Strategy For Unknown Direction

Discussion in 'Options' started by infolode, May 27, 2007.

  1. nikko309

    nikko309

    There are many ways to skin the cat. You have to get comfortable with the strategies that are within your comfort zone. Your conclusion is the obvious one. Find out what option niche suits you.

    And please forgive me for teasing you about your spelling.
    I just couldn't resist that one:p
     
    #11     May 28, 2007
  2. Yes, thank you for the additional information. I'm sifting through various tutorials now and will continue to do so.

    My spelling is atrocious, I must admit. I never lasted past the third round in spelling beez.
     
    #12     May 28, 2007
  3. jj90

    jj90

    To nikko :

    Double slingshots are crap for that scenario. You'd want to long the ATM straddle or closest strangle for IV rush and gamma scalp the swings. Double slingshots are essentially 2 flies with more wings for outliers or if you believe theres a strong push.
     
    #13     May 29, 2007
  4. nikko309

    nikko309

    Crap? LOL.

    Seems to me that both the double slingshot and the ATM straddle benefit from movement away from the strike and IV expansion. How you scalp/adjust is a separate issue.
     
    #14     May 29, 2007
  5. Try a long straddle. This is buying both a call and a put. If you are more bullish than bearish, you may wish to buy more calls than puts, and vice versa. The optimum time to buy is probably just the day before you expect the breakout. This way you don't suffer the option's decay. Options "melt" a little in value each day.

    This scenario doesn't work too well before earnings. The prices of the options are pumped up so far before earnings that the stock really has to move a lot. But, if this is your own private analysis of a breakout point, then the options aren't pumped up too high in value like they are before a widely recognized event such as earnings.
     
    #15     May 29, 2007
  6. jj90

    jj90

    Double slingshots don't benefit from IV rushing. I hope you already know it is just 2 flies on both sides with extra wings. Unless you have so many wings that the position is +vega, IV falling will be in the position's best interest. Why you'd want to scalp muted long gamma in the 2x slingshoty over the massive straddle long gamma is beyond me.
     
    #16     May 31, 2007
  7. what exactly is a double slingshot?
     
    #17     May 31, 2007
  8. MTE

    MTE

    A double slingshot makes your broker happy!:D

    As jj90 pointed out above, it is just 2 flies on both sides with extra wings.
     
    #18     Jun 1, 2007
  9. I see , thanks MTE
     
    #19     Jun 2, 2007