Long straddles are profitable around 20% of the time as are strangles. On the other hand, short straddles and strangles are profitable 80% of the time. A writing strategy has much more chance of success than a long one. --Even though selling premium will choke off profits on major moves.
Lets visit this again ?? http://greyenlightenment.com/post-2008-wealth-creation-guide/ Market took a nice dive SPXU up 7.0% the exmple synthetic short this guy gives has no open interest no movement, both SPXU and TMV,
so who here has the returns or better than this strategy described ? The lack of interest is interesting!
Thank you for sharing the website. In it he stated that a leverage ETF returns were not a simple multiple of the underlying ETF but were path dependent. I understand the statement but do not understand why. Can you kindly explain the logic behind it? Thanks.
3x etfs can offer offer significantly magnified returns if the path is favorable. But because the stock market tends to spend a lot of time churning (as you can see in 2015), 3x ETFs tend to slowly decay. Stock market gains are often interspersed between months or even years of churning.
Not an options guy, hoping some of you experts can weigh in. We all know about IV crush following a scheduled event. Earnings, FDA, etc. But what is the typical IV decay profile post-event? As an example, let's say a company is reporting earnings in afterhours. Assume conference call scheduled for next day at 10am. Assume weekly ATM call/put is pricing in a 10% move one way or the other. Now assume the stock opens flat the next day. At the open, how much would the IV typically drop? Might look for excessive IV crush where we can get long a straddle and profit from large realized in the next day or two. Thoughts?