When you have to resort to silly statements about "nickel bets" and "no risk",.... you've already lost the arguement. As far as potentially owning companies, you missed that point as well. The point being, "IF" you can not even "consider" owning a company, because you are on excessive margin leverage, so all you can do is "HOPE" the stock does not drop, because a margin call MIGHT wipe you out,..... Then having the "choice" of whether to buy a deteriorating stock or not, is a better place to be. It's all about having choices.... other than close for a loss. Perhaps a total loss.
I don't like strategies that limit my potential movement. I don't like borders. I gotta be free! While selling puts includes a one sided border, I can choose to ignore that border if I prefer. That being, buy the stock, sell covered calls, collect dividends, and "manage" it's potential recovery.
Atty, what amazes me even more about this site is how guys cannot understand that every option is a probability and combining them 100 ways from sunday doesn't change that. Either you have an edge or you don't. And if you don't, no combination of options is going to give you one. So selling the 2 delta call and buying the 2 delta call will produce the same outcome over n number of trials. Or selling the 2 delta call and buying the 98 delta call. The sum of the probabilities always equal 1 as does the sum of all deltas.
I don't think any trade gives you an actual "edge". The best anyone can do, is raise or lower their "probability" for success, relative to their "potential" reward,..... relative to the adjustment.
Yeah, it's pretty comical when some guru/clown puts some acronym on some strategy (STUDD) using fills in the guts-stuff. The guru would be better off learning basic synthetics. We had a thread on here about cellular pH and I nearly shit myself. Works the same with trading. Don't speak if you have nothing of value to say, or worse, it's detrimental... (not referring to twinsen). If there isn't an edge on the strip then you're taking a bet, period. The structuring is immaterial. It's not as though there are massive kinks in the strip that lend to some BWB or other shit.
You have an edge if you sell vol at 20 and in comes in realized at 14. It's just not as obvious as it is in delta1, but it's more easily quantified.
First of all, probabilities can not be take in isolation. You high probability of winning a small amount is offset by a low-probability large loss, so while it's nice to win every day, the day when you lose you are going to be crying. In the end, you have to be able to predict something - either you predict the terminal distribution, you predict realized volatility or something even more complex. Playing "high probability" games in a non-linear instrument is a sure way to ruin. Second of all (and I repeat myself), you can not compare an option to a lottery ticket. A lottery is a game that has inherently negative expectation, for a simple reason - it is built this way by the lottery provider. A option, being a liquid market instrument, is not necessarily skewed in either direction - imagine if anyone can be a lottery provider, the negative expectation of the lottery will quickly diminish.
You still are not getting it. You cannot raise or lower your probability without an edge. Adjustments do not change the outcome. Adjustments are simply a whole new trade that with it carries it's own probability distribution. You can roll up and out till the end of time, your probability is not going to get better. LOL. There is a reason why EVERY market making firm in Chicago doesn't hire traders who have not taken a college stats and probability course. Because those guys who haven't believe in all this garbage about selling options as being an edge or improving the expectancy of a trade by adding layers. LOL.
I don't disagree with anything you stated. But just for clarification, I didn't intend to compare a particular option trade with a lottery. I was comparing the "reason" one may chose a particular option trade. That being, the potential for a big payoff, for a low probability trade.