The one with the larger debit is by definition more risky. PUT and CALL condors at the same strikes are synthetically equivalent. The two examples you gave were not at the same strikes.
Why not just do a deep ITM buy write....the 7.50 calls for Nov are trading at 8.30 bid right now. Take in about 7% in one month assuming you get called(pretty good chance! your covered for a 50% haircut in the stock) thoughts anyone?
momoneythansens, your answer about the synthetic was what I was seeking - sorry it was worded poorly. Yes, I was aware the strikes were different, but the risk graphs were the most identical, unless I made a mistake - not unheard of Robert56, thanks for the suggestion. I'll look into that. I'm trying to make a good trade that would allow me to take advantage of the high IV vs HV. The butterfly/condor was one I was considering after reviewing in book "Volatilities and Pricing" (sorry - don't have the author's name in front of me). So, the strategy would be one where I could utilize negative vega, since I feel it will fall (that's just an opinion - I've got plenty, none of which unfortunately come with guarentees...), while trading in a range (ala a condor). Ben
Ben , you really should think twice before taking ANY trade with this stock. This is a non-cyclical event ( happens first time , no historical reference) and you , me or anyone else cannot say at this moment where the IV and price will be before the event and where it will go after .
the option has a high IV for a reason. this is NOT the reason -- for a "smart" person like you to pick free money.
Guys, Thanks for the response. I'm beginning to come around to the same conclusion. I forgot where I got this quote from, but it seems to apply: "Options are usually overpriced for a reason". I appreciate your taking the time to 'give me a clue' where one was missing. I'm really struggling with finding a correct strategy for my personal trading style. When on vacation, I've enjoyed some success trading options while closely monitoring. However, I'm only on vacation a few weeks out of each year, so that's not a viable approach for me. Is it reasonable to think that I can find a strategy to trade options, but not require close monitoring? If so, what would the best strategies be for this type of trading - calendars, butterflies, covered-call-writing, etc? I can check in at lunch each day, and can make a trade in the morning and afternoon, but I can't monitor. I've tried setting stop-loss, but sometimes those trades are dangerous - I saw one a week or so back where the bid/ask was $0.01 and $4.95 over lunch time - thankfully, my stop-loss didn't trigger! JB
Ben, I've been having success with vertical spreads. They don't require continuous monitoring (at least not in my case). I like to open them about 1/2 hour after the market opens (and the B/A spreads come back to earth). I have a theoretical profit target based on the price of the underlying. I can monitor the underlying using a Google desktop snap in and if I notice that its getting close to my profit target, I'll fire up IB and put in a close order.