How I Would Manage a Short Strangle Moving Against Me
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- Опубліковано 6 жов 2024
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Everybody talks about moving the untested option closer to the money, however one needs to be careful with dividend stocks. If we roll down the winning short call, the risk of it going in the money and getting assigned is real, especially before dividend dates. Also, another risk factor is upcoming earning reports. I'm surprised how very few people talk about those risks.
Earnings are priced in the option. The IV is adjusted for that unless the report is way off. However, It is very important to realized those events and plan the best you can. Dividends are cautionary and matter.
great show!
Close at 3x loss and try again. Done
The best way to manage losers. Keeping trades going and losing more makes no sense
Exactly, since any roll of a losing position is booking a loss and opening a new position anyway
Great instruction! But, I have a question for you, because I’m curious: how do you find time for both tasty and MMA? Lol
Excellent video, but would the same management strategies apply for longer DTE strangles - say 60 or 90 that start to go astray after 30 days ?
All good but at which DTE remaining would you roll the tested side out in time?
Don't you at some point give up on the short that's been blown through and is now pretty far in the money? I get keeping it alive if it's a pretty close thing and you think the stock might reverse, but in my experience there are a lot of situations where you know that thing is just done.
I agree and I personally don't think it's right for tasty to suggest martingaling (rolling) except that vol is mean reverting. All you are doing is trading more to offset your losses which is why they suggest keeping lots of cash in the account to be able to survive and make those adjustments, vol eventually comes down.
High win rate, low profit relative to potential drawdown are hallmarks of mean reversion strategies. It's just how it is.
Their adjustments, specifically up or down, are simply delta hedging. When you are rolling out the trade you are making is locking up your capital longer to offset prior losses.
Baby inversion in this example mean buying back the 120 short put and placing a new short put at the 145 strike, correct? It's a bit confusing because Mr. Jim said the 145 put would be "OTM" if stock was at 150 but technically that'd be $5 ITM .
Also, not sure why it's call "inversion" since he's not changing the delta sign of the untested put but only rolling it higher up than a regular "roll out", no?
if the stock is @150 the 145 put is OTM isn’t it
Ok how about using stock to reduce delta? If you have delta 40 just buying 20 shares would cut it in half. Or selling another put instead rolling?
That is interesting but what if it moves down. You need margin and good accounting to deal with it. Also, you would have to out lay that capital. If you keep managing the Shorts you can by more credit. Keeping your capital out lay low until you can get out clean.
I'm in this position now with UPST. Sold the 5/12 12/18.50 strangle. Will likely have to roll up and out on the put side and hopefully I can roll up and out on the call side as well.
Hope you didn’t roll down calls… stock just exploted post earnings
I’m short an AMD strangle post earnings please pray for my call side lol
Same scenario
So "tested" here means the stock price actually reached one of the strikes? Or just gotten close to it.
I understand rolling the put up for more premium, but how do you exit the trade for a profit ? if you leave the call at $140, you get called away and are short stock at 140, if the put at $145 expires, you have $10 loss per share between the call and the current price ? ie this management seems to reduce the loss by capturing more premium but what is the outcome ?
You have to “buy the guts and sell the wings.”
Basically buy to close with your increased premium from the inversion to lower your losses and then resell another strangle.
@@zoraster3749 I am experienced at this but even that doesn't completely explain. Turn the strangle into a inverted strangle, buy selling the 150 put, but when do you do the Snosnoff buy the guts, sell the wings and "un-invert" and re-center. They never ever explain this and only teach the roll a (OTM) strangle to a straddle and here we are talking about roll from (OTM) strangle to inverted (ITM) strangle where both put and call are ITM and when would we buy the gits sell the wings uninvert and how do we uninvert and recenter and why and how and what is the complete finish of management to complete the operation. U can contact me at
Why do I keep building up extrinsic value.
Is it true that the Boston strangler was such a good trader that they named a strategy after him.
Unlikely but we'll check Wikipedia
Is there any platform to backtest adjustment in options? Or at least to obtain historical data to do it manually.
Shooter McGavin- got me laughing on that one..
What if you had a short strangle in nvidia before earnings ? I have a 260/340 short strangle ..should I wait or invert the strangle?
NVIDIA at 442… are you still with us man? Blink if you’re okay
👀😅
😂
excuse me I don't understand what is a baby inverted strangle
With an inverted strangle both sides are 'in the money'.
With an baby inverted strangle one side is 'in the money' and the other side is rolled CLOSE to 'in the money'.
@@SuperInsuranceman ok , thanks a lot
words, words, too many words 😮, like a machine gun 😅
This came out 2 weeks late for me. Unfortunately LOL
I know I'm old but this was just jibber jabber.
His paycheck is well earned
He has a FINEnance bHD, and an addiction problem probably
So much talking, so little information. Get to the point and quit your babbling.
But that is what he is paid to do!