Glad to see you are taking a look at risk graphs. Picture worth a thousand words.
Getting back to your "What am I Missing" thread from last week, make sure you put your proposed position on a risk graph once you become proficient with it. I find the TOS platform the easiest to manipulate when it comes to comparing possible positions and adjustments. All of the typical options strategies have a risk/reward graph "look" to them, and you will become familiar with the look of a vertical spread, condor, butterfly, etc. You will see how a covered call position "looks" just like a short put, along with many other synthetics. Still won't make you money, though. You have to do that yourself!
Best of luck,
RFH
--- In ConservativeOptionStrategies@yahoogroups.com, "Louis" <loupi3@...> wrote:
>
> I'm switching from excel spreadsheets to option risk graphs;currently the free one from OIC, which I find is quite nice and easy to use.
> I'm trying to avoid the unpredictable, which I feel attempting to predict market movement is and to go beyond looking at things as bullish strategies or bearish strategies.
> I have as my main goal not losing money. I think that by keeping that in the foreground, I should be able to maximize returns overall.
> Sounds sort of stodgy, but my days of standing by the roulette tables with half my chips on double zero are long behind me.
> However, no matter how cleverly you plan your strategy, volatility is unpredictable, isn't it? So even though I can come up with some elegant graphs that limit risk and provide massive upside, that can all change very quickly.
> But first, when you plot a spread type strategy on the graph, are the results based on future estimation of the option value considering things like theta and volatility, or as I suppose, purely on the underlying's prices vs option strike prices?
> And what methods are being used to attempt to control that? I hear about delta neutral methodology, but I'm not sure how generally applicable that is.
> Anybody want to contribute their ideas?
> Lou
>
No comments:
Post a Comment