William,
I could write a term paper on this, but let me boil this down to a couple of salient facts:
1. When you deal with greeks - and it takes a little time and energy to not only understand them, but how they react (esp. for your trade) - they don't react in a linear fashion as the market moves up or down. Time to expiration, volatility and a whole slew of other factors make this so. I would pay close attention to how gamma reacts to delta changes. If you learn those two greeks, you'll be ahead of 99% of ALL the traders in the markets.
2. Something I've been trying to preach for a while now is that we, as traders, should not rely on formulas, models and other "hard-and-fast" techniques for developing, monitoring and exiting our trades. I've believed for years (far before "fat tails," "black swans" and other randomness and uncertainty books hit the mainstream) that we shouldn't live on the gaussian (bell curve) system - again, too much to write about here.
If you want to discuss further, I'd be open to that.
John
From: WilliamF <wnfletcher@hotmail.
To: OptionClub@yahoogro
Sent: Wed, July 28, 2010 8:25:24 AM
Subject: [TheOptionClub.
Can somebody tell me why traders don't use percentages instead of Greeks when dealing with individual positions - or maybe translate the Greeks into percentages of the underlying or the investment. For example, if I have an iron condor with a margin of $1,600, isn't it more informative to express the delta as a percentage of this margin, rather than as a dollar number?
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