What if we don't trade vol?
17 Reasons to trade options
- Thread starter trader221
- Start date
options are vol.
I hear you. But please hear me out:
I trade options but I am not an options trader like you. Therefore, often vol is a secondary consideration.
I used to trade individual names on margin extensively. Then in 2013, switched over to options (long/short call/put which ever is appropriate) as margin surrogates.
If one trades directional, high vol simply means the underlying moves a lot. So I often buy when vol is sky high.
In general starting from Mar 2009, someone made a long term macro bet, consistently bought names on margin, or short puts/long calls, he/she would be very profitable.
One of these day I will switch and trade like you.
Welcome your comments and critique.
Sometimes it was DOTM, not DITM.
Shares vs. lottery ticket. Delimited (add both delta, absent sign, =100) and they will carry similar vega. IOW, a 90Δ call and a 10Δ call will have the same vega if vol is flat.
#12 and #14 is me...Yeah, boring but I feel profitable. I'll put in a limit at a lower price to buy the stock. When I do a covered call I will start at the top of the bid/ask. I'll then drop 5-10 cents every 5-10 minutes. Many times when I see that I am the only option at that price (not large companies)...I'll just keep that price till it gets bought.
Another thing to think about with covered calls and dividends is compounding. I use to take the covered call money and dividends and just keep it in a money market fund (when they were earning 2-6%...Back in the days). Now I can take the call/dividend money and can buy something boring with it (A T & T, Verizon, ADM, Wells Fargo). If I have extra money I can buy 100 shares (round lot)...Stocks that pay fair dividends. I can do another covered call with this money on the stock I just bought. I then have the money compounding for me...Rinse lather and repeat. Boring I know...
Another thing to think about with covered calls and dividends is compounding. I use to take the covered call money and dividends and just keep it in a money market fund (when they were earning 2-6%...Back in the days). Now I can take the call/dividend money and can buy something boring with it (A T & T, Verizon, ADM, Wells Fargo). If I have extra money I can buy 100 shares (round lot)...Stocks that pay fair dividends. I can do another covered call with this money on the stock I just bought. I then have the money compounding for me...Rinse lather and repeat. Boring I know...
If you are an option buyer like this guy, that's where the big bucks are:
https://highline.huffingtonpost.com/articles/en/lotto-winners/
Of course most of us mom and pop amateur retails can't do this. Just like most of the amateur retails can be the casino.
Hi there,when you say high vol,are you talking historic or implied??
Curious to why you choose to buy high vol,and if you have backtested it..
I think "switching" is a big mistake..
Cater to your strengths and comfort level..Eliminate your weaknesses..
Curious to why you choose to buy high vol,and if you have backtested it..
I think "switching" is a big mistake..
Cater to your strengths and comfort level..Eliminate your weaknesses..
I hear you. But please hear me out:
I trade options but I am not an options trader like you. Therefore, often vol is a secondary consideration.
I used to trade individual names on margin extensively. Then in 2013, switched over to options (long/short call/put which ever is appropriate) as margin surrogates.
If one trades directional, high vol simply means the underlying moves a lot. So I often buy when vol is sky high.
In general starting from Mar 2009, someone made a long term macro bet, consistently bought names on margin, or short puts/long calls, he/she would be very profitable.
One of these day I will switch and trade like you.
Welcome your comments and critique.