25 lines
1.7 KiB
Plaintext
25 lines
1.7 KiB
Plaintext
and sell ten 39 calls to close the credit spread. Then the trader would buy 10
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of the 39 calls as sell 10 of the 40 calls to establish an adjusted position that
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is short a 10 lot of the February 35–36–39–40 iron condor.
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This, of course, is just one possible adjustment a trader can make. But the
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common theme among all adjustments is that the trader’s greeks must
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reflect the trader’s outlook. The position greeks best describe what the
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position is—that is, how it profits or loses. When the market changes it
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affects the dynamic greeks of a position. If the market changes enough to
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make a trader’s position greeks no longer represent his outlook, the trader
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must adjust the position (adjust the greeks) to put it back in line with
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expectations.
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In option trading there are an infinite number of uses for the greeks. From
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finding trades, to planning execution, to managing and adjusting them, to
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planning exits; the greeks are truly a trader’s best resource. They help
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traders see potential and actual position risk. They help traders project
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potential and actual trade profitability too. Without the greeks, a trader is at
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a disadvantage in every aspect of option trading. Use the greeks on each
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and every trade, and exploit trades to their greatest potential.
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I wish you good luck !
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For me, trading option greeks has been a labor of love through the good
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trades and the bad. To succeed in the long run at greeks trading—or any
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endeavor, for that matter—requires enjoying the process. Trading option
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greeks can be both challenging and rewarding. And remember, although
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option trading is highly statistical and intellectual in nature, a little luck
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never hurt! That said, good luck trading! |