Are There Any Successful Option Buyers ?

WildBill said:
I don't know about "better" but you stand to make more on the volatility.

Two ways to play it:

Risky: All in on a weekly.
Better: 25%-30% of trade on the weekly, remainder on later expiration dates.

Weeklies are all about catching the right combination of fear or greed, and better pricing, when price is running into supports or resistance.
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Im looking at historical option quotes right now and even after large moves the option doesn't appreciate as much as the SPY trade I did.

The stock CSII dropped 29.86% from 12.46 jan 21 to 8.74 jan 22. You could buy a Feb10 put for 0.55 and the following day it would only be worth 2.20 ? I would have expect it to go way higher since a 30% single day move is a huge unexpected event in a market.
 
Fundlord said:
Im looking at historical option quotes right now and even after large moves the option doesn't appreciate as much as the SPY trade I did.

The stock CSII dropped 29.86% from 12.46 jan 21 to 8.74 jan 22. You could buy a Feb10 put for 0.55 and the following day it would only be worth 2.20 ? I would have expect it to go way higher since a 30% single day move is a huge unexpected event in a market.
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I don't use options on individual stocks , only on QQQ, IWM,USO & SPY.

But let's take a look at your example. My math may be wrong, but oh well.

This option trade would have had a 300% gain ($1.65) overnight, you could have avoided the pattern day trading rule by holding it overnight. You wouldn't have had the exposure of holding the trade position overnight.
 
I don't know of a single buyer of vol who makes money solely on that. There are many examples of firms, desks, and traders who lean long vol but they have other sources of alpha to pay for it. Even universa recommends that strategy. Have some alpha produc No strategy and give them 4percent of the gains to buy convexity.
 
Fundlord said:
Gonna start reading this on Monday:
dsc_1051.jpg
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...That book...it says Black Swan and shows a Penguin. o_O

'You look for the birds...they're gonna help you. those birds. you'll see. Good luck" --Eli Wallach, Wall Street Money Never Sleeps [2010] movie
 
lawrence-lugar said:
...That book...it says Black Swan and shows a Penguin. o_O

'You look for the birds...they're gonna help you. those birds. you'll see. Good luck" --Eli Wallach, Wall Street Money Never Sleeps [2010] movie
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True, when everybody keeps a penguin, it suddenly becomes a black swan!
 
Here's a sell premium trade I've been in for a few months, deep OTM at the time. Sold 1 SPX 2500 Call OTM @ 2500. Covered it with a Long 3000 Call for insurance. I normally trade more contracts but was able to still make a reasonable gain on 1 contract. Tastytrade does have good resources. Nassim is right about black swans, always consider if you are comfortable taking your largest loss in a black swan event... It should always be factored into every option trade.

+1 SPX Dec16 3000 Call S&P 500 INDEX $1,906.90 Loss -$225.00
-1 SPX Dec16 2500 Call S&P 500 INDEX $1,906.90 Gain $3,050.00
 
newwurldmn said:
I don't know of a single buyer of vol who makes money solely on that. There are many examples of firms, desks, and traders who lean long vol but they have other sources of alpha to pay for it. Even universa recommends that strategy. Have some alpha produc No strategy and give them 4percent of the gains to buy convexity.
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Yes
 
Fundlord said:
Im talking about those who use OTM options to heavily leverage themselves in hopes for large gain with limited risk.

From what I have read most people preach becoming an option seller and not be directional (tastytrade, Marty Schwartz). But you would need a much larger account to make decent money.

I know there will be a lot of talk in it about buying far OTM's in favour of selling options.

I want to allocate 25% of my account to buying options in hopes for a much higher R:R.
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it took me a few years, but i made [almost] 10x, buying [and selling] options

you do have to risk some money, to make it grow

marc
:cool:
 
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