Sunday, September 6, 2009

Re: [TheOptionClub.com] Charles Cottle Presentation

 

I enjoyed the CC presentation too -- though it wasn't always obvious exactly what his flashy spreadsheet was doing.

His comments near the end about Chris's condors were really interesting, esp. the recommendation to have multiple contracts, at least two or more strikes apart, to allow more scope for adjustments. I know exactly what he means about the "all or nothing" feeling you get when the underlying is getting a bit too close to your short strike; just hadn't figured out that adjacent strikes might be part of the problem. Anyone else pick up on this? Agree? Disagree?

And I second Viky's post: time to have another look at the OT:THR book. I got this a while ago, but am finding it tough going. Still, his approach of dissecting a trade such as an iron condor into a whole list of contiguous "baby butterflies" is intriguing. I'm not sure exactly what he gets out of this (or why no one else seems to do things this way), but it seems to be worth the effort to find out.

As for Ricky's request for risk graphs at expiration... I sort of feel the same way; I think that this is how most of us envision our trades. But if you look at pictures of the CBOE floor, for example, and look closely at the hundreds of screens, you don't see any graphics at all -- no price charts, no risk graphs, nothing! Clearly that's not how the professionals manage their positions. I'm nowhere near ready to give up my training wheels yet, but it doesn't surprise me that someone as experienced as CC doesn't have risk graphs for his example trades.

Martin

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