Independent Option trader

ironchef said:
I don't think you depend on the profits from your trades to put food on the table. :finger:

That said, I like your strategy.

Regards,
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No, I don't depend on my trading profits to put a roof over my head or food on the table. But they do provide the capital to take a nice trip or two every year without having to dip into the household budget. Plus it fun. I enjoy trading. I think that it's important to do what you love to do (and the money will follow.) I enjoy getting up in the morning, reviewing what the markets did the night before in Asia, what they doing currently in Europe and how that's driving the premarkets here in the U.S. Trading the /ES give me the opportunity to move into the markets before the equity markets open at 9:30am (EDT) and stay in the market, should I chose to do so, after the markets close (4:00pm (EDT.)

Best
 
JBM said:
So if you were trade independently and be conservative (no naked puts on the vix etc) what would be the best security to trade on. I saw the futures of the indexes allow for a tax "benefit", more liquidity, and more trading hours. What are the drawbacks for those future options?
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What is "best" depends wholly and solely on you. You have to do your homework, determine what vehicle(s) you would like to trade (stocks, options, futures, forex, etc.) and then come up with a written trading plan and trading strategy.

I like the /ES contract [1] because it trades almost around the clock, has good VOL and OI, lower margins on spreads, tight bid/ask spreads and, from a tax standpoint, is treated as a Section 1256 contract and subject to the tax benefits [2] the tax code affords us. Options do have some drawbacks which are explained in an Investopedia article. [3]

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[1]
http://www.cmegroup.com/trading/equ....html?optionProductId=138#optionProductId=138

[2]
Any gain or loss from a 1256 Contract is treated for tax purposes as 40% short-term gain and 60% long-term gain. Since most futures and futures options contracts are traded in a much shorter time frame than the 12 month rule required by the IRS for long term capital gains treatment, this creates an inherent tax disadvantage. Thus the 1256 Contract designation enhances the marketability based on the after-tax attractiveness of these products. The reason for the implementation of this tax code was due to the fact that, in days gone by, traders were hedging their short term futures contracts (going long and short at the same time) in order to transition to the next tax year without paying the short-term capital gains tax on these positions and effectively making these positions qualify for long-term tax treatment.

[3]
http://www.investopedia.com/exam-guide/cfp/characteristics/cfp30.asp
 
vanzandt said:
Yeah, part D is for Medicare.... speaking of which....

... what do the FAR's say the mandatory retirement age is these days? You sure you're not flying from DC to Tokyo in a sim?
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No, not in a sim or as PIC anymore. But am still doing the IAD NRT (and JFK ORY (and then on to TLS)) route either in the jump seat or in business class depending on the reason I'm on the flight. As you know, some people who retire return as paid employees in a consulting role (e.g. training, safety, human factors, CRM, an EASA role, etc.) In the past few years though dealing with FAR Sections 121.547 and 121.583 and the CASS system has become a big pain in the butt. I've been thinking about just trading E-mini futures options (ES, NQ, YM, etc.) and leaving the aviation related stuff behind.

Now I'm on an OpSpecs rewrite study group. Not sure why the FAA wants to do that though. You do know about OpSpecs I presume.

Best
 
rick cremer said:
What is "best" depends wholly and solely on you. You have to do your homework, determine what vehicle(s) you would like to trade (stocks, options, futures, forex, etc.) and then come up with a written trading plan and trading strategy.

I like the /ES contract [1] because it trades almost around the clock, has good VOL and OI, lower margins on spreads, tight bid/ask spreads and, from a tax standpoint, is treated as a Section 1256 contract and subject to the tax benefits [2] the tax code affords us. Options do have some drawbacks which are explained in an Investopedia article. [3]
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I would echo this. I trade futures options on ES as well - nearly exclusively spreads. Most brokers have platforms that allow for spread entries, getting you good fills and savings tons in legging risk. With ES, you now get two or three expirations per week. Getting spread fills for 100 contracts is nearly as easy as getting filled for 5 or 10 as the market is plenty deep. And the 1256 treatment.

Above all else, the ES is naturally diversified as the SP500 gets "updated" seamlessly as companies get added or drop off. Years ago I traded options on individual equities and it was a lot harder for me personally. I had a few over the years that opened 50% down from the day before after some really bad news. That wasn't for me, but again - trading is intensely personal and very individualized - you need to find a profitable strategy that fits your personality.
 
IAD to NRT? United? I had the joy of business on a 747 Upper Deck. One of my best flights...only bested by ANA on the way back.
 
atrp2biz said:
What hogwash. I would welcome early assignment--eliminates extrinsic value.

Are covered calls ok in your opinion?
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LOL- covered calls are the same as short puts- hope you don't get wiped out like every other smartass who has thought they could do the same, in the entire histopry of options trading. You're not 'Karen the super trader' are you?
 
Windlesham1 said:
LOL- covered calls are the same as short puts
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No shit. That's why I asked the question tongue in cheek. I overestimated your abilities to see through the sarcasm.

By your logic on never being short naked puts, you would never be straight long the underlying.
 
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