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TS: If you anticipate that the probability of winning each month is approximately 90%, it seems to me that the BEST way to make your trading system very profitable is to be certain that the losing months don't make a significant dent in your bankroll. That means accepting losses when necessary...

I'm sure you understand this, but it's worth mentioning: After you have two consecutive losing months, the probability of losing the next month is UNCHANGED. Thus, don't feel overconfident that the 3rd month is going to work out well. Edit: I see someone beat me with a similar response...

Isn't he the guy who crased and burned by writing 'covered calls' against a long LEAPS position? If yes, that tells you the value of his course. Mark

I don't understand your comment. So what if Buffet uses options. I believe options are a wonderful investment tool for millions of investors. And hedge funds. And other institutional invesors. What I object to is Optionetics' outrageous lies and misleading statements - things that make many...

Boy am I thrilled to see this column by a resepected writer. I loathe Optionetics. They give a bad name to the entire options education industry. I just hope enough people see this column so that it does some good. Mark

No. No serious problem. And there is a small, offsetting bonus. If my calls are breached, I have a profit from the puts. Not having to be concerned with a losing put spread when the call spread is in trouble is just a bonus for this style. Obviously, I must take a loss when the strike is...

Yes. There is a long leg. Diagonal spreads. Yes. I choose my strikes by finding a spread that suits my needs. I prefer a minimum credit (2% of margin requirement for the spread). I prefer to go 'reasonably' (your definition is as good as mine) far OTM. I prefer one month out, but...

Diagonals. I bought one month further out than I sold. RUT strikes 30 points apart, SPX 55 points apart. Mark

You have 2 intelligent choices: a) Close Thursday afternoon b) Sell out your longs immediately after the market opens Fri morning. If your broker will not let you make this sale, then get a new broker. Mark

Ouch. Sorry to hear. Consider another broker, or talking seriously to TOS. IB released all my margin from Oct index shorts this morning, at the opening of the market. Thus, I was able to sell any leftover positions. You should be able to do that also. If not, closing Thurs...

No. I do half puts and half calls. Mark

Many thousands. Especially true in 1987. But, I have not been doing the diagonal strategy for that long, and right now it seems that this market never goes down! Mark

Yes, call diagonals have the disadvantage of shrinking IV when strike is breached. That means either accepting larger losses with calls (compared with puts), or perhaps closing positions sooner. I don't remmeber what it was like to have puts breached, but rising IV should certainly minimize...

I care. Why not just cover all of it by closing call spread? Mark

Debits are not mandatory. Doesn't anyone, besides me, use wider strikes and collect credits for diagonals? Mark

Phil, I don't believe you can learn much from a test like this. It only shows the result from one specific example. Mark