What is T+0 line

Discussion in 'Beginner Traders' started by apacc, Nov 22, 2016.

  1. apacc

    apacc Member

    Hello great traders, I am just a beginner but managed to make few successful condor trades. I have basic understanding of the greeks. However I do not understand what T+0 line is and the dynamics of it. I keep reading about it in this forum a lot. Could anyone shed some light on it?
     
  2. David C.

    David C. Member

    I'm sure others will chime in with a more technical explanation, but T+0 is "Time plus zero", meaning if you pull up a risk graph of your position (in whatever software you use: TOS, OptionVue, etc) it is a graphical representation of how your trade would behave "today" if the market moves up/down/sideways. Of course it is dynamic and will be moving a little based on volatility change, etc.

    T+0 = what is happening today (live)
    T+x = estimation of "x" days into future
     
  3. ACS

    ACS Well-Known Member

    Great explanation David. I would add that the software creates that line using certain assumptions that are either built-in or user changeable depending on the program. One thing we know is that volatility usually moves inversely to price but exactly how much is always a guess before it actually happens. Optionvue will change the T+0 line away from the current price based on how volatility has acted recently using the CEV numbers in the model but the market often behaves differently and that is why real results are so often different from the projected T+0 line. It's imperfect but the best we have as long as markets are driven by human emotion.
     
  4. apacc

    apacc Member

    Thanks David & ACS. This is a great forum for beginners. In the past few days I have gained a lot. I have been reading through the forums where different strategies are being discussed. Few things I learnt which is very interesting and opened up a new avenue for me is:
    - Iron Condor (even high prob around 10 delta) is great as long as no large movements happen. Adjustments become very difficult as T+0 line is not flat.
    - Traders prefer Butterflies mainly because of the distinct characteristics
    - Low risk, high profit tents
    - Developers combine few delta neutral strategies to keep T+0 as flat as possible
    - The high profit tents helps developers to make up profits even with adjustments with cost none or low because of flat T+0

    I am going to experiment Butterfly with the Delta neutral strategies that are being used for different variations like M3, Rhino etc. I believe I can learn by subscribing to alerts such as Kevlar. Does any one know that the subscribers of these alerts get explanation from the alert owners on why they are making adjustments so that we can learn? I understand some strategies do not have strict rules. But I just wanted to ensure I learn along the way when adjustments are suggested
     
  5. garyw

    garyw Well-Known Member

    apacc:
    Welcome to the group. I'd advise to begin slowly with real money. If you are new, you may wish to primarily paper-trade for a number of months.
    I subscribed to the RTT service back in April. I remain extremely pleased with the detail, quality and timeliness Tom and Dan provide.
    I have no first hand knowledge of the M3 or Rhino, but think they "may require a tighter grip on the steering wheel", than does the RTT.
     
  6. apacc

    apacc Member

    Thanks for the advise Gary. I am test driving ONE. Hoping to back test and learn before I put in real money. Once I gain confidence on the adjustments will start slowly.
     
  7. Bax

    Bax New Member

    Welcome apacc! I'm very much a noob here too, but have found this sight to be extremely helpful. I've been browsing through the "Library" section on the members page and watching as many Roundtable Discussions as I can. Such a smart and friendly group of folks!!

    I use TOS not OptionVue, but after seeing how these guys hammer home the importance of T+0 and not just the profit line of expiration, I finally noticed a feature I can't believe I missed. On the Risk Profile tab of thinkorswim is drop down where you can select "Day Step" which can show T+0, T+1week, T+2weeks... Now I can see the transformation of the profit line over time, and why it's so crazy unlikely to make anywhere near max profit on butterflies. I'm definitely trying to understand the way of gamma-managed delta-neutral trades, but I also have to say, ouch, the commissions are killing me for the number of legs involved. ;)
     
  8. garyw

    garyw Well-Known Member

    Davidrete:
    I think you have miss-interpreted the context here. The T+0 has nothing to do with a moving average. -- Perhaps you intended to post that elsewhere?
     

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