short-term option strategies

Discussion in 'Options' started by ace123, May 21, 2004.

  1. ace123


    First of all, let me thank you to all of you at your effort to improve otion trading knowledge to the comunity. Elite forum posts are great references to any option traders.

    I am relatively new to option trading and spending much time increasing my knowledge in it. I learned very much from your posts. Thank you guys, you are the best!

    I am constantly searching for an option strategy that would generate quick profits in less time.

    I am focused to a strategy like take-and-flee ,that would be good on stocks that have high IV (big news) and that can explode in some way, like SEPR, OSIP, SUPG, GNTA,..., now CYBX, IDEV...etc.

    What do you think about playing stocks like these with this strategy (DOUBLE REVERSE DIAGONAL SPREAD???):

    Example GNTA before the news, Apr 20 2004:

    Stock @12.82

    Buy May Call 12.5 for 2.80$
    Buy May Put 12.5 for 2.70$

    Sell Nov Call 15 for -2.85$
    Sell Nov Put 10 for -2.40$

    Net debit 0.25$

    Wait til the news break then close the position.


    Example GNTA Apr 20 2004, stock @12.82

    Buy 1.5 May Call 12.5 for 2.80$
    Buy 1.5 May Put 12.5 for 2.70$

    Sell 1 Nov Call 12.5 for 3.80$
    Sell 1 Nov Put 12.5 for 3.70$

    Net Debit 0.75$

    Wait til the news break the close the position.

    Feel free to comment any advantages and disadvantages of these strategies. I feel very comfortable with them. The biggest problem that i encounter is the BID-ASK spread that is considerable! The underliying shoul go in either way at least for 20% for the strategy to be profitable.

    Any insights how we can optimize this positions?

    How do you play stocks like SEPR, GNTA, OSIP...?

    Actually there are two interesting plays in the BIOTECH sector, CYBX and IDEV, how would you play these two stocks?

  2. %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

    1] Like your name;
    highly recommend you do like me &
    reread ''Dennis'' interview this MONTH in Jack Schwager 3 top trading books.

    2] Just got thru writing in ''perfect option position'';
    current commissions for
    [in a context of well researched ] position/ swing investors are not
    a factor.

    3] A helpful suggestion , on making ''profitable quick option trades in less time'' ;
    study to be a market maker or forget it:cool:

    4]SEPR underlying looks better than option despite multiple exchanges;
    & more important read/REREAD
    Four Biggest Mistakes in Options Trading by Jay Kaeppel

    The plans of the diligent tend only to advantage.
    Solomon, trading king.
  3. highfreq


    It's a short time-fly; less gamma than a vertical fly, so it won't perform as well in a blow-up.
  4. Aren't you typically giving up a lot of edge with the IV skew?
  5. ace123



    I understand that i can't change the world, but you are giving me away the hope in finding the Holy Grail :)

    I just bookmarked , thank you.

    Do you think that trend following strategies are more profitable than neutral strategies?

    How can i study to become a market maker? :)

    My name is Denis because I am from Slovenia (small country east of Italy) and probably the only Slovenian here at ET.


    Thank you for your comment. Do you think that would be better to estabilish a delta neutral position (short underlying + 2*long calls), or is better to avoid high IV stocks at all?


    Would the IV skew in my example be so important on the position? I think that the BID-ASK spreads are the places to where to find the edge in short-term trading, or not?.

    Of course all my opinions here are JUST opinions, i don't want to offend anyone, i just want to learn and i welcome all who post here and spread knowledge.
  6. Trajan


    I know a stud Slovenian, dad is a former famous actor and former head of the central bank(er, maybe, I was drunk?). One of the smartest guys I've met, huge Laker fan, head of M&A for a Slovenian Bank(don't know the proper name)?
  7. ace123


    Thank you, i will try to find him.