Expecting endless volatility in the market for the next given months on end, can someone tell me why this would be a bad trade?
Trade:
QQQ price= 498
Get QQQ $477 Call 3/7/25 exp price: $21.88
Get QQQ $519 Put 3/7/25 exp price: 21.73
Both contracts are deep in the money, limiting the extrinsic value paid to about 3.7%.
As long as market swings one way or the other by the end of the week, and overcoming the 3.7% cost hurdle of potential decay, this should be a profitable trade? No?
Example: since delta cannot equal 1 or 0 as long as time>0, getting contracts initially where both deltas are around 1 means that as long as one side remains net positive, that delta will be 1 and the other will be less than one (until the date of expiry) meaning you will pick up profit with even the slightest move on other side.
Please give me feedback. Would love to discuss my DD!