Poor Man's Covered Call vs traditional long stock portfolio

Discussion in 'Options' started by morganpbrown, Sep 15, 2021.

  1. destriero

    destriero

    "Your first mistake was being long vol. your second mistake was not being short vol."

    -sle
     
    #41     Sep 16, 2021
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  2. newwurldmn

    newwurldmn

    and if you feel like you’re in control, you’re not going fast enough.
     
    #42     Sep 16, 2021
    ITM_Latino, taowave and destriero like this.
  3. newwurldmn

    newwurldmn

    that was my quote.
     
    #43     Sep 16, 2021
  4. destriero

    destriero


    Oh snap!
     
    #44     Sep 16, 2021
  5. Overnight

    Overnight

    Sle? What ever happened to that guy?
     
    #45     Sep 16, 2021
  6. destriero

    destriero


    He still speaks highly of you.
     
    #46     Sep 16, 2021
  7. Overnight

    Overnight

    Bullshit. Nobody speaks highly of me. Stop with the lies.
     
    #47     Sep 16, 2021
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  8. Finally got some of the back-end code working for my B-S tool. Using google apps scripts and a google sheet. Beats visual basic, but if I add any more complexity, it's better to use a real language.

    First thing I did was sample IV for a variety of expirations and deltas. Then I fit a plane to the IV(DTE,delta) picks (see the heat map). Dunno if this kind of thing is done, but I needed a mechanism to supply B-S with a realistic IV as DTE & delta change. It has been a real eye-opener to me just how much IV varies within a given underlying's options.

    upload_2021-9-18_17-57-40.png

    I simply modeled the diagonal that I have on now. Long the 90 DTE, 70 delta SPY call, short the 27 DTE, 42 delta call. So the spread is net 28 delta. When I simulate a steady decline (-0.1%/day) in the underlying, something interesting happens. The P&L curve stays pretty flat until net delta hits ~45. This is about where I would roll the short call anyway.

    upload_2021-9-18_18-2-4.png

    I do note that the net gamma flips from negative to positive, about when things go to crap. So I guess that's some more homework.

    I'm still unable to read greater significance in the greeks, but at least I have pictures to stare at. Maybe some insight will set in via osmosis. :rolleyes:
     
    #48     Sep 18, 2021
    shuraver and taowave like this.
  9. My thesis is that SLE is Euan.
     
    #49     Sep 19, 2021
  10. Still scratching my head on how the Syn straddle performs better than outright shorting the natural at 60D, but coming from you guys I don't have the slightest doubt it does!
     
    Last edited: Sep 19, 2021
    #50     Sep 19, 2021