My comms were about 8percent of pnl. Buy side commissions are high though (1 and 3). Price was a factor but not because of comms.
Butterfly compared to a Bull Spread My target price after earnings was $1100.00 and the 1080/1100/1120 Butterfly was structered like this: Buy 1 PCLN Nov8 2013 1080 call @ $14.80 Sell 2 PCLN Nov8 2013 1100 calls @ $8.50 ($17.00 credit) Buy 1 PCLN Nov8 2013 1120 call @ $5.30 Maximum loss $310.00 Maximum gain $2,000.00 - $310.00 = $1690.00 Risk:Reward = 1:5 A Bull Spread might have gone something like: Buy 1 PCLN Nov8 2013 1080 call @ $14.80 Sell 1 PCLN Nov8 2013 1100 call @ $8.50 Maximum loss $630.00 Maximum gain $2,000.00 - $630.00 = $1370.00 Risk:Reward = 1:2 The day after earnings at 12pm EST the Butterfly was worth $100.00, the Bull Spread would be $115.00. Commissions not included. Butterfly -$210.00 Bull Spread -$515.00
If you're trading a range it's not directional, it's a range. It doesn't matter if you place it ITM or OTM. Stop trying to confuse clownpuf. He just signed up for another penny stock trading seminar. I don't believe in micro-managing trades. If you chose a good underlying and an appropriate strat at the right time then you can ride it out without needing to close wings or adjust the strikes' positions. Obviously if you're trolling this site you're not doing much trading, except for closing out flyz for a $17 profit and cheering about it. When you're not listening to tim sikes... Good traders don't make bets. They make calculated risks. You keep projecting your fail onto people who are obviously smarter than you because you're mad that you keep wiping out your play money starter accounts. I don't know why you're having such a hard time with this - but when you limit risk you limit profit potential, and hence constrict yourself to a range. This range is not directional. It's a "target" that does not move. Delta is irrelevant because you're either right and the stock is in the range you targeted or you're not - and calling it binary is misleading because you have a range of potential profit not a specific price where you profit while losing at all others. Except that flies are a strategy that exist for a neutral stock - i.e. a stock that moves within a tight range < 3 std deviations from its current point on avg. That has been ATVI for the last month or so and for a while, VALE. An example of a stock that you would be retarded to place a fly on is AAPL...or the NDX. Like I said before, the places you're suggesting noobs use butterflies would have been better suited to condors. Short condors work great on SPX. Delta is irrelevant if you're defining your profit and loss regions - as you do with a spread. Delta matters if you're leaving one or both sides open-ended (aka directional). Fixation on any one stat is the hallmark of cluelessness. If you used a long condor you could have set the midpoints ATM on both sides and the wings out by the number of strikes you expected the stock to rise (or fall) to capture profits. If you gave yourself 30-60 days to work with in terms of expiry, you could have profited in both ways since the stock usually reverts and goes back to above/below where it was pre-announcement. Your condor's wings would have been short (midpoints long), so if the stock went up as you expected, you'd buy back the short put wing for next to nothing, profiting from the difference, and then you'd have a long put with no limit on profit potential and a highly offset cost to you.
Bro, you're so smart. I can't believe you're not managing Paulson's vol-book. My new sig-line is below. Delta is irrelevant if you're defining your profit and loss regions - as you do with a spread. Delta matters if you're leaving one or both sides open-ended (aka directional).
He's not adjusting anything, you idiot. He's making an analogy with two Euro digital bets. You're not going to understand it because you're thick and indignant. Even an idiot can understand it conceptually, but you're too much of the latter to accept the advice and learn from it. No trader would talk this "delta is irrelevant" nonsense. lol to three sigmas. Yeah, shit that earns under 99.7% of the distribution. lol. Tight range.
Overtrading is always an issue and if we were always RIGHT in our choice of underlying and strat, it works brilliantly to hold until expiration. Many studies have been done that totally disprove your "theory" which is hold to the end. Managing your risk is all about managing your trade and there are times your choice of underlying and/or strat is shit, that's when you need to understand how to best manage it. Sometimes just closing it is the best way to manage it. Other times converting a fly to a condor or rolling out the short strikes saves a loss. Your only limited by your imagination.
Are you waiting for someone to tell you that you don't know what you're talking about, or are you going to continue to entertain us with your ignorance? It's called using the right tool for the job. You seem to be preoccupied with getting a big score on one trade...highly unlikely to happen, although a big loss is assured. You don't have to always be right, you just have to be right more than you are wrong if you keep a consistent risk profile. If you're all over the place then you have to be right on the big moves and wrong on the smaller ones...the point being that if you feel that you need to make frequent adjustments or close the trade early, your process is not sound. Keep that up and you'll end up like clownpuf who tries to mask ignorance with jargon, stuck on this forum being bitter and mad that you lost your money because of a few bad "bets" and moving back in with your parents. Perceived potential gains tend to distort the true risk of many trades - the realistic gain is orders of magnitudes less than the "max potential" which means that the calculated risk needs to be adjust to reflect this - and often it's not. Drinking the "stat & study koolaid" believing that looking to the past is a way to predict the future ensures you'll inevitably lose. There is a reason why outperforming indexes with active trading rarely happens, and if it does, it's largely attributable to luck. Keep trades simple, with positions that are flexible and have time to work tends to win out over casting "bets" on a range or specific price point.
Dude, this has NOTHING to do with stats, this is simply understanding the risks/sensetivities of your options position. You, obviously, do not understand the concept of delta and, as a result, do not understand how it relates to P&L. Anyway, on that note I will conclude my participation in this discussion. To quote an Irish classic, "I learned long ago, never to wrestle with a pig. You get dirty, and besides, the pig likes it."
You need to learn how to follow the conversation rather than injecting something that was never said and then arguing with yourself about it...and if you say it has "nothing to do with stats" and then bring up delta, a stat - you just contradicted yourself.