I have a loss of 1.400% by

[swoop[TR]]

Quote from lindq:

No, I don't trade short as there are more than enough opportunities for long profits. While I do appreciate that there is value in the short side for some trades, or traders, that does not include short calls, under any circumstances. Very limited profit for virtually unlimited risk. One bad trade can easily erase months of gains. You could not invent a worse trading scheme if you tried.

I don't trade longs. as there are more than enough opportunities for short profits. While I do appreciate that there is value in the long side for some trades, or traders, that does not include long calls, under any circumstances. Infinite profit once in a blue moon, for many many losses. One good trade can easily make up for months of losses buying expensive calls. You could not invent a worse trading scheme if you tried.

You chose your camp buddy, but it ain't black and white. Ever...if you're a real trader.

 

[heilbronner]

Quote from swoop[TR]:

I don't trade longs. as there are more than enough opportunities for short profits. While I do appreciate that there is value in the long side for some trades, or traders, that does not include long calls, under any circumstances. Infinite profit once in a blue moon, for many many losses. One good trade can easily make up for months of losses buying expensive calls. You could not invent a worse trading scheme if you tried.

You chose your camp buddy, but it ain't black and white. Ever...if you're a real trader.

Exactly.

 

[heilbronner]

Quote from Vienna:

of what? Of the original risk you took in the trade? How much is that? If your account is $100,000.00 and you risk .5% of that, or $500, you just lost 14 times that, or $7,000, or 7%. Quite a lot on one trade, but survivable I guess.

But if you have a $20,000 account, you lost 30% of that, and that way you will last about as long as if you go to a casino and bet 30% on a color.

What I mean is 1400% means nothing. How much did you risk?

One question: How to determine the risk in a trade when you are writing naked options??
IMHO hardly possible, theoretically risk is unlimited, isn't it?
When I realized the loss in that position it was about 0.9% of portfolio value.

 

[nononsense]

Quote from heilbronner:

One question: How to determine the risk in a trade when you are writing naked options??
IMHO hardly possible, theoretically risk is unlimited, isn't it?
When I realized the loss in that position it was about 0.9% of portfolio value.

Very simple: Don't write naked options if you don't know how to determine the risk in a trade.

 

[heilbronner]

Quote from nononsense:

Very simple: Don't write naked options if you don't know how to determine the risk in a trade.

Ok, maybe you can give me some hints how to calculate the risk involved by writing naked options. Thankful for any hint.

 

[optgamvol]

guys like you bring so much money to the table. The industry just needs to make sure the losers are kicked out and some neebies are welcomed in to provide the bacon.

One can quantify risk for any single financial instrument. Naked Calls Writing's risk can be clearly determined. Recommend to go back to Hull then to Cochane "Asset Pricing". I admit, risk cannot be determined down to the penny in some instruments but what are confidence intervals and risk parameters for: To set risk limits that hold true and maximize returns based on a given level of significance. History teaches tails are fatter in the ends of most distributions as extreme market developments are not appropriately accounted for. But with Short Calls the risk can be neatly described and limited.

I won't go into further detail but recommend going back to the books because some posts in here just cry out for more knowledge accumulation. I won't do the job of a teacher as my job is to take your money away that you put on the table by writing too cheap options and staying too long in the game instead of covering once the markets move in the adverse directions.

You don't know about your risk you ALREADY LOST FROM THE MOMENT YOU ENTERED YOUR TRADES. WONDERFUL!!!! I LOVE YOU FOR THAT ANE A FEW OTHERS, TOO.

 

[nononsense]

Quote from heilbronner:

Ok, maybe you can give me some hints how to calculate the risk involved by writing naked options. Thankful for any hint.

Sorry heilbronner, I can't and I didn't say I could. All I said is that I advised against writing naked options if you don't know about calculating risk.



nononsense

 

[heilbronner]

Quote from bbmat:

guys like you bring so much money to the table. The industry just needs to make sure the losers are kicked out and some neebies are welcomed in to provide the bacon.

One can quantify risk for any single financial instrument. Naked Calls Writing's risk can be clearly determined. Recommend to go back to Hull then to Cochane "Asset Pricing". I admit, risk cannot be determined down to the penny in some instruments but what are confidence intervals and risk parameters for: To set risk limits that hold true and maximize returns based on a given level of significance. History teaches tails are fatter in the ends of most distributions as extreme market developments are not appropriately accounted for. But with Short Calls the risk can be neatly described and limited.

I won't go into further detail but recommend going back to the books because some posts in here just cry out for more knowledge accumulation. I won't do the job of a teacher as my job is to take your money away that you put on the table by writing too cheap options and staying too long in the game instead of covering once the markets move in the adverse directions.

You don't know about your risk you ALREADY LOST FROM THE MOMENT YOU ENTERED YOUR TRADES. WONDERFUL!!!! I LOVE YOU FOR THAT ANE A FEW OTHERS, TOO.

So you just said nothing at all.
Hull is academic BS that never works. You can calculate and derive lots of formulas and end up with nothing for real trading. I have never heard that Hull made some real money in the option markets. Why is Hull not trading? Why has Hull no track record?
Those who can do, those who can't teach.

lol.

 

[heilbronner]

And I'm not talking about almighty Blair Hull. If he would write a book I would rush out to buy it.

Once again.

Those you can do, those who can't teach.

 

[optgamvol]

.......there are people out there for whom money is not the most important in the world. Look at Mark Rubinstein at UC Berkeley, Hull at U. Toronto. They never ventured out to trade and will never have this intention. Your dream is to trade others' dream is to teach and perform research. So, do not look down at those who chose a different path than yours.

Now, only because someone does not have market practice does not mean that such person cannot assess the risk of a financial instrument. In fact, almost all risk management systems are derived from theoretical models, many of those where only lightly, some not at all altered from their original concept. Look at BS-Option Pricing Model. Without it, the traders and market makers on the option floors would still stand around like monkeys not knowing what the approximate value of an option is. I am not saying this model has not been improved by market practitioners, but I am saying that the academic leaders in the field of risk and asset pricing know quite a lot more about the specifics than a trader.

Maybe a hot trader would not listen to the theorists as he/she is making money using his/her own methods (risk mgt included). However, you do not sound like a hot trader, as you do not seem to have a clue about risk at all. And I also highly doubt that you understand even 50% of the Hull book (although this is undergrad stuff). I think I can talk about the way models are used in fin. markets as I work in Fixed Income of a large I-Bank. I know where the models we use in Credit Derivatives are coming from and who developed them. For sure no Tudor Jones or the like. So, listen to the trading hot shots but don't look down on equally intelligent (in my opinion much more intelligent) people who developed what people like Blair Hull now work with. You may learn one or the other thing from such people.

Quote from heilbronner:

And I'm not talking about almighty Blair Hull. If he would write a book I would rush out to buy it.

Once again.

Those you can do, those who can't teach.