You are viewing a single comment's thread from:
RE: Ripping The Face Off The Stock Market. By Gregory Mannarino
I'm still a little confused here.
Let's say I bought the straddle position on SPY.
The market dives 2%. Thus, I sell my call position at a loss, but I hold my put, which is making money.
A few days later my put position is back where it started. It's still open and I'm now at risk if the market continues to go up. How does this make me money? In the mean time I'm dealing with time decay on my open position.
I buy calls and then sell calls to hedge. You collect the decay. If I thought the market was going down, I'd buy puts and sell puts. I can collect the decay, and if the market turns against me my "short positions" the sold call or put will increase in price. When the market starts going my way, I cover or buy back my shorts and apply that to the long side. If you buy a call and a put, I usually just hold on to both until I know the market is going my direction. If you had a call and a put and the market goes down, the profit from the put would eventually be greater than the total invested in the call. So I will let the call expire worthless instead of selling, because it might rally back up before expiration.
Great explanation. Do you have resources or more comments like this? Write more. I must learn.
That's interesting....however, I think it would depend on how far the price fell for the Put to be worth more than the Call, right? (I need to think more on that one.) But I appreciate your other advice as well. I can't believe I never thought of that. Buy puts AND sell puts. That definitely catches my interest. Needless to say, I've only been dabbling in Options for about a year. I wish I had learned more about them 20 years ago. Certainly saves me headaches and stress.
For trading calls on silver, please check my blog guys :)
Joined by advice of Greg.