Volatility trading platform

Discussion in 'Options' started by Gammahedge1, Jun 27, 2012.

  1. Not at all. I am saying that you don't hedge vol with ITM options. The problem with ATM hedges is that short backspreads suck, and by logical extension, long backspreads rule.

    Why sell a 100/110 backspread when you can buy a 100/110/120 fly for 50 cents more?

    Bounded, delimited. Don't sell naked unless you really know wtf you're doing. Only trade naked short vol when it's a proxy for an outright delta1 long/short trade.
     
    #21     Jun 28, 2012

  2. what your saying atticus is EXACTLY what i have always thought... i literally have a book full of ratio back spreads... short one call long two.. looking to capitalize on rare events... BUT on a smaller scale i was playing with the idea of a ratio spread in the other direction .. with one DITM call and then delta hedging the rest of the naked calls with the underlying.. now granted i am planing on being 90 percent long vol in the rest of my book.. i haven't really done well with butterflys.. maybe cause my wings are two short or i'm not hedging in the underlying like a true MM would.. you have to realize.. i have 20k account.. so i have to always be looking at what these theoretical trades could end up financially needing to hedge..
    up to this point.. i have credit spread When vol is high.. ratio spread when vol is low.. i have only made good money on credit spreading.. and i stepped down the size of my trades significantly because i knew i was playing with fire..

    I have a client in my regular business that has been making alot of money writing cash secured puts on the vixy and selling calls against it when he gets put the index.... i was doing some more search on that.. i'm short some puts on the vixy now... i'm starting to really be concerned about the washout/loss over time related to contango/backwardation.. do you guys know how much of a risk that poses on a monthly basis.. everyone seems to be warning eveyrone about the roll over loss and i wanna make sure i have it completely considered in my trades!
     
    #22     Jun 28, 2012
  3. thanks for the imput... you don't know what its like immersing yourself in all this stuff in the middle of Florida.. where everyone for one doesn't care about derivatives.. and for two.. if they know anything its "oh isn't that those things those high fluting people use to bankrupt the country" or something like.. everyone i know would rather watch paint dry then talk gamma delta ratio putfly etc..
     
    #23     Jun 29, 2012
  4. Wait till you start dreaming in Greek.
     
    #24     Jul 3, 2012