Some terms:
This is a straddle set up
you lose if stonk stays in 9 range
win if 8 or 10
1) Probability of profit (POP)
2) Extrinsic value (EXT)
3) 50% profit
4) Delta
5) Theta
6) Max profit
7) Max loss
Cost to set up 147$
December strike
Every day this set up will lose theta (5) if you are a buyer, and gain in value if you are a seller
In the straddle above, you are a buyer on both sides, so you are risking loss
The higher the IV the faster the change.
And the closer to expiration the faster the change
I actually plan to open this one monday - what has happened is options have been completely torched.
Looking at move of currencies, friday was extreme, yet xlf barely budged.
XLF moves opposite currency, which makes sense.
Will that unswap next week?
In this straddle example, if IV stays the same, and instrument does not change in price, i lose $2.54 per day.
The plan is to see which way the market plans to run, especially in overnight when they do these swaps.
i can easily cover one side of the position if its wrong.
Notice the move vs currency (uup = dollar)
also notice that past few trading session the accumulation is NOT favorible... so this move looks mostly currency driven.
Here is the xlf put and call option pricing over past couple months. If you OWNED a call OR a put, you got crushed....
Money flow is OUT of derivatives
I do see a potential vix crush continuing
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