Stop all the bitching. I believe the point Hello was trying to make is that the more informed you can be about the product you're trading the greater the probability of success. With the exception of NOMOREOPTIONS, I like to think that then Options Forum isn't a place to be namecalling and mocking other posters. If you're just trading spreads on a directional basis, maybe you don't need to know more than MOST of the time the spread will increase in value as the market moves your way. However because of the greeks sometimes this may not be the case and you lose on a trade when the market goes your way. That's all. Vega
Hi Again: I think InandLong has some excellent points to make. It is clear that you don't have to know Greeks to trade some types of positions. However there are some that do require that background. For Crimson's benefit (you like examples, thats good) selling straddles is one where you really need to know your greeks. If you do this without having a background knowledge of how things change you may find one morning that the delta of your position changed dramatically. For more examples, just check out McMillan's "Options as a Strategic Investment" (he talkes about this using short straddles as an example). If as InandLong suggests, you are taking directional positions (selling covered calls for instance) you will be fine, because indentifying a good underlying candidate is more important. In the long run you will be fine if you take it slow and are careful to understand what your real value at risk is. Good luck to you. Steve46
May I know which index options do you write? Are the Emini index options liquid enough? And, do you sell straddles or do u prefer to have a directional bias and sell accordingly? Finally, do you do vertical credit spreads? Thanks
Returns mentioned here 8-14% per month. Is this possible consistently or I have misunderstood something. I would master all the greeks if I can even earn 4% (48% per annum) . Please educate me. Thanks.
I gave up ancient greek at school ... and I gave up options greeks later . I really don't see why to masturb his head on these letters when it's easier to trade futures and consider price directly by using market's action principles, now it can be a question of preference .
God, I hope not! I think that many of us are suprised at the risk/reward you're willing to take. I cannot imagine risking 13x my expectation, but to each his own. Your greek exposure should be understood; as well as how greek-sign can change wrt price. Also a good idea to read up on the synthetic and arbitrage relationships. It will give you an intuitive-feel for how quickly the position will bite you in the ass. Knowledge is power ;-) Good luck.
How about OTM naked put instead of credit spread? For that HUI example, just sell the 200put and forget about the debit. That would maximize your risk reward by giving you a better breakeven and credit. You could set a buy stop order if the option goes up 50% giving you a 2 to 1 risk reward ratio.
understanding the greeks is not important unless you'd like to know why people are willing to let you take this position on. from your posts i gather that isn't important to you. it probably won't be important to you until the day you wake up to the maximum loss without ever having been given the chance to cut the loss short. it's not a question of "if" it will happen, it's only a question of "when". but ya know, an awful lot of us had to learn the hard way, so please don't take this post as being harsh or condeming in tone. good luck!
A bit unfair. We all take on even more lopsided ratios when we go on an airplane or eat in a new restaurant. You can't just compare the best and worst results. You have to estimate the expected value of the return.