New answers tagged option-strategies
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Some option strategies have practical names based on the relationship of the respective options. For example, vertical, diagonal, horizontal/calendar, box, and ratio spread, as well as straddle, collar/fence.
Others are based on the appearance of the risk graph. For example, butterfly, condor, Christmas tree spread.
Others are just whimsical in nature ...
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I don't know how definitive it is, but Wikipedia has an answer:
The word iron in the name of this position indicates that, like an iron butterfly, this position is constructed using both calls and puts, by combining a bull put spread with a bear call spread. The combination of these two credit spreads makes the long iron condor (and the long iron butterfly) ...
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Thank you Bob for quick response. Tried and compared different strategies and came up with this one. Please comment.
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A long straddle gains value if implied volatility increases and/or the underlying moves away from the strike price. It loses value due to double sided time decay. Those are its dynamics.
You can reduce the 2% threshold by:
using lower IV options (less chance of a big move)
buying nearer term expiries (disadvantage of higher rate of theta decay)
utilizing ...
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There's not a universal standard - for options on futures, typically the option contract is for one futures contract, which may be for a certain number of units of the underlying (e.g. 1,000 barrels of oil, or 100 troy oz of gold).
But it's not universal - you'd need to look at the specifications of the option contract to be certain.
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[W]ould you close the position considering it crosses the Stop Loss […]
The definition of the phrase "stop loss" is that if the actual price goes beyond the stop loss price, then the trader will close the position. Therefore, the answer is obviously "yes."
If you say to yourself, "my stop loss price is $30," but you don't ...
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AFAIC, selling short puts is appropriate for an investor who is willing to acquire the stock at a lower price (strike price less premium received). If assigned, you get your stock and if not, you earn some income for your effort.
Although you get a larger premium for selling more time (60 days out), you're not taking advantage of the increased rate of time ...
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