Muinalis way of learning how to trade options
- Thread starter muinali
- Start date
Dear dan
This is all about for "non-directional strategy trader" means someone nicely said "lazy trader" who dont care abt direction of market thats way we call them "non directional s. t."as they have fixed their losses. and expecting profit from any movement in either side due to implied vola change.
and ofcouse i dont mind to say that you didnt go through one standard deviation calculation topic purpose seriously
In calculation if iv increases one sd dn also increasesas as simple as it is.
i have been surprised you are not getting that point.
one thing i want to clear here , we are not going to find out any direction of market using calculation one standard deviation it gives a gereral idea to n-d-s-t to built strategy inside range as narrow as possible so that when iv change n-d-s-t will profit easily if price move either direction
one standard deviation calculation require iv to get the width of range where n-d-s-t can hang their hat
This is all about for "non-directional strategy trader" means someone nicely said "lazy trader" who dont care abt direction of market thats way we call them "non directional s. t."as they have fixed their losses. and expecting profit from any movement in either side due to implied vola change.
and ofcouse i dont mind to say that you didnt go through one standard deviation calculation topic purpose seriously
In calculation if iv increases one sd dn also increasesas as simple as it is.
i have been surprised you are not getting that point.
one thing i want to clear here , we are not going to find out any direction of market using calculation one standard deviation it gives a gereral idea to n-d-s-t to built strategy inside range as narrow as possible so that when iv change n-d-s-t will profit easily if price move either direction
one standard deviation calculation require iv to get the width of range where n-d-s-t can hang their hat
Learning To Trade Calendar Spreads
firstly need to be clear Option Greek (previous posts) particular greek vega and OTM,ITM and ATM
OTM CALL- If you are bullish on the underlying you select a strike price FOR CALL that is ABOVE the current stock price.
ITM CALL If you are BULLISH on the underlying you select a strike price for call that is below the current stock price.
OTM put-If you are bearish on the underlying you select a strike price that is below the current stock price.
ITM put If you are bearish on the underlying you select a strike price for put that is above the current stock price.
ATM If you are neutral about the price of the underlying you you select the ATM strike price.
BTO-buy to open
STC-sell to close
STO- sell to open
BTC- buy to close
Calendars spreads make money by the change in volatility and the passing of time.
To construct the trade, you sell an option and buy one further away in time.
#If you write the near term option and buy the far term option the spread is created for a net debit, so you are long the spread.
#If you write(sell) the far term option and buy the near term option the spread is created for a net credit, so you are short the spread.
#If you believe implied volatility is too low, you want to open a long calendar spread.
#If you believe that implied volatility is too high, you want to open a short calendar spread.
#If you don't think implied volatility is too high or too low, you do not want to open a calendar spread.
#Calendar spreads can be created using either puts or calls. generally prefer to use out of the money strike prices, which would determine if I wanted to use a calls or puts.
firstly need to be clear Option Greek (previous posts) particular greek vega and OTM,ITM and ATM
OTM CALL- If you are bullish on the underlying you select a strike price FOR CALL that is ABOVE the current stock price.
ITM CALL If you are BULLISH on the underlying you select a strike price for call that is below the current stock price.
OTM put-If you are bearish on the underlying you select a strike price that is below the current stock price.
ITM put If you are bearish on the underlying you select a strike price for put that is above the current stock price.
ATM If you are neutral about the price of the underlying you you select the ATM strike price.
BTO-buy to open
STC-sell to close
STO- sell to open
BTC- buy to close
Calendars spreads make money by the change in volatility and the passing of time.
To construct the trade, you sell an option and buy one further away in time.
#If you write the near term option and buy the far term option the spread is created for a net debit, so you are long the spread.
#If you write(sell) the far term option and buy the near term option the spread is created for a net credit, so you are short the spread.
#If you believe implied volatility is too low, you want to open a long calendar spread.
#If you believe that implied volatility is too high, you want to open a short calendar spread.
#If you don't think implied volatility is too high or too low, you do not want to open a calendar spread.
#Calendar spreads can be created using either puts or calls. generally prefer to use out of the money strike prices, which would determine if I wanted to use a calls or puts.
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