Market neutral meant for me the same like direction neutral. Next time I will write direction neutral. Any way: What I mentioned is called leg in. No matter what you plan: When your plan is to leg in, you always have some thing open. Have a look at those strategies: http://www.google.com/cse?cx=partne...arch#gsc.tab=0&gsc.q=Credit Spread&gsc.page=1 Each one of this strategies can be implemented at once, and then they look the way you see them there.
Now have a look at this: http://i44.tinypic.com/kqbr8.png Red is the 0 line and I am far above it ( Marked with the vertical green lines ) Why? Because I implemented my trades like showed in the above link or because I legged in and have some times one part and in other times two or three parts (legs) open? What do you think?
Now the same to the sold strangle idea with the future trades in between. By leg in I have a better start and if done the right way, my break even points on the down and upside are far better compare to your break even points by implementing the whole strategy at once. In the best case I am at or over the 0 line even before I start to use any other derivatives. Also my margin comes drastically down ( US Broker as I trade there ).
It is a directional start and if it not works I have to make a decision: Do I adjust or do I leave the trade and implement an other one. But such decisions you have to make no matter what you trade. If you now trade the pure future or if you trade a future in between a range, fixed with the sold strangle, and market gapps stronly and you start to lose, you also have to make a decision.
Advantage and disadvantage from the different kind of trading. But in no way a just one way thing. Best description for that: Flexibility.
DanPickUp
Now have a look at this: http://i44.tinypic.com/kqbr8.png Red is the 0 line and I am far above it ( Marked with the vertical green lines ) Why? Because I implemented my trades like showed in the above link or because I legged in and have some times one part and in other times two or three parts (legs) open? What do you think?
Now the same to the sold strangle idea with the future trades in between. By leg in I have a better start and if done the right way, my break even points on the down and upside are far better compare to your break even points by implementing the whole strategy at once. In the best case I am at or over the 0 line even before I start to use any other derivatives. Also my margin comes drastically down ( US Broker as I trade there ).
It is a directional start and if it not works I have to make a decision: Do I adjust or do I leave the trade and implement an other one. But such decisions you have to make no matter what you trade. If you now trade the pure future or if you trade a future in between a range, fixed with the sold strangle, and market gapps stronly and you start to lose, you also have to make a decision.
Advantage and disadvantage from the different kind of trading. But in no way a just one way thing. Best description for that: Flexibility.
DanPickUp
Expected market range for march probably 5200-5500.
