Are options a waste of time and money? (pun intended)

Ok,you are definetly an old school trader who has been at this for a while and appear to be lost as to what to do with options..

Elliot,Wyckoff,Fib and your "unique take" on RSI is very telling as to your orientation and how long you have been at this.

I dont know many directional guys who opt for "Delta structures" over trading the underlying..

So I basically agree with your original premise,but only in the directional space,and also agree that the 0-3 day trades backtest well...

Where you fail miserably and seem unteachable is Vol trading..There are clearly traders who are very successful trading Vol without a directional bias using the underlying to hedge...

Wyckoff,Elliot,RSI are not in their vocabulary,nor will it ever be....

No disrepect,but options outside of 0-3 days is a waste of YOUR time and money










wxytrader said:
What are you talking about? They are statistically measurable using fibs. Everything is embodied into ew...chart patterns, order blocks, candlesticks, price action, vols, Wyckoff, etc so if you aren't familiar with it or just using one part of the picture to trade then that's all you have...a snap shot.
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longandshort said:
Lol tell me you've never taken a stats class without saying it... :rolleyes: Anyway let's not get into semantics here. Sounds like you've found your holy grail in EW considering it captures all those things you find important. You should have that lambo any day now!
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Um I do lol. I bought a Gallardo.
 
taowave said:
Ok,you are definetly an old school trader who has been at this for a while and appear to be lost as to what to do with options..

Elliot,Wyckoff,Fib and your "unique take" on RSI is very telling as to your orientation and how long you have been at this.

I dont know many directional guys who opt for "Delta structures" over trading the underlying..

So I basically agree with your original premise,but only in the directional space,and also agree that the 0-3 day trades backtest well...

Where you fail miserably and seem unteachable is Vol trading..There are clearly traders who are very successful trading Vol without a directional bias using the underlying to hedge...

Wyckoff,Elliot,RSI are not in their vocabulary,nor will it ever be....

No disrepect,but options outside of 0-3 days is a waste of YOUR time and money
More...

Vols trading isn't like some secret options language. It's fairly easy to get the concept but I don't see the profits honestly. I don't care about slow and steady as far as profits...I want to wait in the weeds and then strike big. I don't ever get pushed out of positions...will avg down or hedge with options (currently employing the stock repair strategy actually) and wait it out.

Regarding vols, from what I have picked up in the last day or so:

ATM IV 20.46% 1.73
25 delta call IV 22.20% @ .57
25 delta put IV @25.84% @ .61

So this is a reverse skew which is pretty normal for index funds. As I understand it puts are generally more expensive because traders put more weight on buying puts for protection than calls for speculation, apparently this skew started to present itself after the 87 crash.

It is also a volatility smirk since the outer strikes have higher volatility than the inner strikes but IV is skewed more to the downside.

Great. So the "edge" would be buying puts in a forward skew because it should return to a reverse skew and IV/price will increase? Or sell calls that will come down in IV/price?
 
You are clearly a smart guy,why dont you check out Orats so you can chart historical skew, create custom measures thst are normalised and all thst fun stuff..You can back test as well

I'm on vacation and not looking at trading screens :)


wxytrader said:
Vols trading isn't like some secret options language. It's fairly easy to get the concept but I don't see the profits honestly. I don't care about slow and steady as far as profits...I want to wait in the weeds and then strike big. I don't ever get pushed out of positions...will avg down or hedge with options (currently employing the stock repair strategy actually) and wait it out.

Regarding vols, from what I have picked up in the last day or so:

ATM IV 20.46% 1.73
25 delta call IV 22.20% @ .57
25 delta put IV @25.84% @ .61

So this is a reverse skew which is pretty normal for index funds. As I understand it puts are generally more expensive because traders put more weight on buying puts for protection than calls for speculation, since the 87 crash apparently is when this skew started to present itself.

It is also a volatility smirk since the outer strikes have higher volatility than the inner strikes but IV is skewed more to the downside.

Great. So the "edge" would be buying puts in a forward skew because it should return to a reverse skew and IV/price will increase? Or sell calls that will come down in IV/price?
More...
 
taowave said:
Ok,you are definetly an old school trader who has been at this for a while and appear to be lost as to what to do with options..

Elliot,Wyckoff,Fib and your "unique take" on RSI is very telling as to your orientation and how long you have been at this.

I dont know many directional guys who opt for "Delta structures" over trading the underlying..

So I basically agree with your original premise,but only in the directional space,and also agree that the 0-3 day trades backtest well...

Where you fail miserably and seem unteachable is Vol trading..There are clearly traders who are very successful trading Vol without a directional bias using the underlying to hedge...

Wyckoff,Elliot,RSI are not in their vocabulary,nor will it ever be....

No disrepect,but options outside of 0-3 days is a waste of YOUR time and money
More...


Lol I've never been neutral delt at inception in my career.
 
wxytrader said:
Regarding vols, from what I have picked up in the last day or so:

ATM IV 20.46% 1.73
25 delta call IV 22.20% @ .57
25 delta put IV @25.84% @ .61

So this is a reverse skew which is pretty normal for index funds. As I understand it puts are generally more expensive because traders put more weight on buying puts for protection than calls for speculation, apparently this skew started to present itself after the 87 crash.

It is also a volatility smirk since the outer strikes have higher volatility than the inner strikes but IV is skewed more to the downside.

Great. So the "edge" would be buying puts in a forward skew because it should return to a reverse skew and IV/price will increase? Or sell calls that will come down in IV/price?
More...

There is no vega in a 4-day. The price is sticky so the vols are generally meaningless. What have you accomplished in buying the risk reversal for a four cent credit? And I have no idea where you got your vols from. It appears you've priced Friday's closing data (premium) with today's date.
 
wxytrader said:
It's more like passing a hot potato than a casino. Give me an example of a 6 month option that you think count be profitable.
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When you understand options are about relationships you will transition to being a calm profitable trader. For 24 years, and with my tiny brain I have made a decent living. I don't choose to upscale but my ROCE is generally 100% p.a. From my blog:
Trade 321 16June
Here we sell 2x the near month, July strangle 7400 puts,(24) 7825 calls(24), and we buy one August strangle: 7400 puts (55.5) and 7825 calls (44.5) .Here’s the numbers: 55.5+44.5= 100 and 24+24 (x2)= 96. Our cost therefore is 4
FTSE expired at 7650 so front month went out for zero, leaving us with a nice profit.
WIN! 7400 put 28.5 7825call 23=51.5- our cost 4= 47.5(£475 on margin £3,000 in 35 days )
 
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