Volatility has been so low that a 10% move up is very small. A sharp 50% move in vol, from 12 to 18? Moves like that are not uncommon.
Likewise, physical commodities like beans and oil have positive skew, since gaps are more likely to be on the upside.
For an example of how this thinking is not necessarily best for making money, go back to the thread I started the Sunday before Katrina hit. My...
Yes, but for the most part, FIGURATIVE blood. When the phrase was coined, I think Baron Rothschild meant it for real.
There is negative skew for all stock indices (and, generally, for stocks too). The OTM puts (and, hence, the ITM calls) have traded at a higher...
I wish all brokers would allow this. Interactive Brokers, unfortunately, does not.
Sorry--I did not answer your original question very well. 2 AM here--yawn. Unacceptable levels of risk and acceptable levels of risk are...
There is no free lunch. A steady 2% a month is possible, but unless one is working with an already built-in advantage (selling expensive options...
A low-risk approach to credit spreads would generate a return around 10-12% a year. Some years more, some years, much, much less. That might...
Second, make sure that what you are getting full value for the risk you are taking. I used to trade the SPX options, when I did not know better....
If you STILL think I am being too conservative, consider this: I know of one professional option seller/hedge fund manager who writes stock index...
That said, I would recommend credit spreads, but only under the following guidelines. First, margin should be 20-25% of the total capital...
Some would say that historically there have been few gaps and few sharp moves, so therefore the risk is practically nil with credit spreads....
Andy (and Phil, provided that he is open minded enough to listen): There really is no advantage in credit spreads, but if you like to sell...
Where did I ever say "beware, stay away"? Don't be a Phil and start putting words in my mouth. :-)
I said "it is not a bad strategy." I make valid criticisms of the strategy, and do so in a nice way, and you respond by telling me to go away....
Yes, I would agree with the Dr. here. His returns had little to do with understanding the vega (vol) of options. He bought (still buys)...
I don't think Cramer is options savvy enough to know anything about what options traders know as volatility, or vega. By "volatility" he probably...
Your response is one giant straw man. You are simply distorting what I said. Arguing with you is a waste of time; your mind is already made up...
I am not disagreeing with you for the sake of disagreeing. But as a self-proclaimed expert (book, radio show, handle as "option coach"), you...
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