A hypothetical scenario

[harryp]

If this is true, then do option traders make money only in good weather?

See there is this hidden secret. Once you have made a 1000 option trades, the CBOE and CME are obliged to give you easy trades going forward. Or was it 10000 option trades, I forget !!

Actually, go read Malcolm Gladwell's book Outliers which talks about the 10000 number. You may not agree with all of his philosophy and numbers and some of that has been debunked (http://www.bbc.com/future/story/20121114-gladwells-10000-hour-rule-myth), but there's a lot that makes sense (at least to me).

If this is true, then do option traders make money only in good weather?

What is good weather? For someone in Seattle, where it rains 250 days a year, it is one thing but for someone in Sahara where it does not rain, maybe completely different thing. Also if you are in London and the telly says its going to rain you take the umbrella otherwise you don't. So you do one thing in rain (carry umbrella) and another thing in sun. Don't you think it could be similar in options? The question is how do you read option weather. What are the tools to read the weather? What are the things to do once you can decipher the weather? What do you if the weather turns out to be different?

Alright ... gotta go but don't be afraid of the hard work. There is no substitute.

 

[vegamedic]

I don't think Hull is very practical, so I haven't started reading it.

Discarding Hull (without even reading it I might add) as impractical is a bit like saying learning the electrophysiology of the heart is impractical to diagnosing a STEMI. Yeah, there's a ton of derivation and "nice to know" but not immediately tradeable info in Hull's book, but it adds depth and color to the instruments you're trading...in much the same way that you can teach a computer to flash ***ACUTE MI*** on the screen but we still rely on clinical decision making before shipping people to cath. Not sure if the analogy makes sense, I tried my best for your background

I read only one page from Olmstead's book and I found a serious error

I'm curious what that serious error was

 

[Johnmaine]

maybe focus on medical school because you are going to have someone's life in your hands.

Options let me do exactly that!! Otherwise, like other medical students, I will be forced to work to pay my bills. Also unlike other medical students, I am already a licensed PA, so I can prescribe medicine and treat patients - and easily earn $60-75,000 working part time. Options allow me to focus on my medical education instead of scrambling to make money by working at the hospital. I have paid for M1 - first year of medical school - with options.

 

[Johnmaine]

Do you ask the teacher "Do doctors only make money when people are healthy and no work needs to be done?"

I know a Native American medical student who routinely asks this question to every professor.

 

[vegamedic]

Options let me do exactly that!! Otherwise, like other medical students, I will be forced to work to pay my bills. Also unlike other medical students, I am already a licensed PA, so I can prescribe medicine and treat patients - and easily earn $60-75,000 working part time. Options allow me to focus on my medical education instead of scrambling to make money by working at the hospital. I have paid for M1 - first year of medical school - with options.

the difference between moonlighting as a PA and trading options to fund MS2/3/4 is that

1) working as a provider has "guaranteed" income; that is, you know exactly how much you will make per x number of hours worked, vice options which are not guaranteed and can lose more than your deposit depending on your strategy

2) continuing to practice as a PA will help you in your future practice as a physician

The idea that you can trade options as a sort of side thought to support you during medical school -- based on the language you're using of trading vs. "working" as a PA -- is extremely risky and could put your future in jeopardy.

 

[JSOP]

So assume you bought a stock on which options are frequently traded. Let's say you purchased 100 shares of SPY at a high $560. Then you are medically induced into a temporary coma. When you wake up from your coma, SPY is trading at a mere $280.

Since we're just talking hypotheticals, assume that you aren't allowed to sell the stock at a loss.

(a) In the first case, assume a cash balance of $30,000 in your account, in addition to the 100 shares of SPY. How would you use Options to generate a steady monthly income from these 100 shares of SPY in your account?

(b) Now assume you have no cash balance - just the 100 shares of SPY. How would your actions be different?

Well first of all scenario a) would not exist because if SPY has dropped that much, most likely your cash balance would be all gone from your account and you would've been force-liquidated most likely so you would've only had $2K left which is not nearly enough money to do any option trades even option writing because all the brokers would require margins on naked option shorting.

So that just leaves scenario b) which in this case, you would have to raise money by either begging for more money from your loved ones and/or family and/or friends and/or from strangers via like GoFundMe page, or selling whatever assets that you have, and/or getting a job and/or getting lucky by winning the lottery.

I hope this is just a hypothetical scenario.

 

[JSOP]

Neither. But in a way you are correct because I am a bit afraid that reading materials in the books available to me will limit and constrain my thinking. Medical school is like trying to drink water from a fire hose, so I am already drowning at the materials that are directed at me. I'm afraid I haven't yet been able to find a book on Options that I like, and I guess I have access to all of them through my university library. I don't think Hull is very practical, so I haven't started reading it. I like McMillan but I find Olmstead's book even more practical. However I read only one page from Olmstead's book and I found a serious error in that book that has probably let many people to make mistakes in their trading, so I gave up on that book too.

Wait you are a medical student and you are trying to learn options???!! WHY are you not concentrating on learning from your medical books? Being a doctor is like having guaranteed income for life nowadays as long as you graduate. If you think medical school is like trying to drink water from a fire hose, you think investment management is any different? LOL

 

[JSOP]

Options let me do exactly that!! Otherwise, like other medical students, I will be forced to work to pay my bills. Also unlike other medical students, I am already a licensed PA, so I can prescribe medicine and treat patients - and easily earn $60-75,000 working part time. Options allow me to focus on my medical education instead of scrambling to make money by working at the hospital. I have paid for M1 - first year of medical school - with options.

Your answer does NOT make sense. If you have paid for 1st year of medical school with options which I assume is by trading options, so you should have some experience in options then how is it you don't know the solution to your hypothetical scenario? Why would you still need to ask it here.

Anyway I am done here. Clearly another troll thread.

 

[SunTrader]

Is there a doctor in the house? No but there is a wannabe broke option player here.

 

[El OchoCinco]

Made enough money to pay for a year of medical school but asks a newbie question revealing little or no experience/knowledge of options. As the famous attorney question goes "Were you lying then or are you lying now?"