Going Live Option Trading Questions

D

dreamliner

Greetings,

I have been paper trading basic options/spreads for many months (over a few years I guess) and have done "ok" with basically very small trades relative to the demo account size. I've been just doing very basic trading of selling naked puts, verticals, iron condors, selling strangles, etc. All selling, no long options.

I've now paid off all debt and am ready to go live with a 20K account size using Think or Swim (I don't like the commissions but love the tools), but have some questions.

My objective is to grow the 20K account (plus adding to it monthly) into something I can retire on. My problem is I have no real plan, no real understanding of how much to put at risk, and no real knowledge of how to adjust properly. I've just been getting out of the entire trade if it approaches the short strike.

I also understanding nothing of volatility, and I'm sure some on here would suggest I not trade live until I do. I have simply been going with an 80% probability on the Think or Swim platform and either expiring in profit or closing if approaching the short strikes.

So my questions are these:

1. What do I need to learn to go live, and where can I learn it? I did see the livevol site but feel that $250.00/month is quite expensive for my level of trading.

2. How can I develop some kind of a plan for growing the account into a retirement amount, when I'm not sure of expected returns (or even if I'll be profitable in general).

I guess what I'm looking for is a mentor of some kind who can teach me how to plan and trade and adjust and follow through, etc. I'm quite sure this is a very expensive proposition involving either very expensive seminars or costly online mentoring, etc. Is there no other way to do this?

Any input would be appreciated.

Thank you in advance.
 
Quote from dreamliner:

Greetings,

I have been paper trading basic options/spreads for many months (over a few years I guess) and have done "ok" with basically very small trades relative to the demo account size. I've been just doing very basic trading of selling naked puts, verticals, iron condors, selling strangles, etc. All selling, no long options.

I've now paid off all debt and am ready to go live with a 20K account size using Think or Swim (I don't like the commissions but love the tools), but have some questions.

My objective is to grow the 20K account (plus adding to it monthly) into something I can retire on. My problem is I have no real plan, no real understanding of how much to put at risk, and no real knowledge of how to adjust properly. I've just been getting out of the entire trade if it approaches the short strike.

I also understanding nothing of volatility, and I'm sure some on here would suggest I not trade live until I do. I have simply been going with an 80% probability on the Think or Swim platform and either expiring in profit or closing if approaching the short strikes.

So my questions are these:

1. What do I need to learn to go live, and where can I learn it? I did see the livevol site but feel that $250.00/month is quite expensive for my level of trading.

2. How can I develop some kind of a plan for growing the account into a retirement amount, when I'm not sure of expected returns (or even if I'll be profitable in general).

I guess what I'm looking for is a mentor of some kind who can teach me how to plan and trade and adjust and follow through, etc. I'm quite sure this is a very expensive proposition involving either very expensive seminars or costly online mentoring, etc. Is there no other way to do this?

Any input would be appreciated.

Thank you in advance.
More...


Hey Dreamliner, I am almost in your same status. Just opened my first Options account... at OptionHouse.

I sold a few Puts today on stocks I want to purchase for the purpose of writing Covered Calls.

Will also be doing some Iron Condors and other conservative Spreads.

I am now on book after 3 weeks and have a couple more on the shelf.

For Covered Calls, I love the screener at Calpix, but I will be purchasing a few dividend paying blue chips and will play Covered Calls on those to generate additional cash flow.

My starting balance is about $100K so I will play it safe and slow.
 
my advice to you is get experience trading live with 1 contract until you can make consistence profit over a long period of time, I would say 1 year.
-pick one strategy and be good at it and use it exclusively.
-concentrate on one trade at a time.
-read a few books about trading not necessary on option.

trading options is 100x harder then trading stock and you need to be an exceptional stock picker(fundamental and technically) to do well over a long period of time.
 
Thank you. What one strategy would you recommend? I've traded all forms of credit spreads, iron condors, short strangles, etc.

Quote from magicz:

my advice to you is get experience trading live with 1 contract until you can make consistence profit over a long period of time, I would say 1 year.
-pick one strategy and be good at it and use it exclusively.
-concentrate on one trade at a time.
-read a few books about trading not necessary on option.

trading options is 100x harder then trading stock and you need to be an exceptional stock picker(fundamental and technically) to do well over a long period of time.
More...
 
my bread and butter is the DITM verticals with starting risk/reward ratio of 10-20:1 or less. a very high probability trade, its boring but it will make consistence money over time.
There are people that say this is a crazy trade why would you risk 10K to make 1K or 20K to make 1K but if you do your research on a stock thoroughly you will realize unless there is a near disaster event 90 percent of the time you collect the spread at expiration.
the hard part is picking the right stock to use your strategy on.
the less complicated a strategy the better in my opinion
 
OK I will look at these. Can you give me a current example (stock/strike)?

Quote from magicz:

my bread and butter is the DITM verticals with starting risk/reward ratio of 10-20:1 or less. a very high probability trade, its boring but it will make consistence money over time.
There are people that say this is a crazy trade why would you risk 10K to make 1K or 20K to make 1K but if you do your research on a stock thoroughly you will realize unless there is a near disaster event 90 percent of the time you collect the spread at expiration.
the hard part is picking the right stock to use your strategy on.
the less complicated a strategy the better in my opinion
More...
 
Quote from dreamliner:

OK I will look at these. Can you give me a current example (stock/strike)?
More...

I'll pick an easy one AAPL for example

the April 21 calls 440/445@4.8 if you buy 40 verts it will cost you $19200 to make $800 when it expires

AAPL is at 585 now the probality it's going to 445 in a month is not very likely. fundamentally AAPL is solid, technically the chart show an up trend. This is the type of trade I would take.
 
Why deep ITM call spreads? Why not pick the same strike prices but look at the put spread. The OTM puts will be more liquid, have tighter spreads and not have the risk of early assignment. If you sell the put spread for $0.20 or buy the call spread for $4.80, the profit potential is identical.
 
my suggestions is:

no book

no listening to any opinion

no expert talk

for 3months

watch one market for three months and do nothing

record what you observed, try different ways to look at them, then get used to think in market way

finally you will get a sense how the market works.

the basic is buy low and sell high.

I day trade options, I trade DOTM, I did quite successfully, I trade options not so long time ago. it does not matter, whether DITM, ITM or DOTM, OTM, the priciple is the same: buy low and sell high.

since option is a magnifier, a small move in the underlying can be a huge wave, in order to survive and prosper this game, every trade must be planned in advance, execute trade very decisively, one hesitation can be a disaster.

before you start, a roadmap or the plan, always put it there. market is just a maze. if you do not have a wayout roadmap, you will dizz around forever and waste time and money, there is no wayout.

before I start a day, my fisrt question to myself is: where is my roadmap or my plan (detailed, do what, how my order to put, what kind of order, what the market is...., and what my startegy is..)

after I answered the first question, what I try to do is: follow the plan and proceed.

if i can not answer it, I need shut down my computer, I know I will get lost.
 
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