@MushinSeeker Correct on the Vega if BAC POPS but then, hopefully it goes down the next day or two (3 or 4 tops so theta doesn't rape me) and then goes back up giving me a big boost from a bigger gamma (because delta is lower) and a vega push, I will let you know what happens at the open, do you think the banking news in China will help out BAC for tomorrow? @Robert Morse Please send me a free demo THANKS ALL INVOLVED
Can't give you advise on BAC ( I trade index and ETF's ) .. I don't quite understand what you mean by vega push. If BAC goes up , then down the net day or so then back up, the vega will hold or even go down (unless there are extraneous factors like an upcoming earnings release). I also don't understand what you mean by a boost from bigger gamma. If you sold out your excess calls on the 25 line, this would mean you are now short the 24/25 vertical and you have negative gamma so when BAC goes from 23 back up to 25 you will get smacked as you near expiry and the otm 25's bleed out deltas and the atm 24's converge towards 100 delta which you are negative on.
@MushinSeeker SO I am selling them 1 leg at a time and when the price goes down on a call, the delta decreases but the gamma increases at an increasing rate, then, when price goes up, the opposite happens, delta increases while gamma (which is now much higher) decreases at an increasing rate. So I am not looking at all 4 as 1 but as for separate positions which would be four different greeks
just wanna make sure I am understanding you.. If BAC goes from 25 to 22, your 25 line call wings all decrease in price, delta and gamma...if BAC goes from 22 to 25, your 25 wings all increase in price,delta and gamma. when BAc goes from 25 to 28, price , delta go up gamma inverts..
When an options delta approaches 1 for calls or -1 for puts, gamma decreases, that's what I am saying. And if they decrease, Price and delta decrease but gamma will start to get larger if it goes back up and then as it rises and delta approaches 1 the gamma with decrease.
ok.. we agree that gamma is largest at 50 delta and smallest at 100 or 0.. I jut wanted to make sure you knew gamma flips at it goes thru 50 either direction.
Yes, I did figure this out. Quick question, I know you cannot give market advice so don't, but if (hypothetically) you wanted to position yourself (right now) if you had call and or puts on let's say a Bank stock, where would you look (asian markets, currencies, China's interest rate change etc...) and what would you do before market open? THANKS AGAIN
tough question.. if you are worried about your position in BAc for example for tomorrow, I dont think there is any move possible wo taking on hidden risks...anyway got to go for the day..
@MushinSeeker I got knocked pretty badly today like $1,200 but was able to cut it in half with some savvy trades. I think BAC is going to keep taking a hit until Wed or Friday when the Data from FED (WED) comes out and the Employment Data (FRIDAY) comes out so I am Holding 100 calls at $25, 30 call at $24, 30 Puts 2 $22.5, 30 Puts at $22 and 30 puts at EXPIRY this Friday at $22.5. Any ideas? Thanks Buddy!!!
I never take a concentrated positions on any strike much less make an opinion on where a stock is going . My system is in guessing the terminal distribution of an index. ie put on position that will lose 10 cents from price A-C, make 40 cents from price C-G and lose 10 cents from price G-Z... From your previous posts, it looks like you are long a call backspread which has a risk hole around 25 depending on when they expire plus a vertical put spread. You have to read up on basic spreads and in particular the part of position dissection chapters by Charles Cottle's "woulda, coulda, shoulda " book. This way, you can visualize where your vulnerable points are.I wish I could be of help but delta trading using options is beyond my expertise.