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Why would you project an end game of a blow out and bankruptcy?

That's a great question. I did two years of backtesting to determine if the recipe had potential. Backtesting has its limitations, but it is generally good enough to identify a worthwhile candidate to prototype. I prototype traded (paper trades) credit spreads for five months. I used my...

I do credit spreads on monthly RUT & NDX options. I voted "no preference" because I am ignorant of the trade-offs between monthlies and weeklies. Perhaps this thread will begin my education.

Some random thoughts: When you only get into trades once a month as I do, it's good to remember that trading skill, like many other skills is perishable, i.e. it atrophies over time. If you have a recipe that works, write it down and follow it each time you make a trade. I'm a private...

I have no idea what your talking about? :eek: I tried the more chemically correct version but all the letters would not fit. :)

Having $50,000 to manage has significant advantages over having to manage $500,000,000. I've explained earlier about my experience (less than a year with options), my approach (credit spreads) and my results (8%+). If you demand proof before accepting my report, pay for the audit and I'll...

Rudeness is in the eye of the beholder. I was born in the 1940's and was brought up to understand that truth was insufficient justification for rudeness. I avoid ad hominem attachs and advocate others adopt this method of discourse as well. Call me old-fashioned.

The Black-Scholes paper "The Pricing of Options and Corporate Liabilities" was published in 1973. The key insight was that if a stock was traded, the option price could be determined with a high degree of accuracy. Scholes won a Nobel Prize in economics for his work. Black was not eligible...

I know my experience is limited (5 months paper, 3 months money) but this is just not my experience so far. If the market moves sufficiently, one side of the IC has in several cases yielded 80% to 90% of its potential yield which permits me to roll that side to a closer spread and increase my...

Perhaps an analogy will illustrate the point. When I travel from Ohio to Seattle I have a number of choices. I can fly commercially. I can use my pilots license to fly myself in a small private aircraft. I can drive my car. I can take the bus. I can take the train. You get the idea. All will get...

Ouch!

IIRC, Pardo's book goes into this. If I have some time in the next few days, I'll try to summarize his insights into your question.

Back-testing is useful but fraught with danger. No matter how large the data set, there is always the concern that you will fall victim to the phenomenon know as "curve fitting." One of the common strategies to avoid this problem is to optimize your rules using a randomly selected part of the...

Paper trading 5 months. Money trading 3 months. My own rules based on some math developed jointly with my son. I am a retired software engineer but majored in mathematics in college. My son is an economist. I'm not yet sure if this is of significant advantage. We both still have much to...

Good analysis. Pictures are always a useful aid for those of us who still have trouble visualizing from just a word description.

My trading mentality is to "sleep well at night." Therefore I look for trades that offer 80%-90% probability of success with effective rules to limit losses to no more than 20% of required margin. Credit spreads is my primary vehicle. I've still got a lot to learn here.

In my opinion, the major thing that the size of your trading account dictates is the vehicles available to you. My credit spreads account is in that neighborhood. Paper money trading yielded a low of 6.6% and a high of 22% in one month. My money trading is more conservative and is yielding an...

If the goal is to put on an iron condor, the most common misconception I come across is that one should put on an iron condor or do nothing. Each side should be considered independently for its risk/reward. Many times only one side will be attractive. The other side may be put on at a later time...