You are correct, I did figure that the delta was close enough to .5 to suit my purposes. I was counting on a breakdown of the stocks over the next few days... that did not happen. But I still could have gotten out with less damage by being a little more clever with my exits. All that being said, i basically blew off the trade because I had said to myself that if the market (and those stocks) held up through the economic news on Thur and Fri, I would exit as best as I could. Metooxx, I don't think I am throwing darts. However flawed, I do have some logic to these trades. Both OMC and BAC are at good resistance. If we do crater after the election and FOMC, then these should lead the way. If they (and/or the market) skyrocket, well.., that is why these are LIMITED risk trades. If they simply bobble around the strike price for a few days.. again I will exit as best I can. OMC would have been better at 65.00, but I don't know if it would ever get there, and if it does.. I will re-evaluate. If you can see clear flaws in my thinking, by all means feel free to point them out. Nobody sees me cry here anyway.. Thanks,
Metooxx, I must admit the first 2 option/stock "straddles" were pretty off the wall. But the BAC spread is a very conventional bear spread. The OMC short with a protective call is a common type of trade too. If you see any obvious flaws in the implementation, I would appreciate hearing about them. I am going to try to not "invent" any new stratagys in the future. And you are right, I have not "mastered" any option stratagys since I am just now deciding to use them. I am using options to "cure" one of my more egregious faults, that is my tendancy to bail out of a trade at the first whiff of trouble. I don't know how many times I have jumped out of a trade that made a little wiggle, only to see it make a large move my way a little later. With an option "protecting" me, I can sit through a wiggle knowing that if it turns out to be "the big one", I will still have limited my loss. (and I won't be a victim of the "deer in the headlights" syndrome which I have suffered from in the past) Of course, this comes with a price, I will have given up some of my profits for the "security" of avoiding a blowout loss. I am also experimenting with longer time frames since I seem to have a fair amount of trouble with the short time frames I have been trying to trade. I feel that options will help protect from the overnight rip that can occur. Anyway, that is my thinking. I am doing these plays with minimal size while I am feeling my way along. I appreciate any feedback, positive or negative. Thanks,
My suggestion would be to pick a strategy, i.e. credit spreads or debit spreads, not both, concentrate on that with small size and multiple positions, and not try anything else until you have done a lot of them, i.e. 1,000 plus.
My suggestion would be to pick a strategy, i.e. credit spreads or debit spreads, not both, concentrate on that with small size and multiple positions, and not try anything else until you have done a lot of them, i.e. 1,000 plus. Do credit spreads offer a slightly higher probability for making money than debit spreads?