Friday, May 21, 2010

Re: [TheOptionClub.com] Re: GS TRADE [was:How do you manage your Vega?]

 

I am also amazed by this trade.  But unfortunately, I started following it in the middle of the project.  Does any one have all the adjustments and their explanations that Mike gave while making the adjustments?  I looked up the files section and found some correspondence missing.  If you do have all the discussion on this trade it would be very helpful if you would post in the files section.

Thank you in advance and a BIG THANKS to you Mike.

Chet.


From: Ricky Jimenez <rickyjim@bestweb.net>
To: OptionClub@yahoogroups.com
Sent: Fri, May 21, 2010 10:39:25 AM
Subject: Re: [TheOptionClub.com] Re: GS TRADE [was:How do you manage your Vega?]

 

On Thu, 20 May 2010 04:04:31 -0000, "speedsam21"
<SpeedySam21@gMail.com> wrote:

>
>Michael,
>
>I have been quiet as I have been 3-4 steps behind.
>This exercise does help me understand your thinking behind adjustments.
>I have other questions on vega later.
>
>With regards to adjustment -
>April 30 – where you adjusted into a gut condor
>May 18 – where you adjusted to 'strangle'
>
>With comments from Ricky and James,
>(a.) could you elaborate your thought process leading to the 2 adjustments?
>
>James pointed to Charles Cottle's {?} position dissection to identifying the risk.
>Was that a similar exercise you did?
>(I was reading Cottle's book but got distracted.)
>
>With long experience as a market maker, I believe you analyze opportunity/risk – quickly.
>(b.) Could you share a 'slow' step to do this?
>
>Thanks,
>Sam

Sam, I discussed both the April 30 and May 18 plays in a post,
"Algorithm for Flattening Expiration Graphs" which is also in the
Files section as Flatten.rtf. Let me know if what I said there is
helpful. The problem I have with Cottle's book is that he doesn't
give enough examples on how to choose and use dissections in actual
trading. His exposition of dissections is extremely long winded and
clumsy. Instead of the simple formulas that people here use to
describe positions, he uses pages and pages of multi colored diagrams
which I think are pretty but not informative. Well somebody had to
say it.


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