Edge in options trading does exist, but not for one who doesn't understand the greeks, because the edge is in the greeks. IOW, is the market pricing in more or less volatility than they should be, according to your more accurate pricing model. Or for one reason or another, did the ATM Nov go out of whack compared to the ATM Dec options. Edge here is had in developing a model that is more accurate than the market at predicting future price action.
If you don't have that more accurate model, then by default the market is pricing the options more accurately than you are, and the more complex your positions get, the greater the losses become. Granted, often times the options at a certain strike will go so far out of whack as to be completely noticeable without any sophisticated pricing model. But the point remains, that the edge must exist. The more accurate and sophisticated the model is, the more subtle the edge can be. If your doing all the math on the fly, then the mis-pricings will need to be glaringly obvious for consistent profits.
If you aren't up for devoting yourself to the development of an accurate greek based model, then IMO the only choice left for you is to become a skilled trader. Generally this skill is in trading direction. Is it going up or down, when, and by how much? You can certainly do this with options, but then the greeks are just an annoyance. You'll buy ATM calls because you think the underlying will rise. It will in fact rise, but a vol collapse will actually cause the calls to decrease in value. What I'm saying is that as you are still paying no attention to the greeks, their effect on your option position is completely random and in the long run will neither hurt or help you, but rather just annoy you. So if you decide to purely trade direction, then you'll switch to futures rather than options.
I'm referring mainly to the E-mini S&P. These are futures contracts listed on CME exchange and traded over Globex system which is all electronic, as opposed to the open outcry pit traded method.
Subsequently, ES (s&p e-minis) has $0.25 ticks and standing orders are shown in a depth matrix. There are no greeks to worry about. You are simply trading the S&P index straight up. Long or Short. But you are levered pretty heavily. ES has a 50 multiplier, which means that if you have 1 contract and the futures increase by $1, your account will increase by $50. This is not to be confused with leverage due to low margin requirement. ES is currently trading @ 1120, but my broker doesn't require $1120 to purchase a contract. They require $1250, but some I think only require $500 initial margin. In that case you can see that not only are you getting a 50X nominal multiplier, but also 2.24X margin leverage. In effect, you are then getting 112X total leverage on your dollar.
Obviously then, if you are trading a $2K account with a $500 margin requirement, you don't want to buy 4 contracts. A 10-point S&P drop would wipe you out. But if you control your leverage, and build up your directional skill then large consistent profits are attainable without a model edge. Your edge is then your ability to read the market.
