xled the B-fly order...market looks like its selling off and with the "big" boyz taking off early today it will have a hard time rallying
great topic yip. I do look at it and have tried to figure out how BEST to use it. perhaps touching points are good places to place hedges or buy/sell ES?
Yeah, I talked about that a bit on this thread a while back. I don't think you were around yet and I don't know where I first mentioned it.
well, given the 5 point premium in the ES, i wouldnt say its better. If we rally hard in AUG, it will be more painful for me to adjust as i will be ATM/ITM quicker. I too wasnt getting filled on the spx so i canceled(IB got a nice lunch on me) and legged into the ES. I cant believe the CBOE guys filled a boy from Utah faster than a homie.
You can use your target adjustment point ( Coach's idea is 10 to 20 points from your short) in your touch probability. So you have an idea of how often you need to adjust your position. Do you have the formula for touch probability? My rough estimate is 2 x delta. I used it a lot for my naked writings with OIH in the past. I don't want it more than 20% of my short strikes, and I'll hedge when it comes close to 30 to 40%. For vertical spread, I have no experience of using it. Since the long leg has a partial hedge effect on the short one, I think it is ok to have it close to 40%. Just want to get some insights in this topic.
I was too short this morning. Thus, I adjusted some call spreads that went ITM by rolling to higher strikes in a further out month. Hated to do it, as holding short positions in options that are near the strike is the path to LARGE expiration profits. But, being short that gamma is too risky for me. The rolls were rather painless as the cost was about 6% of the premium I've collected to date for my August positions. I'm very willing to pay that for protection. With the market heading lower, it appears I may have been too hasty - but I've learned that there is plenty on money to make tomorow, as long as I don't get kiled today and I refuse to remain short options that are currently ITM Hope the rest of you are doing well in the rising market. Mark
Mark: Just wanted to say that I'm sure many of us appreciate your posts. It's always good to get perspective and insight from those who've been in the business, have probably seen it all, and are trading a similar style. Thanks.