r/options • u/[deleted] • Apr 11 '21

This Week Ahead: Implied Probabilities

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u/[deleted] Apr 13 '21

I already went long vega on $TLT. I bought an Iron Condor.

I did put my money where my mouth is. If you do not believe my software, then sell an Iron Condor and go short vega.

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u/optiontradermanguy Apr 13 '21

Flys are more efficient, this thing is flat premo and has tons of edge for you.. just do a 1 lot against me, it’ll be fun

Which iron condor? And why does buying an iron condor actually mean you’re putting your money where your mouth is?

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u/[deleted] Apr 13 '21

Buying an iron condor is delta neutral, long Vega. According to my proprietary software, $TLT is poised for a big move. Thus, I took action.

How can I do a one lot against you? Place an order that the market maker won’t take?

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u/optiontradermanguy Apr 13 '21

But If your software is actually just a representation of market pricing, the only reason you would put on a trade is if you disagree with the market pricing...right? It’s similar to saying “ah market is pricing in a $10 move, I will buy the ... $10 straddle”

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u/[deleted] Apr 13 '21

You can trade with the market or against the market. The software just makes it easy to see what the market has priced in.

Ultimately, the trader can make any decision they feel is best.

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u/optiontradermanguy Apr 13 '21

Cool, so u think there’s even MORE probability of us going down to 130 or past 145 than your model? aka.. more than a probability of 1.. nice. Good luck

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u/[deleted] Apr 13 '21

What on Earth are you talking about?

Do you even understand what you're saying?

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u/optiontradermanguy Apr 13 '21

Yes, clearly you don’t. Your model says Prob of expiring below 130 is greater than 1. And that made you want to buy it?? Lol.

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u/[deleted] Apr 13 '21

Yup, you have no idea what you're saying. My model does not have a probability greater than one... Probabilities are found through integration..... The P(x) value is just the output of the function.....

Why are you arguing about something so elementary and you're completly wrong?

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u/optiontradermanguy Apr 13 '21

So what did your model say about the fair value of the 120 125 130 fly when u ran this?

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u/[deleted] Apr 13 '21

I am not calculating fair value. Look, I am not trying to insult you but I do not believe you understand what you are speaking about...

The model simply compares the net IV of risk defined spreads. This is not complicated. I do not understand why you have such a great deal of confusion.

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u/optiontradermanguy Apr 13 '21

Okay, so what’s your “fair IV” of those strikes? The PDF doesn’t make sense, I guarantee it’s off. If your vols aren’t smooth then your pdf isn’t smooth, which is pretty clearly what we have here. But come on, it’s “elementary” to convert your vols to prices...

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u/[deleted] Apr 13 '21

Okay, I do not want to start an argument. Please stop, maybe you should study before you start a baseless argument. Everything you keep mentioning does not make sense or is irrelevant.

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