SLV Straddled Here

I believe good to go now.
in 4 May 40 calls @ 1.42

 

I sell naked straddles every month on a few index funds but would never consider doing it with SLV.

Selling naked straddles on SLV is NUTS.

Right now a SLV May straddle will get you about 10% for 2.5 weeks. They could give me 25% I still wouldn't touch it.

Given the OP has "rudimentary" knowledge of options all I can say is please turn your straddles into iron condors. And this is coming from a guy who hates ICs.

 

as i mentioned in my opening post i will be buying wings for protection. at the same time i want to have the wings sufficiently far away so that i don't pay too much for them. therefore, i think about my position as a short straddle but with black swan protection.

 

Naked straddle(s) is not a good idea for rudimentary option knowledge. You need more than that as well as disciplined money management.

Selling the near month straddle is desireable for capturing the higher rate of time decay but you'll be happier with higher premium from a further month if the UL blasts thru your strike.

If you want to sell volatility, look toward hedged positions. Diagonalize if there's skew b/t near months (or weekly/1st month). Another possibility is to gamma scalp shares against a short option position - but that's probably beyond your pay grade now

The best thing is to model various positions and tweak them until you find one which has an aceptable R/R profile.

 

You might consider a short strangle as the core so that you have some buffer.

 

Yes that's a good idea as long as you buy the wings at the same time as the you sell the straddle (ie an IC).

If you try to leg into the wings at a later date it could get ugly.

With high straddle premiums I would imagine you could put on an IC and still have enough premium to make it a worthwhile trade.

 

If you buy the wings when 'it really goes nuts', the price you pay will be nuts. Not much protection after the fact, except for capping your unrealized loss.

 

no, i will buy them at the same time as selling straddles. trying to figure out how far away to place them.

 

can you please expand? what index, what filters do you use, how long have you done it?

thanks.

 

but you can blow up on the trade before that happens. And that's the likely scenario. Odds are against you that it will be quiet from here on. And 1 6% move will end you.