Quote from Derivman:
Thank you very much anti ad hominem. At least we are now starting to discuss something that is related to the thread topic. Your efforts have not gone unnoticed. I will now review your post in detail and respond accordingly. Again, thank you for taking the time to post your honest thoughts. Cheers.
Derivman
Again anti ad hominem, I thank your for the reply. Here are some of my thoughts.
Quote from anti ad hominem:
Hehehe. Now you really are making me laugh.
There are only two things you can do with options. Buy them & sell them. Simple. You have to understand what you are actually doing when you do either or both at the same time - with respect to your risk (ie:greeks).
Having just done 2 hours training with my instructor yesterday, I am now aware that there are over 64 things you can do with Options by buying and selling them. Some of these things are more suited to making consistent returns in the Options markets, than others.
I have met hundreds of traders who have dedicated hours to learning 'strategies', rather than to trade options. With monotonous regularity either blow up or bleed to death. Why? because they do not understand the underlying premise of the instrument they are using, so they have no clue how to manage the risk. A la the little time bomb that went off at T2W.
I have mentioned previously that imho, understanding risk is very important, but it is nothing more than an integral part of the trading business. You can have the best risk management approach in the world, but if you can't place winning trades then it will be of no use to you what so ever. Your account will just evaporate like a sponge left outside in the hot sun.
ALL good traders trade POSITIONS, not STRATEGIES. The difference is the former comes from the perspective of a complete acceptance that ultimately we have no idea where the underlying will actually go, only an opinion, the latter usually a conviction that they do, based upon one thing or another.
Any good trader that I know, makes good money consistently from his / her trading activities.
It is only the knowledge of how options work that will allow you to assess whether or not to go ahead with a position & reliably be able to trade it to profitability as the market has it's way with the underlying. It is only through knowing how to respond to risk as it emerges once a position is on that gives a trader even a chance of consistent profitability.
I would have thought that you would only go ahead with a position, providing there was a high probability of the trade becoming a success, with success meaning, a return from the closed out trade which has a far greater value than the initial risk taken on, when the trade was first opened
WRT to your assertions about luck. Unless and until I can be convinced that I have absolute control over everything that happens to and around me, I will continue to side with Taleb, esp given his pedigree (intelligent & educated - aren't you the master of understatement?! LOL). I know many people who have followed the "success" teachings of people like Kyosaki etc etc who will be wildly financially successful the day hell freezes over. And I know others who literally stumbled on great success and wealth (by their own admission!). There just isn't a formula to assured success & as the old saying goes 'sometimes sh!t happens.' - good, bad & ugly. What Taleb is talking about more broadly is our lousy ability to attribute cause to effect. We point to attributes and actions as creating success that a proper statistical analysis of a random population will show simply are not defining factors. And I am not going to argue with Taleb on statistics!
What you decide to do with your money is entirely up to yourself. Personally, I prefer to know what my chances of success are, and also, what is my expected profit from taking on the risk for the trade in question.
