/biz/ - Business & Finance

Delet

>>12953492
no

>>12953411
how would one implement this? what exchange? post a how to video please

>110% lose

absolutely brainlet

Alt F4 this

>>12953790
in comparison to the gain you absolute fucking retard.
>enter position
>+$10 credit
>hits first OTM -$1
>hits second OTM -$11
i did make a mistake in the OP tho instead of ~5% loss I mean't ~10%.

Also this model assumes that the ATM price will stay the same if it pump/dumps to the OTM contracts which have been sold. In reality, if the pump/dumps is especially violent there will be a slight premium because implied volatility will more than likely increase tho it should be pretty insignificant in relation to the rest of the position.

>>12953411
Can you explain it to me like im in 3rd grade?

>>12953881
>buy OTM puts & calls
>credit +$10
>price hits OTM put
>buy ATM put (same strike price as where you opened position)
>-$10 (price of contract)
>price hits other call
>buy ATM call
>-$10 (price of contract)

of course it depends how far out of range you are. If the range between the OTM put&calls are really far away the price of the ATM contract will be much more than what you sold for tho it's less likely to hit it. I fucked up some of the percentages in the OP but it doesn't matter really.

The idea is to take a position by ONLY selling options so you can take advantage of the premium without having to hedge the position until completely necessary but still having minimal risk in case things do go wrong. This strategy also has like 20% less risk than a traditional iron condor strategy.

Ideally the price never hits either OTM put or call, and it wont majority of them time. Then you get to keep the $10 credit.

>>12953881
ok here is a real world example using current prices on deribit.
>sell puts at 3625
>+$20
>sell calls at 4125
>+$16
>credit: +$36
>price hits 4125 -> buy ATM calls
>-$90
>credit: -$54
>price hits 3625 -> buy ATM puts
>-$90
>credit: -$144

max loss: -$144
max gain: +$36

Of course the max loss is only realised if the price hits both 3625 and 4125 before the 15th of March (expiration date of the contracts) - which is very unlikely. It means that if you get this trade right 80% of the time, you are in profit. If it only hits one of the 3625 / 4125 by the 15th you only need to get the trade right 70% of the time. The max loss get's less and less with each passing day as well due to time decay eating away at the ATM prices. So considering that time decay accelerates at an increased rate, the closer to expiration, the risk drastically goes down. example; current contracts that expire on the 8th have ATM price of $14. so max loss after 8 days of this specific contract becomes;

max loss: +$8 (yes you read that right it's a "+")
max gain: +$36

Pic related. It has to stay between the pink lines before the blue line.In comparison to iron condor which in the same position which would do;

max loss: -$134
max gain: +$18

the max loss is also a constant and does not get less and less like with the above strategy. And it is already priced in, if the price goes above a single one of the pink lines. In comparison the strategy above needs to hit BOTH pink lines to get a max loss.

>>12954454
There was a thread on here a little while back from some fag that had sold a whole bunch of AMD puts and he got cleaned the fuck out!

>>12954471
yeh... that's retarded. not having a strategy to hedge the position on a naked option short is fucking degenerate

>>12953411
it's called a strangle. real options traders hedge by buying an offsetting position in the underlying not by buying other options

>>12954481
Selling options is stupid altogether imo

>>12954497
>buy in the underlying
that requires far more capital and turns what could be 40% gains into like 1% gains.

>it's called a strangle
no its not. a strangle is buying OTM options on both sides not selling them. As far as i've looked, i've never seen this strategy mentioned anywhere.