|
PureBytes Links
Trading Reference Links
|
Ok... you've got a point about not being able to take advantage of the
Japanese trading hours without a foreign account...
Still... buying a Straddle is tough for me to accept, UNLESS you have strong
reasons for a major breakout, and no certainty of which way. It's just very
expensive, and costs you decay money EVERY DAY! Remember, any given market
is in a non-trend AT LEAST 2/3 of the time. That means MOST of the time you
pay daily rent (in premium decay) for keeping your position in hopes of
catching the monster wave. I am a surfer... and if I'm waiting for waves,
I'd rather be PAID than have to pay others.
I used to teach straddles (and still do) as a beginners strategy... but only
because it was relatively easy to grasp. As soon as they "got it" I'd show
them all the reasons NOT to straddle... it eats your capital daily... and
the odds of it paying off just aren't on your side.
If you still doubt this, consider that many of the managed futures firms
utilize the strategy of SELLING strangles extensively. This is because it's
a virtual cash-cow to the SELLERS! Yes, they have to watch against a spike
up or down, but that's why they (WE) are TRADERS and not "investors." Every
day that the market does NOT move in a sustained spike, THEY COLLECT PREMIUM
INTO THEIR ACCOUNTS! If it moves, they've got stops to cover their
positions and re-establish another OTM write.
True, it's not as sexy as gunning for the big moves... UNLESS you find
steady profits sexy!
None-the-less... if you (anybody) is REALLY CERTAIN of a breakout, and can't
be on it during the hours it is traded (or have limits or stops or
contingency orders to nail it), then a straddle is the way to catch the
moves. Just remember that you'll be paying accelerating "rent" in the time
decay (Theta.)
Go Get 'Em
Dave
-----Original Message-----
From: khanitha <charlie@xxxxxxxxxx>
To: deltaforce@xxxxxxxxxxxxx <deltaforce@xxxxxxxxxxxxx>; RealTraders
Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Saturday, August 22, 1998 10:17 PM
Subject: Re: Yen Option Strangles (Don't)=problem
>one problem,
>
>throw both those theories out the window if:
>1 - options don't trade at night, right?
>2- if you wait until, as you suggest, the big move will more than likely
>occur while you are sleeping and the japanese are eating sushi!
>3- i would buy a call and put at 7000 before any news or big move and wait
>for a big move, if it never occurs and stays locked side-ways at 7001, what
>did you risk?
>can you afford to lose it all and still subscribe to the money management
>theory, meaning, will you still have 95% of your bank-roll intact, if so,
>GO FOR IT !!!
>gary
>hawaii
>----------
>From: David Donhoff <deltaforce@xxxxxxxxxxxxx>
>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>Subject: Yen Option Strangles (Don't)
>Date: Saturday, August 22, 1998 6:50 PM
>
>What you're looking at doing is called a "strangle," and in most cases
>buying it is the WORST of both worlds. Here's why;
>
>Out-Of-The-Money options decay FASTER than any other strikes.
>
>If you really think the yen is going to bust out strongly, and you have no
>idea which way.... you'd be better buying a STRADDLE (Call and Put at the
>SAME strike) or even a "Guts-Straddle" (with the both the Put AND the Call
>In-The-Money.)
>
>Better yet; Use a "Volatility Breakout" entry;
>1) Find your best estimation of Support and Resistance.
>2) Place a Market Buy on a Call, Contingent on the market AT or Above your
>resistance line.
>3) Place a Market Buy on a PUT, Contingent on the market AT or BELOW your
>Support line.
>4) Make both orders "OCO" (One Cancels the Other), so that after you are
>in, the other is cancelled.
>5) Immediately on fill, place your stops!
>
>Good Luck Trading!
>Dave Donhoff
> -----Original Message-----
> From: Olukunmi Popoola <popoola@xxxxxxxxxxxxxxx>
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Date: Saturday, August 22, 1998 7:25 PM
> Subject: Comments anyone?
>
>
> I am thinking of buying 1 DEC Yen 7200 Call and a DEC Yen 6800 put on
>Monday. The idea for the trade is as follows:
> There may be intervention in the yen. This normally pushes the yen up
>about 10 against the $ (that is approx 500points on the Future). if that
>happens the call will be in the seriously money. The reason for the put is
>to profit from any possible collapse in the honk Kong$ and the Chinese
>currency in which case the Yen would be way past 150 making the put
>seriously in the money. The only problem I can see is if all these dont
>happen in time.
> Comments please
>
> Thanks.
>
>
>
|