If you’re trading Options without understanding the greeks, then to an extent, you’re trading blind.
For example, IV crush, is generally where the unwary get punished on the long side, and has given rise to many of the myths regarding the advisability of being a “seller” of Options.
jog on
duc
The greeks can’t be tracked “real time” and there is no myth regarding the selling of options for profit. The greeks don’t work for low volume large spread options. Selling options is by far more prudent than buying them. Time-proven method.
There is also no IV crush with the buy-write strategy.
Sorry, I meant to write buy-write plus strategy.
Duc,
“Expiration is never a surprise. We always know precisely when an option is going to expire. Because expiration and time decay are certainties, a favorite strategy of many option traders is to be a net seller of option premium.”
Kat,
theta on your Options playing up?
jog on
duc
Funny!
By the way, after our exhange re: buying/selling options, I actually started making money with *buying* options, not selling. So it is possible 🙂
Theta is where the $$$ is. 🙂
Trying to confuse me with the Greeks, I see.
You two made me look here:
http://www.investopedia.com/terms/t/theta.asp
Otherwise known as the “decay rate”?
Kat,
If you’re trading Options without understanding the greeks, then to an extent, you’re trading blind.
For example, IV crush, is generally where the unwary get punished on the long side, and has given rise to many of the myths regarding the advisability of being a “seller” of Options.
jog on
duc
The greeks can’t be tracked “real time” and there is no myth regarding the selling of options for profit. The greeks don’t work for low volume large spread options. Selling options is by far more prudent than buying them. Time-proven method.
There is also no IV crush with the buy-write strategy.
Sorry, I meant to write buy-write plus strategy.
Duc,
“Expiration is never a surprise. We always know precisely when an option is going to expire. Because expiration and time decay are certainties, a favorite strategy of many option traders is to be a net seller of option premium.”
This is from http://www.capturingtheta.com/
(hat-tip Comp!ete)
You may be very good at buying options for profit, but for most this probably holds true – selling is more profitable, more often.
I’m just going to continue practicing 🙂 until I find out what works for me.