Wednesday, December 2, 2009

Re: [TheOptionClub.com] GOOG [was Re: Basic Calendar Question]

 

On Tue, 01 Dec 2009 17:47:06 -0000, "janzen257"
<yahoo.to.mj257@spamgourmet.net> wrote:

>--- In OptionClub@yahoogroups.com, Ricky Jimenez <rickyjim@...> wrote:
>> [...]
>> Now contrast this situation will the rationale for making a
>> position delta neutral at other times. I see, in this and other
>> forums, diagonal traders explain how they sell just enough
>> ATM calls against their LEAPS to make the total position DN.
>> Of course the next day the market moves and they are no
>> longer DN. Why did they think that was the best move in their
>> quest to make money?
>
>Because they don't pretend to know which way the market will move the
>next day.
>
>The idea is that they want to eliminate, to the greatest extent
>possible, the risk caused by price movements. Instead, they want to
>sell premium, and to make money from time decay and/or changes in
>volatility.
>
Well if the market stays right where they sold the premium they will
benefit from the time decay. My point was that the gurus who shill
such trades don't maintain the delta neutrality as the market moves
daily so I don't see the point of the initial setup. Is there proof
that starting off delta neutral is better than selling as much premium
as margin will allow?

__._,_.___
The goal of TheOptionClub is to provide a forum for members to work together for the purpose of furthering our individual understanding option trading.  All messages and postings, and any materials circulated are provided for discussion and educational purposes only.  No statement contained in any materials from TheOptionClub should be considered a recommendation to buy or sell a security or to provide investment, legal or tax advice.  All investors are encouraged to consult a qualified professional before trading in any security.  Stock and option trading involves risk and is not suitable for most people.  There is no guarantee that any information provided is accurate and, may in fact, be wrong.  It is understood that the participants in TheOptionClub have varying backgrounds and degrees of experience in option trading, and that regardless of experience each member is considered a student.  As such, any information distributed through TheOptionClub should be considered with a critical mind and not relied upon as an authoritative source.

To unsubscribe from TheOptionClub, send an email to:
OptionClub-unsubscribe@yahoogroups.com
.

__,_._,___
Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)