What is the best Options trade?

Discussion in 'Options' started by xtrhvydty, May 2, 2006.

  1. Assumptions:

    1. Options are at all time low IV
    2. We assume the HV and IV WILL explode over the next 2 weeks, but we don't know exactly when. We have no directional bias.
    3. The stock is holding steady at the ATM option
    4. Expiration is in 3 weeks for the near term option.

    Which of these trades has the best Reward/Risk ratio, from your experience, over the long run? Please explain.

    Many Thx
  2. why the fuck can't I delete the thread?
  3. jj90


    Long Straddle. If you had the capital/knowledge of how to gamma scalp, trade the frontmonth to pay for the theta cost. Either case the straddle is the best choice for those assumptions. Keep in mind the further out the expiry the more it becomes a volatility play.
  4. jj90


    Well, there goes my 2 cents.