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Is it possible to make a modest living w/options?
- Thread starter wartrace
- Start date
My apologies. Of course you're the OP. Let me restate my comment correctly:I AM the OP. I was trying to clarify WHY I stated a 3% limit on each trade which is to avoid one loss wiping out my entire account.
>> You're off on a tangent. The OTHER PERSON was discussing the unlikely possibility of achieving a return of 4% per month not the money management/diversification of risking no more than 3 pct per trade. <<
Quote from 4444CJones4444:
Let's agree to disagree on this one, Mark. Understanding the concept of options may be simple, but consistently profiting from options is something altogether different.
I don't disagree with the statement above.
I believe an option is a simple concept. We all know how to use a grocery store rain check.
Yes, profiting is a different matter. And that's the part that's not so easy. I never said it was.
Please don't get me wrong. Until I invested the time to learn the options market, my annual returns were average at best. And, for me, there is no going back. Without options I would soon lose interest in ALL markets, not just equities. When asked, I always tell people it's hard, but once they spend the time to learn the craft, they will be extremely happy that they did and they will never look at the markets in the same way.
I agree again.
Bottom line: I am going to have to disagree with you that we are going to have to disagree.
We agree
Mark
Quote from dagnyt:
Options are as simple tools and almost anyone can understand them.
A rain check at a grocery store is a call option.
But - the strategies can be complex. Risk management is difficult for most to understand. You perpetuate the misconception that options are 'complex.'
Mark
This is an excellent and simple explanation of a long call option. Actually, a rain check is a long call without any expiration period..so there is no time decay. You can even sell this raincheck for profit. To hedge it, you can sell the product--if you own it. Strategies are complex if you do not understand basic option theory-mostly the greeks. There are strategies that are more successful than others long-term, but one will find that volatility will be the determining factor for most strategy choices.
Quote from wartrace:
Unless I am mistaken, everybody who trades options or ANY security started out as a rookie. It isn't genetic, is it?
LOL. Thanks for saying this, wartrace. I would like to frame it. There is no shortage of people on this forum telling newbies to give up before they start. And none us emerged from the womb knowing how to trade.
Is it war trace or wart race?
WarTrace,
In response to your opening post:
After honing your options trading skills, you should be able to earn consistant profits in a couple of years. This assumes that you don't take unnecessarily large risks on any given trade, and that you have a trade plan before entering each position.
Credit spreads are OK, but so are Debit Spreads. My experience has been that different market conditions spawn clusters of strategy opportunities.
As an example, in January and February I put on 18 Put Ratio Spreads with 30 to 45 days to expiration because promising opportunities showed up on my radar screen. I closed all of these positions before expire... 15 at a profit and 3 at a loss.
But market conditions have changed and it is now more difficult to find attractive Put Ratio Spread opportunities (at least for me).
But there are always opportunities with Condors (my least favorite), Vertical Spreads, Butterfly's & Calendars (Calendars are so boring that they make my eyes glaze over).
To get you off on the right foot, here is the best advice I have for you:
Dan Sheridan puts on 5 or 6 one day "Real World Trading" seminars in conjunction with the CBOE. Find one that is close to you and attend. When I went three years ago, Dan covered specific strategies including Butterflys, Condors, Calendars and Double Diagonals. Dan provides handouts with specific rules on timing, entry, adjustment and exit of the strategies he covers.
Dan will expose you to the trading disciplines needed for success.
I liked his approach so well that after three years I plan to attend again whenever he is "in my neighborhood".
I suspect that Dan has made some revisions to the seminar to take into account market action of the past year.
Good luck.
Mech
In response to your opening post:
After honing your options trading skills, you should be able to earn consistant profits in a couple of years. This assumes that you don't take unnecessarily large risks on any given trade, and that you have a trade plan before entering each position.
Credit spreads are OK, but so are Debit Spreads. My experience has been that different market conditions spawn clusters of strategy opportunities.
As an example, in January and February I put on 18 Put Ratio Spreads with 30 to 45 days to expiration because promising opportunities showed up on my radar screen. I closed all of these positions before expire... 15 at a profit and 3 at a loss.
But market conditions have changed and it is now more difficult to find attractive Put Ratio Spread opportunities (at least for me).
But there are always opportunities with Condors (my least favorite), Vertical Spreads, Butterfly's & Calendars (Calendars are so boring that they make my eyes glaze over).
To get you off on the right foot, here is the best advice I have for you:
Dan Sheridan puts on 5 or 6 one day "Real World Trading" seminars in conjunction with the CBOE. Find one that is close to you and attend. When I went three years ago, Dan covered specific strategies including Butterflys, Condors, Calendars and Double Diagonals. Dan provides handouts with specific rules on timing, entry, adjustment and exit of the strategies he covers.
Dan will expose you to the trading disciplines needed for success.
I liked his approach so well that after three years I plan to attend again whenever he is "in my neighborhood".
I suspect that Dan has made some revisions to the seminar to take into account market action of the past year.
Good luck.
Mech
Quote from drcha:
LOL. Thanks for saying this, wartrace. I would like to frame it. There is no shortage of people on this forum telling newbies to give up before they start. And none us emerged from the womb knowing how to trade.
Is it war trace or wart race?
It is the name of the nearby town;
http://www.wartracechamber.org/history.html
It's where strolling Jim, grand champion Tennessee walking horse lived. The towns name is all one word.
I think that your interpetation of what you read here is incorrect. There are very few people advising noobs to "give up before they start." What I see is an awful lot of people, myself included, who have learned that this isn't an easy road to riches and are advising noobs that they would be better served by learning the game first and starting slowly. Otherwise, a hefty tuition will be paid. There's an old cliche' that applies:Quote from drcha:
There is no shortage of people on this forum telling newbies to give up before they start. And none us emerged from the womb knowing how to trade.
Good judgement comes from experience and experience comes from bad judgement
Despite the RFT's of ET, gawd I wish I had an ET or similar as a sounding board 25+ years ago when I first read the financial term "option."