ATM options for premium decay

Trading Education Buyer

Trading Education Buyer

I usually buy a straddle at the money every week.It is quite profitable when volatility breaks out.It loses when there is no volatility .

It is uncomfortable going through drawdowns.

What other short option strategy can I add (sell options ) to make money premium , when there is no volatility?This will compensate when other strategy is not making money.

some calendar spreads otm?ATM calendar puts?Calendar butterfly with one month to expiry = buy atm two months , sell lower ?

How about buy lower call 2 months to expiry , sell atm weekly call and buy top 1 2 months to expiry.Do this every week.How about this butterfly
 
You will not get any edge by long or short premium blindly. Market will even up in long term, your long premium strategies will loss money in low volatility period and gain in elevated volatility, short premium strategies will loss money in elevated volatility period and gain in low volatility period. When you ADD them all in long period, you are break even (market are quite efficient this day for long term prediction) but if you include the commission and slippage. You are SURE losing money. Again, broker and bucket are the winners in this regards.

All the new options traders went through this stage of learning curve, thinking by selling and long premium will give you edge and make you money.

PM me if you want to discuss more.
 
I believe that Galvin is correct. This concept of "doing the same thing every week" or as the many videos out there call it "income trading" is really fool's gold. You simply cannot blindly do any of this stuff and expect to beat the market. On the other hand, if you can create a "system" or methodology that will tell you when the markets are likely to go sideways, you can sell those straddles or do some sort of ratio spread...then after a period of consolidation, you can determine that odds are good the market will move into its trend phase, you can switch back to the other strategies, etc, etc...

I believe that the worst thing that comes out of complacently doing the same thing each week is that it earns just enough to encourage more of the same when market conditions are primed to really destroy the strategy that was working for too long.
 
W.J. Feathermaker III said:
I believe that Galvin is correct. This concept of "doing the same thing every week" or as the many videos out there call it "income trading" is really fool's gold. You simply cannot blindly do any of this stuff and expect to beat the market. On the other hand, if you can create a "system" or methodology that will tell you when the markets are likely to go sideways, you can sell those straddles or do some sort of ratio spread...then after a period of consolidation, you can determine that odds are good the market will move into its trend phase, you can switch back to the other strategies, etc, etc...

I believe that the worst thing that comes out of complacently doing the same thing each week is that it earns just enough to encourage more of the same when market conditions are primed to really destroy the strategy that was working for too long.
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To make money in option market, you have to either able to predict the price direction (up, down or sideway) OR predict the direction of Volatility. The challenge is NO ONE (not retail traders, not institutional traders) is able to do this Consistently in Long Term. This is the reason why the main source of income from institutional still coming from fees.
 
galvinlee888 said:
To make money in option market, you have to either able to predict the price direction (up, down or sideway) OR predict the direction of Volatility. The challenge is NO ONE (not retail traders, not institutional traders) is able to do this Consistently in Long Term. This is the reason why the main source of income from institutional still coming from fees.
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In your view, what is the best way to predict/forecast the direction of Volatility?

Thanks
 
Trading Education Buyer said:
I usually buy a straddle at the money every week.It is quite profitable when volatility breaks out.It loses when there is no volatility .
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A lot of poster said selling straddles and selling volatility is the way to go to capture the volatility premium. What do you think?
 
W.J. Feathermaker III said:
While I appreciate a skeptic or "realist", I think that you are venturing into "absolute's" with the "never", "impossible", "nobody".
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You must be one of the exception trader that can "make it" happen (even non of the institutional can make it) ? Mind to share how you do this ?
 
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