Buying/Selling Options

Bob, I have to agree with rallymode and majorursa, but that doesn't mean I don't find your postings useful. You obviously like butterflies and have become comfortable and proficient in trading them - perhaps they fit your personality? Others here are comfortable with, say, ratio backspreads. My point is that there is no one strategy that is PROVABLY superior to another. Each strategy has it's own advantages and disadvantages (I hope noone is going to argue with that, lol) and it's own time and place. Furthermore one strategy works well for one trader but is disastrous for another. For example, I could trade the exact same flies as you and lose money whereas you might make money - totally dependent on one's 'adjustment' skills.
Anyway, I hope you don't stop posting here. I find one of the benefits on ET is that you get other view points that are generally different (or opposite, lol) to your own. I use this type of feedback to fill/reassess gaps in my understanding and initially (when I first started on this board) realised that I had some major misunderstandings of basic concepts. The downside of ET is that the feedback is sometimes a little harsh, but to me that is preferable to losing money and also motivates me to check to see if that feedback is actually correct - more often than not it is, lol, especially if it comes from a reputable poster.
As an aside, like you, I'm also a long term optionetics student (started in 2000) and still attend their courses but I no longer get involved in the argument over whether they're 'good' or 'bad', they simply provide motivation and another perspective on how to trade options.
Best
daddy's boy
 
Quote from exQQQQseme:

The only real value of my entire posting is item 8, which didn't get any comments. Bye Y'all.

Don't go. Stay.

8) One can build a Butterfly one leg at a time and over time. If things fall right, it is possible to turn it into a risk free trade.

Bob

Ok. I'll play. For discussion purposes, I have a comment on your #8.

I disagree. You cannot turn it into a 'risk free' trade. Here's why:

Let's say you leg into the fly by going long one call series and that the market moves in your favor. You now have 2 choices:

1) Sell you calls and take a profit

2) Complete the butterfly for a net credit of a dime.

If you choose to covert your winning trade into a butterfly, it's certainly true that the overall position cannot lose money. But is it really risk free? After all, you had a profit in your hands - and rather than take that profit, you re-invested the profit into a fly.

To me, you are risking the profit in hand in an attempt to make even more money. That's ok. Nothing wrong with that play. But it is not risk free, because there is a good chance that your initial profit will disapper - and it's that profit you are risking.

Mark
More...
 
Quote from dagnyt:
If you choose to covert your winning trade into a butterfly, it's certainly true that the overall position cannot lose money. But is it really risk free? After all, you had a profit in your hands - and rather than take that profit, you re-invested the profit into a fly.

To me, you are risking the profit in hand in an attempt to make even more money. That's ok. Nothing wrong with that play. But it is not risk free, because there is a good chance that your initial profit will disapper - and it's that profit you are risking.

More...
I think that's a great point to bring up.
I think Cottle also makes the same comment in his book.
daddy's boy
 
Quote from exQQQQseme:

Ursa, thanks for your posting. Looking back at my item #1, I should have used the term "low net debit" as opposed to
"cheap".

On second thought, maybe I should not have done the damn posting to begin with. The whole point in #1 is that you have to go out in price to reduce the opening net debit. And if one is going out in price, it is necessary to allow time for the stock to move into the profit zone. This and many other responses I have received in this thread and elsewhere have me discouraged to the point where I have decided to either not post any more or if I do, only in rare occasions and only in a limited response to a limited issue.

The only real value of my entire posting is item 8, which didn't get any comments.

Everyone seems to want to express whether they agree with what I say and whether there is a different way of accomplishing something. But seldom, if ever, does anyone ever come up with a specific suggestion. Now I know why. Because the only thing a specific alternative suggestion would accomplish would be to give the others something new to take a shot at. There are always alternatives. There always will be. My alternative is to wish everyone well and get the hell out of here.

Bye Y'all.
More...

With all due respect, Bob, this is not an Optionetics discussion board where most participants know very little about options and/or trading and, thus, will grab on to anything that sounds reasonable. The ET community is a lot more knowledgeable about options, trading and markets, in general, and, hence is a lot more critical. When posting here you can expect to be ripped to pieces, but at the same time you're almost guaranteed to come out of it as a better, more knowledgeable trader.

So cheer up, mate!
 
You people have such high opinions of yourselves. You bag optionetics non stop and assume no one there has any idea (not everyone who frequents there is a beginner or has been through the optionetics system). You people obviously go there if have such an opinion.

Is ET such a great discussion forum.???...all I see on this forum is crap apart from a few posts. The rest is absolute shite and you spend most of your time talking bullshit about theory and hardly any time talking about how to make money. I wouldnt want to give my secret away would I?

Im happy to be proven wrong and if I am show me.

OTMB
 
MTE, I wasn’t going to post here any more. But your posting requires me to comment here.

I don’t consider myself an expert on options and truthfully don’t know diddly squat about such erudite things as synthetics, put call parity, etc. I also know very little about any strategy other than Verticals (butterflies, same month spreads) and stock and option combinations (such as collars and reverse collars).

I don’t consider myself anything close to an expert on these two types of trades either. And I want to stress that I don’t give a crap that many other persons participating here know far more about option theory than I would ever even care to know.

But this much I do know. I know of a few ideas as to how a person of average intelligence and a modest amount of financial resources can use either the butterfly or a stock-option combination to have a decent chance to make some money. I chose these Forums, and also the Optionetics Board, to share those ideas in the hopes that some people might benefit from what I have to say, or at least appreciate it. Unlike some who post here and elsewhere, I am not looking for any monetary remuneration for my efforts.

The responses I have received here have been full of useless theoretical rebuttal. For example, one person felt it was important to challenge me on my use of the word “cheap”.

Another challenged me on the theoretical accuracy of a statement I made when I mentioned I would have a risk free trade if I leg into a butterfly and after being completely legged in, there was no remaining net debit. Sad part is that he was “theoretically” correct. But his theoretical accuracy doesn’t do anything to help anyone make any money.

So, if all of you highly knowledgeable option theorists want to continue to amuse and impress each other without any tangible money making ideas being put forth, it does make for an interesting circle jerk.

MTE, in the last sentence of your posting to me you stated, “When posting here you can expect to be ripped to pieces, but at the same time you're almost guaranteed to come out of it as a better, more knowledgeable trader.”

Who the hell, in their right mind, would buy into being ripped to pieces in exchange for an “almost guarantee” from a group of anonymous people who haven’t demonstrated the ability to produce a “cha ching” every now and then?
 
Forgive me if this has been mentioned, but here's a thought: QQQQ, why not post a real fly trade?

Post the initial position, all the way through complete closeout. Show every adjustment and the reasoning.

I'm in agreement with others here that there is, and cannot be, any initial edge or profit expectation (liquid stocks only).

But who knows what you can do with adjustments and market savvy?

Yeah, it would take some time and there would be lots of criticism (but why would you post here, if not to receive differing opinions and ideas?), but I think we all, and you, would benefit. I know this sort of thing helps me see more clearly what is going on.

Just a thought.

Regards to you and all. :cool:
 
Wayne, are you asking me to retroactively reconstruct a butterfly and take it from beginning to end? That wouldn’t help anyone because it would disingenuous on my part because I could easily look for a stock that has performed a certain way and then use it as example to prove profitability. Even then, it would not prevent the recalcitrant malcontents here from taking shots at it.

The only way that this could honestly be done would be to take an actual example and show it as it develops. Then, win, lose, or draw, it would be Que Sera (whatever will be, will be). Isn't that exactly what I am doing now by opening with the AAPL Jul 120C?

Finally, what do you mean by the phrase, "...any initial edge or profit expectation"? Of course there's a profit expectation. Why else would we even be here?

You mentioned the potential benefit from differing opinions. Yes, I agree completely. But never in my wildest dreams did I envision that that term included a never ending dialog of the pros and cons of Optionetics, or a useless semantic discussion over the meaning of the word "cheap".

Bob
 
Quote from optiontraderman:

You people have such high opinions of yourselves...

hardly any time talking about how to make money.

OTMB
More...

What do you expect? A PM giving you a guaranteed winning trade?

The discussion here is open-ended. Adopt any suggestion you like; forget what you don't - and then you're on your own.

Mark
 
Bob, sorry to see the transition has been rough for you from the Optionetics boards to here. I think ET just has so many members that often what happens with large groups, the entire group sinks to the lowest common denominator. This is true of almost all large groups. It's why perhaps Optionetics feels less threatening as the traffic there is substantially less then here. It's simply a function of human nature, you have to accept it.

That being said, you need to build up some tough skin. Trading is tough. If you can't take the heat on a message board, you probably won't be able to take the heat of a serious drawdown in your account. This business is not for the meek.

Having said that, I hope you stay here because I truly believe the educational content here is light years ahead of the optionetics crowd for one reason and one reason alone. Most of the optionetics crowd comes from the same square of knowledge taught by optionetics. Where as here, you have guys coming from all walks of life. You get a lot of street talk, a lot of theoretical crap, a lot of personal trading stories, and a lot of knowledge that comes from working in the business. I really don't believe you have that diversity over there on the optionetics boards.
 
You must log in or register to reply here.
Back
Top