I feel confused as sometimes a straddle is added, sometimes a call is added and sometimes a put is added. Are there any trading rules (to add and drop options) so that mechanical trading system can be designed and tested?
I refer to the chapter on Overlapping Straddles. I feel confused as sometimes a straddle is added, sometimes a call is added and sometimes a put is added. Are there any trading rules (to add and drop options) so that mechanical trading system can be designed and tested?
You are confused because you don't understand options. You're trying to learn to play the piano by studying a musical script from Chopin. First learn options, than read books on how to use them Ursa..
Whatever you do, be very careful, and don't underestimate the sophistication of the players on the other side of the trade, and don't overestimate the practical value of these books for finding strategies.
Yes, they all work. Which have a quantifiable edge? Simple, buying the bid, selling the offer, period.