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Tag Archive | "commissions"

Commissions for Option Spread Traders

Thursday, December 4, 2008

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Commissions are a cost of doing business, and as such shouldn’t be ignored.  It’s worth the trouble to spend a few minutes checking that your commission structure matches with your trading style, and that you’re getting the best rates available. But paying too much attention to commissions can be a double-edged sword: there’s a certain type of trader we hear from pretty regularly, the sort who obsesses about commissions, 60/40 tax treatment, exchange fees, etc., such that they seem to spend…

Market Neutral, Not Delta Neutral

Tuesday, August 12, 2008

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There are plenty of ways to put on option trades that have a neutral outlook: straddles, strangles, condors, etc.  Whereas stock and futures traders are limited to whatever price action the market gives you, options let you take a view on implied volatility (vega), the passage of time (theta), and the rate of change of the rate of change of the option per unit move in the underlying (gamma).  Okay, that last one isn’t so obvious, but the idea is…

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