To start pictures
The current price is 66807, options are far out of the money, before expiration a month. The advantages of this design are obvious, this is the 1d4 risk / reward.
Disadvantage, low probability that the price will be so high. Now I do not make forecasts for the dollar / ruble pair, I am saying that if you assemble such a structure every month, in most cases it will bring a loss, otherwise there would not be such a beautiful profit-to-loss ratio.
How can you increase the likelihood of making a profit? It is possible to divide the amount of possible loss that we allocate for this construction into 6 months in such a way that each next month beats off the losses of the previous ones and brings more profit. For this we take an eksel. Take, for example, 100t rubles, in the first month we have to risk 4812r, the following months will be 1.5 times more
The first column shows the loss of the current month, the second is the profit of the month, the third is the profit taking into account the losses of the previous months. This option brings on the allocated money from 19% per month, up to 82% in six months. But it is also possible to drain all the money.
Now a little math, how do you find the sum of the first month?
Very simply, we need to find the sum of the chunks for all months. That is, the first month is 1 piece, the second is 1.5, the third is 1.5 * 1.5 (or 1.5 to the second degree), etc.
1 + 1.5 + 1.5 ^ 2 + 1.5 ^ 3 + 1.5 ^ 4 + 1.5 ^ 5 = 20.78125 pieces
We take 100t / 20.78125 = 4812.033008
You can vary, increase the number of months, do on quarterly options, or change the multiplication factor. This is everyone’s business, the potential risks / revenues will simply change.
Now, as in real life, this design worked for me. In February, I started collecting this spread from calls 67500/67750 for the dollar / ruble pair. I dumped February, March, April, May, June, July, and in August I finally beat it off and started working. Of course, the course went against me, I chose the strikes lower, made them wider, but the concept is the same. In the second half of July, when the rate was still low, I collected September options i.e. two months, with 65500/67000 strikes, the risk / reward ratio was 1d6.5 (that’s why I started collecting a little in advance). It so happened that both August and September brought profit. Ie, I collect the next month when the options of this month are still alive, I do it as if overlapping. And this increases the potential profit. You can also start collecting the next month if the asset has gone strongly against you, and your risk / reward ratio has improved.
Emotionally, bargaining is difficult, because you constantly drain, and you want to spit and leave. Here you need faith in your forecast. But it may happen that you are lucky, and everything will be cool right away in the first month. Or maybe you run out of money. Selling options is much more pleasant to work with, although there are problems too.
In general, everyone’s business, if you liked it, plus.