Wrangle question

Discussion in 'Options' started by IV_Trader, Dec 17, 2006.

  1. For "W" shape PnL , does anyone enters second similar position ( obviously later in time and using diff strikes) at the lowest point of "W" ( at the Max potential loss) , assuming every entry is carrying good r/r ?
  2. jj90


    I see the hedge, but looks like it defeats the purpose of the original wrangle. If one was concerned about the underlying remaining there, why go through the trouble of putting on a 2nd multi leg wrangle at that strike price, when one could just adjust to be short gamma by selling more strikes. I mean if you plan to adjust, you've already decided on a different trade profile. Why not take the shortest most efficient way? Or maybe I'm not understanding you?
  3. hedging is for losers
  4. those double calendars are vega trades ; the later the entry -the better ( steeper vols ramp over lesser time). I will only do it if a second entry will carry a better ( then first) r/r as a stand alone position. Something like that :
    short front 52.5 ATM
    long back 50-55
    vols at 25 , ratio 2:3
    Max loss is at 47.50. If price is at 47.5 two weeks later , I am planning to add short front 47.5 + long back 45-50 ( if vols conditions still favorable). I ran combined PnL , looks good.

    I'm not advising anyone to do it ; I was just asking if someone is already doing something similar and willing to share how its works for him so far.

    Rallymode , hehe , I agree !