Veteran trader Ron Bertino presented “Weighted Vega” and it was a stunner. Ron presented several option trading concepts that are commonly believed by option traders and dispelled most of them.
Which of these statements do you think are true and which are false?
- A longer term calendar will give me more long vega exposure.
- I'm bearish so I'm going to load up on vega by buying a calendar using LEAPS.
- Someone using an upside OTM call calendar is crazy…don't they know it's positive vega?
- IV almost always goes up 2 to 3 weeks or so prior to earnings, so I'm just going to trade calendars before earnings and get rich.
- Initiate calendars when IV is low
- You'd be crazy to trade an iron condor which is really way out in time.
This presentation was so powerful, Bill Ghauri immediately implemented Weighted Vega into his TOS tools (available to his Alpha alert subscribers only) and Karen Rae from OptionVue is forwarding this to Len Yates to consider implementing into OptionVue software!
This is a must see presentation!
All members of our community can download Ron's powerpoint slides and his Excel spreadsheet so they can calculate weighted vega for their own trades.
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Great presentation. This explains why my calendar vega hedges haven’t worked as I expected them to work.