Fibonacci numbers, when used in technical analysis, the golden ratio is most often translated into three percentages: – 38.2%, 50%, and 61.8%. However, other multiples can be used, such as 23.6%, 161.8%, 423%, and so on. The Fibonacci sequence is applied to finance in several ways: retracements, extensions, arcs, fans, and time zones.
One of the most effective ways to adjust a broken out-of-the-money vertical spread is with stock. So many of us in the retail world—having been introduced to the flexibility and/ or leverage of options—seem hotly opposed to taking a position in an underlying stock, ETF or futures.
With the implied volatility of the S&P 500 Index (as represented by the VIX) touching 18 and the 20 day Realized Volatility down at around 8%, I’ve been hearing quite a bit from students and colleagues about long gamma positions – straddles in particular.