So you are saying the reduced gamma exposure is worth the lower Theta and increased risk of the underlying moving out of target range assuming you are not planning on modifying the trade later on? I am not trying to be confrontational. I do respect your experience and knowledge and maybe I can learn something here too.
The point is to isolate vega, not to gain from theta. The assumption is that the trader is predicting a decline in implied volatility, not realized vol.
I was just giving examples of straddles since you defined a straddle as a call and a put, which is correct but its not limited to that. âOverpricedâ is really just a matter of opinion, therefore I donât generally refer to volatility as over priced or under priced in that way. When you sell a straddle youâre expecting implied volatility to fall, thatâs the primary variable to be concerned with, not theta. No problem, I was not really speaking in the context of repair or rolling. I was noting that if you sell longer term straddles then 2 to 4 weeks there are ways to trade around them and build a greater more profitable position. But, I do agree itâs a bit more advanced then need be for this thread, the issue was that straddles in no way should be looked at as only a 2 to 4 week position all the time. Good Thread
i wouldn't recommend anyone to short straddle because there is unlimited risk on both the downside and the upside.
have any of you guys tried getting out of 100 contracts of GOOG options? I've been waiting for 10 minutes for my order to get filled.