Strategy for flat market

Discussion in 'Options' started by mutluit, Nov 12, 2012.

  1. mutluit

    mutluit

    When designing a strategy one mostly faces this problem:
    what if the underlying doesn't make any move? :mad:
    I have not been able to find a method to "close the gap"
    say between +2% and -2% spot delta.
    At some stock betting sites one can make bets on a range (I think they are based on Barrier Options),
    but would prefer a solution using vanilla long-Calls and long-Puts only. Is it somehow possible?

    Ie. something like the "Ends Between" method here:
    https://lo02.betonmarkets.com/d/trade.cgi?market=indices&l=GB&underlying_symbol=DJI
     
  2. Don't force a trade, look for something that is moving. But that's just my opinion.
     
  3. One second thought, couldn't you be long volatility under the assumption that it will make a move in the future?
     
  4. why not use a butterfly or condor?
     
  5. mutluit

    mutluit

    I think these require writing (ie. shorting) and a margin account,
    I have currently only a small cash acct :-(...
     
  6. mutluit

    mutluit

    Right, but one has to take into account the "time decay" of options, this can get costly with overnight strategies using straddles or strangles. I was thinking to add another vehicle exactly for the non-move-case, ie. a kind of simple hedging.
     
  7. mutluit

    mutluit

    I did some simulations and the preliminary results indicate that
    one can close the above said gap if one finds calls and puts with
    differing IV's (for the same underlying), and that seems to be feasable, imo.
     
  8. Different strikes or same strikes?