trading VEGA

Discussion in 'Options' started by jenek-cowboy, Oct 16, 2007.

  1. thank you very match for you full answer.BUT
    I probably not it is correct told earlier.I am sorry.I known how i may extract the profit from change of IV. BUt i don't know WHEN i must have entry in market. I want to hear a statistical method on which i can found this moment.
    For example.
    IF i expect IV to rise I buy two options and sell one futures that made a stredl. What for i could do dynamic hedging? I get the profit from delta.IF we sell IV then i agree.But what for we do this when buy IV?
    I am sorry if i incorrect understood you.
     
    #51     Oct 19, 2007
  2. MTE

    MTE

    Well, obviously, noone is gonna tell you that, why should they!?


    It's kind of hard to do dynamic hedging when you are trading single contracts, as you don't have the ability to adjust your hedge.
     
    #52     Oct 19, 2007
  3. cvds16

    cvds16

    Then again, like I presumed before you were not asking your question clearly, you were asking two different things. I gave an answer to your first question. You were really asking another question: 'how can I predict the direction of future vol or future implied vol' (it's even not too clear which of both questions you are asking, and there is a difference).
    If I could give you the answer to that I would be making a fortune trading VIX-futures, I don't know it, and probably noone else does, it's like asking for a statistical method to tell you at what price the Dow will end the year: nobody really knows, all you can tell are educated guesses.

    You should reread all those books I advised you because by now it's obviously painfully clear that you have NOT understood them at all. You have no idea what dynamic delta neutral hedging is all about. It's not just doing one hedge but continously changing and adapting your hedge (think 200 options and 100 futures and continously adding or subtracting a future)

    by the way, the example you give is not a stradle.
     
    #53     Oct 19, 2007
  4. when i told about buing/selling IV i imply that we must formed a delta-neutral position
     
    #54     Oct 19, 2007
  5. I constantly muddle the strandle and strengle
     
    #55     Oct 19, 2007
  6. cvds16

    cvds16

    There is a difference between having a delta-neutral INITIAL position and CONTINOUSLY hedging it. See my previous post.
     
    #56     Oct 19, 2007
  7. cvds16

    cvds16

    It is not a strangle either.
     
    #57     Oct 19, 2007
  8. Simply we probably understand the notions on miscellaneous
     
    #58     Oct 19, 2007
  9. cvds16

    cvds16

    sorry but once again this is not an english sentence, I don't understand at all what you are saying
    all I can say is trading vol on options is not really simple, it's complicated.
     
    #59     Oct 19, 2007
  10. Okey...We made this.Name proportional sell
     
    #60     Oct 19, 2007