HowardCohodas Index Options Credit Spread Trading Journal
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Thanks. I had no idea you ever thought me amusing.
Regarding our disagreement, I'm reminded of what I think whenever I hear any politician say anything with certainty. "Just because you say it, doesn't make it so. The more certain you are, the more skeptical I am" :eek:
Permit me to answer in a slightly different time frame. On August 2, 2010 I funded an account devoted exclusively to trading this strategy. That was 215 days or 7.1 months ago. The cash balance today is up 116.67% from the opening balance. This accounts for trading costs, and cash in reserve. The reserves are needed to provide funds to close spreads that have reached their loss limit or for rolling purposes.
My preference, however, is to express the results in terms of month on month returns. That mostly eliminates the effects of compounding and illustrates consistency (or lack thereof).
This is the chart I use for my personal journal and that I publish in my online journals such as this one at the end of each month. Even though that was only 5 days ago, it is probably hundreds of posts ago. :eek:
Even though I paper traded for five months, I still traded with small money the first two months. I then began trading with serious money, hence the jump in returns.
If there is a way to present the information you seek in a more helpful way, please ask.
Well an interesting thread. Howard has probably done a service to the community, with all this airing of experience and opinions.
Couple of good ideas came out of it for me. CLEAR THE ACCOUNT MONTHLY was a good one. I had been having vague thoughts of doing something similarly. Thing is I would have to compound to get where I want to be.
OPTION COACH AND ATTICUS both came up with some serious zingers that have me salivating and curious. Being proprietory, I guess I will have to do some research the hard way? ATTICUS with his teaser on trading VOLATILITY with the butterfly. Have done some simple amateurish ideas on this, but they didn´t work very well regularly. I kind of want a SETUP, a WIN situation if the entry setup is correct. I do not understand the BUTTEFLY SPREAD and as both Option Coach and Atticus have said it is a VOLATILITY environment, I am at a loss right now to understand the setup and play. The SHORT STRADDLES I think I will pass. I seem to remember experimenting with these last year and didn´t like them for some reason?
I like my current strategies. Two of them. Both directional. They are working well. I can probably make a living with them alone. The improvements will be in POSITION SIZE and CLEARING THE ACCOUNT MONTHLY, once I get it up to where I want it.
The CREDIT SPREADS are too time consuming, too much margin money for too little reward, even if you can manage them I am thinking. The risks also are greater than I want to take on.
Couple of good ideas came out of it for me. CLEAR THE ACCOUNT MONTHLY was a good one. I had been having vague thoughts of doing something similarly. Thing is I would have to compound to get where I want to be.
OPTION COACH AND ATTICUS both came up with some serious zingers that have me salivating and curious. Being proprietory, I guess I will have to do some research the hard way? ATTICUS with his teaser on trading VOLATILITY with the butterfly. Have done some simple amateurish ideas on this, but they didn´t work very well regularly. I kind of want a SETUP, a WIN situation if the entry setup is correct. I do not understand the BUTTEFLY SPREAD and as both Option Coach and Atticus have said it is a VOLATILITY environment, I am at a loss right now to understand the setup and play. The SHORT STRADDLES I think I will pass. I seem to remember experimenting with these last year and didn´t like them for some reason?
I like my current strategies. Two of them. Both directional. They are working well. I can probably make a living with them alone. The improvements will be in POSITION SIZE and CLEARING THE ACCOUNT MONTHLY, once I get it up to where I want it.
The CREDIT SPREADS are too time consuming, too much margin money for too little reward, even if you can manage them I am thinking. The risks also are greater than I want to take on.
Like most other high-leverage strategies, the DOTM credit spreads work until they don't . Ansbacher has been doing similar for many years. And he damn near got wiped out a few times.
Seems like after a few good years for these strats, everybody and their brother is doing them and selling books. Hell, I think these were even called the "house in the Hamptons trade", because they were so reliable. But then...something bad happens and the pundits go away for awhile...
I think most realize there is absolutely nothing new here. There may be a very slight positive bias to selling options (as can be seen by some of the newer index products) based on skew, interest rates, GDP, or whatever. But that's as far as it goes. Mav, riskarb, etc have shouted for years that there is no inherent edge. There can't be (look up put-call parity if you don't believe).
If Howard is successful at this, it's called trading, not edge. If he can truly say with certainty that a very bad overnight, and next few days, event will "only" wipeout 20%, then maybe he can survive. Hopefully his students can survive as well. I was trading SPX spreads during 9/11 and it was no fun...
Good trading to all.
Seems like after a few good years for these strats, everybody and their brother is doing them and selling books. Hell, I think these were even called the "house in the Hamptons trade", because they were so reliable. But then...something bad happens and the pundits go away for awhile...
I think most realize there is absolutely nothing new here. There may be a very slight positive bias to selling options (as can be seen by some of the newer index products) based on skew, interest rates, GDP, or whatever. But that's as far as it goes. Mav, riskarb, etc have shouted for years that there is no inherent edge. There can't be (look up put-call parity if you don't believe).
If Howard is successful at this, it's called trading, not edge. If he can truly say with certainty that a very bad overnight, and next few days, event will "only" wipeout 20%, then maybe he can survive. Hopefully his students can survive as well. I was trading SPX spreads during 9/11 and it was no fun...
Good trading to all.
Here's my view, if anyone cares. There is no setup, no magic bullet, no single systematically winning strategy. Spreads, flies, condors, whatever will work, if you buy them cheap/sell them expensive and will not work if you do the opposite. That's all there is to it. The difficult bit is determining what's cheap and what's expensive. Given this, my view on Howard's method should be obvious.
For the record, as Howard himself will attest, on T2W I have tried a number of times to get him to realize that he's not qualified to teach, but to no avail.
For the record, as Howard himself will attest, on T2W I have tried a number of times to get him to realize that he's not qualified to teach, but to no avail.
Well Atticus has put a bee in my bonnet. A quick perusal of the iron butterfly and the long butterfly and remembering the side comments.
If it is a trade to do short time with volatility the goal and not expiration. Then this quick brief look, says I need to concentrate on the Long Butterfly. Planning for a small directional move. In and out?
Am I getting hotter, or colder? Remember the old childrens game?
If it is a trade to do short time with volatility the goal and not expiration. Then this quick brief look, says I need to concentrate on the Long Butterfly. Planning for a small directional move. In and out?
Am I getting hotter, or colder? Remember the old childrens game?
I don't know what you're looking for, but I am pretty sure you're looking in the wrong place. Why don't you put together an Excel sheet that would allow you to see how any combination of option behaves under different scenarios (using simple BSM)? You'll be able to answer a lot of your questions. Then you can observe what scenarios occur in the mkt and thus get an understanding of things. That's what experience is all about, IMHO.
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