You can use any strategy in any market condition. There is no correlation among strategies, market conditions, and outcome. It is true that "you can trade spreads in any market conditions," but it is not true that "you can trade spreads in any market conditions AND HAVE POSITIVE OUTCOMES." You can fight battles with swords in Medieval times and in modern times, but you cannot expect positive outcomes then and now.
book --> get rich with options 4th edition
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You can use any strategy in any market condition. There is no correlation among strategies, market conditions, and outcome. It is true that "you can trade spreads in any market conditions," but it is not true that "you can trade spreads in any market conditions AND HAVE POSITIVE OUTCOMES." You can fight battles with swords in Medieval times and in modern times, but you cannot expect positive outcomes then and now.
Stocks are trending up or down maybe at most 30% of the time and the rest of the time they languish. Options allow a trader to profit in all market conditions if he selects the right strategy.
Even for stock investors the use of options can protect the underlying.
The absolute key to success is to limit your losses. I suggest 1% of
your account on any one trade. That is pretty conservative and if your fortunate to hit the million dollar mark in your trading account scale back to 3/4 %. Conversely don't take on positions that are so large you don't give your position time to work before your at your stop loss. Read everything about options, stocks, trading and analysis.
I dont care what others do, professional or not, all I know is that some simple spreads, butterflies and condors have been making me money. I came here to pick the brains of others who have experience in some of the more esoteric elements of options.
If you hedge and just accept the small losses when they come you should make money in the long run. I prefer to be the option seller but that is just me. Good luck.
Even for stock investors the use of options can protect the underlying.
The absolute key to success is to limit your losses. I suggest 1% of
your account on any one trade. That is pretty conservative and if your fortunate to hit the million dollar mark in your trading account scale back to 3/4 %. Conversely don't take on positions that are so large you don't give your position time to work before your at your stop loss. Read everything about options, stocks, trading and analysis.
I dont care what others do, professional or not, all I know is that some simple spreads, butterflies and condors have been making me money. I came here to pick the brains of others who have experience in some of the more esoteric elements of options.
If you hedge and just accept the small losses when they come you should make money in the long run. I prefer to be the option seller but that is just me. Good luck.
Tao,
Pretty much any options trade has about a zero expectancy at the moment you put it on. This is inherent in how options are priced. You will have to guess right about something to make money: amount of movement (or lack of movement) of the underlying, or change in volatility.
http://www.elitetrader.com/vb/showt...85394&perpage=6&highlight=condor&pagenumber=3
Pretty much any options trade has about a zero expectancy at the moment you put it on. This is inherent in how options are priced. You will have to guess right about something to make money: amount of movement (or lack of movement) of the underlying, or change in volatility.
http://www.elitetrader.com/vb/showt...85394&perpage=6&highlight=condor&pagenumber=3
I disagree. Vertical spreads prevent home-run trades, but you also hedge a little vega and theta. They significantly reduce premium and still allow for excellent return. ESPECIALLY if you don't plan on using a stop when you're buying naked options.
I disagree as well. You cap your losses and only a fool holds for the full loss all the way to expiration. Conversely in the 80% or so of the time the market is trending your way or going sideways you profit.
I submit your winners will over time lead to more $$$ made than lost. The key is not to trade so large that a loss when it comes can cripple your account.
I submit your winners will over time lead to more $$$ made than lost. The key is not to trade so large that a loss when it comes can cripple your account.
Drcha,
I 100% agree with you but was a bit stumped why the poster wrote that verticals have a negative expectancy.Zero is one thing,but negative is another.
Perhaps I am not understanding what he is saying,but it doesnt appear likely that a negative expectancy can exist for the buyer as well as the writer.
I 100% agree with you but was a bit stumped why the poster wrote that verticals have a negative expectancy.Zero is one thing,but negative is another.
Perhaps I am not understanding what he is saying,but it doesnt appear likely that a negative expectancy can exist for the buyer as well as the writer.
