Ima go Broke Trading Long Options...Which Strategies to Focus On?

zghorner said:
open to being short as long as losses are capped/hedged with a long leg.
More...
For longs (low prob with high reward), I would recommend watching these videos. It's based on Unusual Options Activity with a twist. https://www.youtube.com/c/OptionsGeek/videos

For shorts(high prob with low reward), assuming you don't want to do the Wheel, I would take a look at what Tasty Trades does - sell premium when vol spikes to high levels.

Basically, you need to find some edge if playing long, and be selective(patient) when playing short. The combination of the two should provide steady growth with possibility of occasional home runs. Just my $0.02.
 
caroy said:
As a fellow traveler on the path to profitability I think you're on to something with the line about capping risk. I think risk management is one of the largest keys to successful trading. You find your edge. Many of them out there. The style of trading needs to mesh with your personality. I spent a few years doing the tasty trade method of selling premium iron condors and the like but I found it like watching paint dry and only to see a large 2SD move wipe out months of profit. It works for some and hats off to Sosnoff and the crew - not my style. I've gravitated towards playing long expiration day straddles in /ES. Three expiration days a week. Go long when they trade for under 20 usually around 11 CST and play a move. Trick is when to take profits. I'm doing this with 1% of my account value so I know worst case I lose 1% presuming it actually pins at the strike at expiration which is unlikely. The other method is one day expiration plays with butterflies. Put them on Thursday out Friday. I risk 2.5% of my account. My edge is tied to pinning with the OI when one strike has a significant difference in OI than the others. Once again a butterfly can only go to zero but you only need a couple of them to be successful as they often double triple in value in one day offsetting the losers. Ones that appear to be losing i take off the short options and leave the longs on to let it have a chance to move my way. My account is flat every Friday I wire a third of the profits into checking, a third to savings for taxes, and leave a third to grow my trading account. I hold no positions overnight other than the flies thurs to friday. I like going out for dinner and drinks with friends and not looking at my phone to see what's happening as I have nothing on. If they are mostly call flies I add a hedge with something long the vxx sometime a fly sometime a bull spread. I've gravitated to these as I like to sleep at night. I know the worst case scenario. I blew out an account (large one) years ago with a naked wheat option. I don't do that anymore regardless of how juicy the premium is. Find your edge, define your risk - plan the trades and trade the plan. For me capital preservation is number one, risk management two, strategy with edge three.
More...
great reply thank you for posting that.

I tend to gravitate away from day trades...because i suck at it lol. 95% of the time i place a day trade i lose money...I love the action, but I lose money too frequently and avoid unless i see something i just cant stand passing on.

I usually buy 3m-1y options to give my theory some time to mature...look for big swings to exit but most of the time theta kills me lol.

"trick is when to take profits" truer words have never been spoken at least concerning my mistakes...I recently let a $100k profit evaporate down to roughly $5k before exiting...sickening man.
 
qlai said:
For longs (low prob with high reward), I would recommend watching these videos. It's based on Unusual Options Activity with a twist. https://www.youtube.com/c/OptionsGeek/videos

For shorts(high prob with low reward), assuming you don't want to do the Wheel, I would take a look at what Tasty Trades does - sell premium when vol spikes to high levels.

Basically, you need to find some edge if playing long, and be selective(patient) when playing short. The combination of the two should provide steady growth with possibility of occasional home runs. Just my $0.02.
More...
thank you.

what style of trading do you do? not looking to mimic, just curious.
 
zghorner said:
great reply thank you for posting that.


"trick is when to take profits" truer words have never been spoken at least concerning my mistakes...I recently let a $100k profit evaporate down to roughly $5k before exiting...sickening man.
More...

Man I'd puke. I puked when I blew up an account. Had a friend had a good philosophy with his crypto stuff. Once his account doubled took out his original investment put it elsewhere now it takes the emotional stress off of trading going forward with the winnings because it he knows bitcoin goes to zero he still has his initial investment safe somewhere else and it's all risk capital. I don't know something to think about.
 
caroy said:
Man I'd puke. I puked when I blew up an account. Had a friend had a good philosophy with his crypto stuff. Once his account doubled took out his original investment put it elsewhere now it takes the emotional stress off of trading going forward with the winnings because it he knows bitcoin goes to zero he still has his initial investment safe somewhere else and it's all risk capital. I don't know something to think about.
More...
I have two trading journals now from different time periods with big huge words written in bold that says "SELL AT PEAK EXCITEMENT!!!"

twice now i have done this...the first time I let a $50k gain evaporate to zero then turn into a $20k loss (last spring holding puts refusing to believe the V-shaped recovery that was taking place before my eyes)...then the most recent fiasco with meme stocks I went in with options realizing the bullishness but held too long...and let that $100k dissolve to almost nothing.

Im getting better I guess...if going from horrendous to terrible is improvement.
 
zghorner said:
what style of trading do you do? not looking to mimic, just curious.
More...
I started with swing trading, then naturally moved to day trading. Now I have added options directionally only. I am subscribing to the OptionsGeek service (but you don’t have to, he explains his method). I also run a variation of the Wheel (which I treat as swing trading with options).
 
Being over leveraged is the main cost you pay not margin interest. Hence it is irrelevant whether you buy options to avoid paying margin interest or whether you buy stocks and borrow capital. The cost of margin is immaterial in the context of being overinvested and not having an edge.

If the main reason why your account is bleeding is being overleveraged then you need to reduce size. If you can't fund properly sized positions then you have no business trading (yet) unless you want to lose even more. It's really that simple.

zghorner said:
up to this point...to leverage my capital without using margin.

now...what "i am trying to achieve"...is to consistently grow my account.

trading options will provide a way to put the odds of profit in my favor...I know it can at least I just have to put in the work.

im also not trying to delude anyone away from the fact that I have some fundamental issues that need to be addressed as well...learning all about straddles or butterflies wont fix the fact that I overtrade & lack Patience.
More...
 
zghorner said:
I have two trading journals now from different time periods with big huge words written in bold that says "SELL AT PEAK EXCITEMENT!!!"

twice now i have done this...the first time I let a $50k gain evaporate to zero then turn into a $20k loss (last spring holding puts refusing to believe the V-shaped recovery that was taking place before my eyes)...then the most recent fiasco with meme stocks I went in with options realizing the bullishness but held too long...and let that $100k dissolve to almost nothing.

Im getting better I guess...if going from horrendous to terrible is improvement.
More...
I will throw this out there as an idea. My father made a living trading commodities for large grain houses and in the end for his own accounts managing some private money for a few years. He always had a trading partner. They traded different commodity groups. One the softs one the grains energies etc. They had a trading plan and came up with what seemed to be a viable solution. A different trader was in charge of the exits. So if my dad traded the grain portfolios putting on positions in the soy complex, corn, wheat, they had pre-determined exits. It was then turned over to one of the other partners to manage the exits. Took the emotion out of it. There is something I feel that in trading alone is dangerous and empowering at the same time. But I default to the position that we are social creatures and trading with partners is a better idea if doable.
 
You must log in or register to reply here.
Back
Top