From novice to riskarb...

Quote from Virtuoso:

... that Cottle book -- the shit reads like an advanced physics book to a novice (even looks like one with all those stupid charts) :)
More...

I completely agree. It takes a lot of effort
to extract very simple stuff from an elaborate
pseudo-science babble it is wrapped into
in Cottle's books.
 
Hey Folks:

Its important to read the literature and acquire a working knowledge of the concepts. No doubt. Unfortunately, it is a big leap from there to trading options profitably. For my money, I would go to one of the companies that train traders. On the east coast, try Piper O'Connell (Chicago), where Marty O'Connell is the principal. His book "The Business of Options" is one of the best ever written. Concise, short, to the point. There is a company doing that work on the west coast, but I don't remember the name. Either way, you get personal attention and an overview of the current best practice on and off the floor. The alternative is to try the strategies in these books and get beat up by the professionals (until you figure out what really works). Good luck, Steve46
 
Quote from candletrader:

OK, its clear to me that riskarb is the most knowledgeable person on these here forums (when it comes to the esoteric world of options)...

I would like various opinions on the best route to get from the stage of novice
(=understands stuff like straddles, understands the basics of the greeks, understands gamma scalping etc, but is unable to be creative about options, and is unable to think with any degree of fluency about anything but the 'standard' set-ups)

to the stage of riskarb
(= can talk options like there's no tomorrow, understands the subtle nuances of options, can exploit arbitrage opportunities with ease, and can very easily and quickly make complicated adjustments to payoff profiles of existing positions, in recognition of evolving market conditions)...

Obviously, one recognises that experience counts too, but we'll keep that factor constant for the purposes of this exercise...

So to help others to get from novice to riskarb, I invite riskarb (and other like-minded options traders) to please create their recommended reading lists (ranked easiest first, to most complicated last)...
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Cut the crap,your not really interested in what comics these fellas read.What you really want is for them to tell you how to make money trading options(I know because that's what I want as well)!!They will never tell you though because they are all tighter than a gnat's twat!I suppose I would be as well if I was as good as these chaps.

Anyway,I've been to the pub and I'm half pissed so I'm gonna do some day trading.Have you ever done that?It's amazing what the results look like the next morning!!
 
You've given me an idea... maybe I will do a poll on preferred strategy!

Quote from johnk49:

Cut the crap,your not really interested in what comics these fellas read.What you really want is for them to tell you how to make money trading options(I know because that's what I want as well)!!They will never tell you though because they are all tighter than a gnat's twat!I suppose I would be as well if I was as good as these chaps.

Anyway,I've been to the pub and I'm half pissed so I'm gonna do some day trading.Have you ever done that?It's amazing what the results look like the next morning!!
More...
 
Hey Candle:
My preferred strategy is to backspread. There you go. Are you any further down the road now? As I said before, you need the assistance of a good pro. Read the books, then try contacting someone like Marty O'Connell. There is no shortcut in this business. Good luck, Steve46
 
Quote from Maverick74:

...all the books in the world and understanding all of the nuances of the greeks won't make you a dime. That's why a lot of these guys stay in academia and never wander into the real world.

So read the books, take them with a grain of salt and add as much experience as humanly possible...
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Although I agree with the spirit of what you are saying, I think it goes too far.

IMO, the reason most quantitative models are meaningless to a certain extent is that most (all ?) models require that the statistical properties of whatever you are modeling evolve slowly over time so that estimates using past data can be indicative of the future.

Obviously, as traders this is not what we observe, but that does not mean that greeks are _always_ meaningless, but _when_.

nitro
 
Quote from nitro:

Although I agree with the spirit of what you are saying, I think it goes too far.

IMO, the reason most quantitative models are meaningless to a certain extent is that most (all ?) models require that the statistical properties of whatever you are modeling evolve slowly over time so that estimates using past data can be indicative of the future.

Obviously, as traders this is not what we observe, but that does not mean that greeks are _always_ meaningless, but _when_.

nitro
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I never said that greeks were meaningless. In fact, quite the opposite. I make a very good living trading off the greeks. I just think that if one focuses all of one's attention on the greeks as the key to making money you are doing yourself a disservice. If you can't trade the underlying, you won't make shit trading options. And if you are not a damn good trader overall, i.e. good discipline, patient, and willing to take risk then you are going to find options to be very challenging.

As far as quantitative models go, I think most of them are worthless. I'm sure most people would disagree with me on this but I stand my ground on this topic. Every option is worth what someone is willing to buy or sell it for regardless of what the model says. Also, stocks do not trade in a vacuum. They jump around way too much. The key is to be able to calculate the value of the jump so to speak. I do this by pricing the ATM straddle vs the ability of the stock to jump and the magnitude of the jump. Then calculate what the skew should be based on those calculations. From there you can start to derive fair values. Anyway I digress, greeks are very important, but more important is one's ability to trade. I'll take a good trader over a great pricing model any day of the week.
 
Quote from johnk49:

Cut the crap,your not really interested in what comics these fellas read.What you really want is for them to tell you how to make money trading options(I know because that's what I want as well)!!They will never tell you though because they are all tighter than a gnat's twat!I suppose I would be as well if I was as good as these chaps.

Anyway,I've been to the pub and I'm half pissed so I'm gonna do some day trading.Have you ever done that?It's amazing what the results look like the next morning!!
More...

I do not know whether this ET riskarb is the google riskarb, but if you want his style without reading all these books, then here is a spam from 2001 in google forum

link:

http://groups.google.com/groups?hl=...rb&ie=UTF-8&oe=UTF-8&hl=en&btnG=Google+Search

'Hi All,

I have begun trading at home which will allow me to post more frequently. In addition, I am offering forum members the ability to follow all of my daily trades, consisting of neutral options and directional equity trading. The trades are executable at the retail-level, an important consideration.

The daily/intraday email service will consist of the following:

1) My Daily Options Positions
- DISCRETE HEDGE IV EDGE (delta neutral/GARCH model/skew edge)
- IV EDGE (via long-horizontals)
- LONG-THETA POSITIONS (short gamma position trades)
- POSITION CONVERSIONS TO ZERO-GAMMA (short to neutral gamma)
- HEDGING
-FULL GREEK EXPOSURE MANAGEMENT IN POINT-TERMS
- ENTRY/EXIT PARAMETERS
- WEEKLY/MONTHLY P&L MONITORING

2) My Directional Equity Positions
- INDEX SIGNALS WHEN AVAILABLE

****PERFORMANCE GUARANTEE****
Aggregate monthly signal performance must be positive <OR> a full refund of the monthly subscription will be given, or applied to the following month at the subscriber's request.

OFFERED AT $100/month, $250/quarter. Payable via PayPal only, certified PayPal member. Please email riskarb@ifrance.com for more info.

Best,
arb.
riskarb@ifrance.com
deltaneutral@yahoogroups.com

http://finance.groups.yahoo.com/group/deltaneutral/'
 
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