Long time commodity options trader looking for some help/advice.

[rgjujitsu]

So I'm a dinosaur, still trading on paper sheets in a pit and never have executed a trade on a computer. I had many successful years but for the last three i haven't made squat and really after expenses have lost. It baffles my mind why people make the trades they do now. I thought the idea behind being a market maker was to get paid to absorb risk. Now I have started to do some analysis with the bloomberg machine and following open interest and different things. But really unless you're collecting an edge how do you make money?
I see a lot of these guys from big groups come in and the thing they love is to do size small delta spreads for very little to no theoretical edge. Great, trade shitty spreads that won't really lose money but certainly won't buy you much more than busch light.
Ok sorry rant over and I probably sound like a moron but the reality is i have a family to support and i could use some career advice. I have been trading options for the same prop firm for 10 years in the same pit. I made them a lot of money in that time and paid a ton of inflated expenses. I'm towards the end of my savings and could use some direction. Where do i go from here? i really don't want to go back into restaurants(which is where i worked before becoming a floor trader) and start climbing from 60 or 70k again to scrape my way to 100 while working crazy hours. I feel like all of my trading experience has some value, but it seems firms only want quant guys now. thanks for any real advice.

 

[TraDaToR]

You need to post this in the options forum where there are numerous true option professionals. I am not sure they read that part of the forum. They should have some interesting comments for you.

 

[trader198]

when I read your story, I know you are broken.

stop trading immediately.

the only way to trade successfully is DO IT.

options are best suitable for small retail traders,in my view.

small retail traders do not have sufficent capital, or undercapialiized.

so they need LEVERAGE, the more the better.

but talk about leverage, you need strong trading skills. sadly,most retail traders do not have those trading skills, either they lack of experience,proper training,or they are not suitable.

trading skills include: money managment,bussiness dsicipline, cost/loss control, market timimg, opportunity recognization ability, some special knowlegde in the area you are focusing on.

if you trade stocks with no leverage, trading skills are not needed, what you need do is follow common sense.

 

[rwk]

I think the only reason pits still exist is that there are a lot of people who have equity tied up there. Electronic trading is just so much more efficient that pits have no economic justification. I never traded on the floor and often wished I had, but electronic trading fits my temperament better anyway.

It's hard to say whether the OP's experience as a floor trader will carry over to electronic trading. A few seem to do well, but many (perhaps most) do not. Floor trading works well for those who are big, loud, and aggressive. Electronic trading rewards being quiet, thoughtful, and creative.

I am not sure I agree that being a market maker was to get paid to absorb risk. Market professionals, both market makers and fund managers, tend to be highly risk-averse. What they do is more like arbitrage, which is pretty low-risk when done right.

I think options are a good choice for the OP, given his experience and capital base. But I recommend picking just one strategy (of the many) that is either market neutral or has small losses when the direction is wrong. Do that trade repeatedly, then branch out from there.

What has worked best for me is focusing my attention and going for consistency over time. Trying for big wins, predicting direction, and using a variety of strategies have not worked, and I do this for a living.

 

[emg]

Quote from rgjujitsu:

So I'm a dinosaur, still trading on paper sheets in a pit and never have executed a trade on a computer. I had many successful years but for the last three i haven't made squat and really after expenses have lost. It baffles my mind why people make the trades they do now. I thought the idea behind being a market maker was to get paid to absorb risk. Now I have started to do some analysis with the bloomberg machine and following open interest and different things. But really unless you're collecting an edge how do you make money?
I see a lot of these guys from big groups come in and the thing they love is to do size small delta spreads for very little to no theoretical edge. Great, trade shitty spreads that won't really lose money but certainly won't buy you much more than busch light.
Ok sorry rant over and I probably sound like a moron but the reality is i have a family to support and i could use some career advice. I have been trading options for the same prop firm for 10 years in the same pit. I made them a lot of money in that time and paid a ton of inflated expenses. I'm towards the end of my savings and could use some direction. Where do i go from here? i really don't want to go back into restaurants(which is where i worked before becoming a floor trader) and start climbing from 60 or 70k again to scrape my way to 100 while working crazy hours. I feel like all of my trading experience has some value, but it seems firms only want quant guys now. thanks for any real advice.

where is your badge?

 

[rgjujitsu]

Thanks for taking the time to reply everyone. I'm not broken, just looking for a different way to skin the cat. Any more ideas/thoughts would be appreciated.