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Showing content with the highest reputation on 05/15/2025 in Posts

  1. 1 point
    A couple of comments related to this: For me the RV chart is the most valuable, and always will be. IV (and therefore RV) changes have closer to the same pattern each earnings cycle for the most part (more predicable). Stock price changes leading into earnings is much less predictable and just because a stock moved a lot leading up to earnings in one cycle doesn't necessarily mean it will this time. Entering trades at good RV levels with short strangle sales covering/exceeding the typical RV decline heading into earnings days is the top criteria for trade entry, IMO. The tool already has the option to display the stock price movement for prior cycles. If there is another chart of straddle performance tracking a straddle at price xxx over time, then the results can be misleading at times: I know the intent is likely to track gains due to stock price changes (gamma), but when looking at a chart like this straddle changes due to IV changes (vega) would not be readily apparent. If the trade was entered at higher IV, then straddle could show a loss even though stock price moved. Conversely, if trade was entered a good RV then straddle could show vega gain even though stock price did not move much. And vega could be an overall market thing and not stock-specific (so not repeatable from one cycle to the next). Bottom line for me is that having a chart showing past straddle price changes over time is fine... but not being able to tell how much of the change is due to gamma, vega and theta makes it not very useful to me for making a trade entry decision. Having such a chart certainly won't hurt (the more data the better), but the RV chart is the most important for trade entry decisions with the other charts providing more background.
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