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I would like to share some of the thoughts expressed in the article and add my own perspective. Honesty and Transparency Above All Dan writes: "As we wrapped up the month of April, the sample account took another loss . Once again, due to RUT. When you take two monthly losses in a row with a high…
Performance dissected It is important to mention that those numbers are pre-commissions, so your actual results will be lower. As with every trading system which uses multi leg trades, commissions will have a significant impact on performance, so it is very important to use a cheap broker. We have…
Here it a screenshot from my broker's 2015 statement: This account is exclusive to trades that I share with my SteadyOptions and Steady Condors members. It uses a very conservative allocation of 5-7% for SteadyOptions trades and 15-20% allocation for Steady Condors trades, leaving around 30-50% of…
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This is another thing we do differently from many other services. We open our trades early and close them early. We would typically open the trades 6-8 weeks before expiration and close them 2-3 weeks before expiration. Here is the P/L chart for 2008-2015 (live trading began in late 2012 as shown on…
Effect of volatility and time to expiration on gamma Gamma is important because it shows us how fast our position delta will change as the market price of the underlying asset changes. When volatility is low, the gamma of At-The-Money options is high while the gamma for deeply into or…
General The delta of an option is the sensitivity of an option price relative to changes in the price of the underlying asset. It tells option traders how fast the price of the option will change as the underlying stock/future moves. Option delta is usually displayed as a decimal value between -1…
In simple terms, vega measures the risk of gain or loss resulting from changes in volatility. Vega for all options is always a positive number because options increase in value when volatility increases and decrease in value when volatility declines. When position Vegas are generated, however,…
Negative theta vs. positive theta Theta values are negative in long option positions and positive in short option positions. Initially, out of the money options have a faster rate of theta decay than at the money options, but as expiration nears, the rate of theta decay for OTM options slows and the…
There are few ways to sell options before earnings to take advantage of IV crash. One if through an Iron Condor. Many options sites do this strategy on a regular basis, based on high IV rank alone. I described here why selling options based on high IV rank alone might be not a smart move. The…
In this article, I will show why it might be not a good idea to keep those strangles through earnings. As a reminder, a straddle involves buying calls and puts on the same stock with same strikes and expiration. Buying calls and puts with the different strikes is called a strangle. Strangles usually…
Lets look at the US Unemployment Rate and its correlation with Dow Jones Industrial Average, a leading market indicator. Unemployment rate is a direct representation of the state of economy and hence it’s highly and inversely related with the Market Indices as shown in the graph below. In 1983-84,…
The Butterfly is possibly one of the least understood and least utilized options income strategies. Butterflies can be used to construct high probability positions with a profit range similar to and potentially larger than an Iron Condor with less risk. Alternatively, a short dated Butterfly can…
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