Maybe the butterfly has some way to cover them? I will look them up and start reading up on them.
Elite think Thanks for the info on Butterfly spreads. Looked it up on the internet and got a nice explanation. It sure does read like something for weekly options. Reads real good. Will surely take some practice though. Stanford, the Butterfly is a debit spread and a credit spread set on top of each other. Roughly 3% deviation apart for the outer edges ( wings ) and makes money from TIME DECAY. There are several options, or adjustments like you like. You can roll over, or turn it into an Iron Condor, or just take some quickie profits. Far more agile and rewarding it looks like than a credit spread alone. Not a trend type strategy, but one for market turns, or range bound. Most weeklies fit this type of description. Going to take about 3 weeks of practice for myself to straighten out the possibilities.
Stanford Got no premium in the OEX to put the other half of an Iron Condor. You might have in the NDX though? I would be looking at a Bear Call Spread at 2175 for a weekly trade, expiration tomorrow.
Often adjustments exacerbate the situation. If they work for you then go for it. In order for premium selling to be profitable, expectancy must be supported. If a short option multiplies by more than 5, usually, expectancy breaks down. My exits are usually 3 to 4 times the entry.
Elitethink That is why I want to adjust very early if the market goes against me. I am looking at a roll at a debit of 150% of the initial credit. I did that twice this month on the NDX 2050/2075 spreads (rolled out eventually to 2100/2125) which didn't cost very much, good thing I did as the market went above that. Dont want to feel uncomfortable at all waiting to do a very expensive adjustment. Michael
Stanford When you get that analyze figured out, tell me about it please! TODAY's the day for you. You finish your monthly experiment. Be sure to tell me how it worked out, please! VERY CURIOUS. I'm diddling and fine tuning my entry and exits for straight buying of options yesterday and today. Losing money like crazy in this sort of testing. Still if anything, I'm learning of things NOT TO DO!
Falconview, what I will do is copy and paste the cash statement from the TOS account once things have settled. What time does the settlement actually happen today? You will be able to see the details then, but overall, using $250,000, profit for the month was $12,500 or 4.5% for the month. I did do one weekly as a test in there also (small amount as you will see). Did to upwards adjustments of the NDX calls as the market rose and probabaly would have done one more with real cash, so I suspect it would have been somewhere closer to 4%. Also closed out some positions early but made close to maxmum profit on those ones. Did a little playing around with RUT calls at the last minute, but that was a wash, close to even on those. So, if my goal is 3%, I have achieved that. (10% first month, 4% second month). I want to avoid the mistake I have heard about somany times where you get a couple of winners and then make a big mistake. Need much more practice time like TJ says before risking the real cash. Michael