Well, what do you get if you're long/short the underlying, short/long OTM calls and long/short OTM puts?
Yeah, so it's really neither here nor there, tbh... At any rate, that's assuming you do it 1:1.
I wish you would explain it to me, because I'm obviously having trouble understanding the point I'm missing. I'm really not trying to be obtuse, but I think one thread as a place to describe my strategy and to place competent (not based on false premises) criticism of it without the trash and the lulz, has merit.
It's simple... You suggest that your issue is that you didn't have enough cash to buy back the spreads that blew through your stop. The problem, in your view, is that you haven't been building up your cash rapidly enough, which means that your solution is that you should be selling more spreads, collecting more premium, taking more risk. Do you see a problem with this? Or maybe I misunderstand?
I was building up my cash reserves by selling fewer spreads as expiration dates came and I entered a new series. What I should have done was liquidate some of the spreads to build cash rather than wait for series to expire. This is what I ended up doing in my attempt to rescue my losing spreads from further loss. It took too long and I lost more than planned. I could have added cash from another account, but the purest in me wanted this account to represent both success and folly. Sometimes being a purest has real consequences and costs real money. Helps cement the lesson in memory in ways more difficult to ignore.
Explain your contention (that I don't have an edge) in light of my results so that I can understand.
Still holding this bad boy
This doesn't make sense. How can you build up cash reserves by liquidating some of the spreads, if you've lost money on them? You still don't understand. Your portfolio is short vol and has some directional exposure. In a relatively mild recent panic you got chopped, which is entirely natural. Your response to that is, basically, to do more of the same.
Yes, models are great, but only if they distil and summarize a common sense approach. Your solution to address the drawdown that you have just experienced is, effectively, to increase your tolerance for mark-to-mkt losses. Now I am all for that, generally, but in your case this is just plain suicidal.
Howard, has your system made you a net profit or a net loss?
