CDZ A Sure-Fire way to win in this Market

[william the wie]

First determine the most probable price of the S&P, Dow or Whatever in March, June, Sept or Dec on options expiration date.

How do you do this? Find the lowest cost straddle. CAPM using the wisdom of crowds and economies of networks has determined that this is the most probable endpoint with the cost of the straddle being the margin of error +/-for that expiration date.

CTs claim that the real reason why this rule works so well is that the market makers hedge the crap out of their positions so they can't lose not matter what and then add expiration date helper to make sure that this works out for them. Ignore such nonsense.

However volatility in the run up to expiration almost always exceeds the margin of error in both directions in the run up to quadruple witching hour.

Therefore buy a put at the bottom of the margin of error and a call at the top of the margin of error.

On the first trading day after an intervening expiration date the underlying is likely to go out of the margin of the error.

When you can sell one of the options you own to buy a straddle to do so.

Rinse and repeat as many times as possible.

Glide into expiration wealthy.

 

[sonic]

Interesting, but "sure fire" is not compatible with "probable", "almost always", and "likely", although they are all terms one might hear at the horse track
Let us know how it works out.

 

[william the wie]

It was a toss up about where to put this humor lost.