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That may be true AH, but when the markets are open and have high liquidity, what stops either the trader or broker from closing out the position?

Realistically, yes, but only if I know something is up. That would mean getting an alert, and pulling up an order. In my case, that would limit me to punching it in on my phone, as I dont feel comfortable doing that on my work laptop. That said, I don't want that to be the common thing...

I should have been more clear, How long should I hold it before I tap out? How long before I consider it a win and exit? I don't have a playbook yet, so I don't know what are reasonable times for each of these kinds of events. Days to months is a high level answer, but I am looking for more...

Any specific ones I should look at? My rationalization for why I deserve money is I'm offering insurance. It's not an edge, but it is a service I can provide. I think longer dated options (or plays) level the playing field between big dogs and me, because less is known about the future.

What does this look like in terms of holding times? Do people put in stop losses for these longer periods? Is swing trading just long term scalping? I am a software engineer on the west coast. I can baby sit from 6:30am PST to maybe 7:30, which seems to be where most of the volume is. I...

I can't watch screens all day, and several of the trading strategies discussed on this site seem to focus on plays that require a lot of attention. I don't have attention, I have meetings. Up until now, I have been a buy and hold investor. This is the easiest mode of trading, but I am...

Not sure I would call this a hammer drop. I was watching both SPY and VIX rising at the same time this morning and ended up selling near the top. My experience thus far is that both of those rising means tectonic plates are building pressure up fast.

How do you tell if it reboots and doesn't come back up?

The academic understanding of risk is variation in the returns of assets. Having a well defined risk metric will help you answer how much risk there is in indexes. For example, if the S&P500 shot up in value, is that a risk? Most people would say no, but if you were short the index (or...

While those companies do represent a larger portion of the index, it is the correct weighting. S&P500 is an approximation of the Tangency Portfolio. This portfolio reduces all idiosyncratic risk to as low as possible, leaving only systemic risk. Phrased differently, there is no additional...

One other thought here: I tried backtesting some LEAPS strategies based on their leverage ratio rather than their delta. Both measures ended up with a lot of failed portfolios, because delta and lambda get crazy as the option approaches expiration. For example, I tried backtesting buying...

I kind of hinted at in in my final sentence, but I think these investment companies won't be able to come up with an index that is attractive, because the data isn't out there. For example, a Cloud ETF that tracks the revenue(or profit, or whatever else is broken out in the 10-Qs) of those...

Looking at the prospectus and the index it follows, I don't think it will be very attractive to investors. Amazon AWS is the big dog in cloud computing, but the index has hardly any exposure to it. The index caps weighting to 4.5%, which is arbitrary. Given how little transparency there is...

To be clear: I was trying to construct a portfolio of options that had the same return as TQQQ. The reason the gamma is zero is to match TQQQ maintaining a constant leverage ratio.

That's fair. I would revise my statement to be for buy-and-hold-forever trades, rather than traders. Buffet is known for his long holding periods, even if he sometimes cashes out. (His Oracle stake comes to mind.)

I looked into this a few months ago. I had the idea that I could replicate UPRO, or TQQQ trading it myself, rather than paying the fees. Both of those symbols attempts to have exactly 3x leverage, so the "lambda" as you call it would be 3. The idea here is to make delta as close to...

The original claim of the OP was that every trade can be explained by expectations of other traders. As you point out Warren Buffet doesn't follow this rule. Therefore, the rule doesn't explain all traders. Rate of return yes, but what I am saying is there are investors who only care about...

The relevance of the spread is in how often I should roll my position into longer-term positions. If a B-A spread is too high, I should not roll so frequently, as it will show up in the P/L.

Also, I don't think this theory explains investors who are looking for dividends. Many investors only care about the consistency of the dividends, and have no position, up, down, or neutral, on the value of the stock. Trade doesn't even need to be entered into the equation.

How does this theory explain the actions of the Federal Reserve?