It depends on what you want to achieve. If you arb skew, then of course you would want to hedge with the option on the other side of spot (you sold a otm call so you want to buy an OTM put) and hedge delta with shares. OTM vs ATM you oviously also want to hedge with options. IV vs. stat vol you buy nuke protection and use shares. When it comes to risk, you want to establish min/max for each greek and try to stay within that greek regardless of time.
Maybe a few of us should go together and author a book specifically on the butterfly as few if any actually exist. An entertaining Spring / Summer project.
QA Threads So I've been researching options for a few weeks Questions: round 2 https://elitetrader.com/et/threads/...ons-for-a-few-weeks-questions-round-2.356968/ Which Strategies to Focus On? https://elitetrader.com/et/threads/...-options-which-strategies-to-focus-on.356807/ Butterfly Trades https://elitetrader.com/et/threads/destriero-butterfly-trades.353623/
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I was a creditspread seller (1 trick pony), but last year I realised that it has become more difficult for me to be consistently profitable. In these markets, you have to be able to adjust. So which books talks about adjusting positions in detail (how /when / why ) besides the Charles Cottle book?
His book is tough. I'm gonna read it for the 3rd time, but chapter 1 is very hard to understand. I do have to say that everytime I read it, i get a new understanding.
Trading is a tough game though ... there is no 'easy way' to learn ... although plenty will try and sell you a 'Triple-income-wheel' strategy that appeals to the naive I seem to remember Cottle introduces his book as starting where others have finished
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