My Conclusions

[daddy'sboy]

Mayo 367,
Excellent post, couldn't agree more. As you said, the so called "negative" posts indicate that the individual concerned doesn't have a good grasp of what option trading (or any trading for that matter) is about.
daddy's boy

 

[luh3417]

Quote from daddy'sboy:

Mayo 367,
Excellent post, couldn't agree more. As you said, the so called "negative" posts indicate that the individual concerned doesn't have a good grasp of what option trading (or any trading for that matter) is about.
daddy's boy

I'm glad this post is interesting to people, and I and many others are here to learn. I can also agree philosophicaly with some of the philosphical criticism raised.

NTL, I have made a number of specific points in my initial and subsequent postings. Nobody seems to contest them, and nobody seems to offer any specific technical points of their own, or share much of their own experience. It seems like a bunch of hand waving. I still can't help but wonder, where's the beef, in this thread? I admit that I come off a bit negative, but at least I bring some beef to the sandwich. Since all the members of the optimist club above have such a commanding "grasp of what trading is about" would it be very hard for you to share your pearls of wisdom with us? Or address the technical issues? All I've really heard so far is "stay positive".

What part of "read Baird's Option Market Making and learn about how market makers operate" is negative? Do you challenge the point that they get inside fills all day long and we never do? Do you disagree that it is a zero-sum game? In your positive world, do you think the market maker is your friend?

Or, someone please tell us you've been making six-figures a year for 10 years trading options at retail. That would give us some real optimism. Tell us if you balance your greeks. Tell me you think options liquidity is just peachy.

Simply saying, oh, ignore that negative person, he's trying to confuse us with facts, doesn't cut any ice.

Yes, I'll continue to trade options, but only when I have a clear edge, and probably merely by going long a put or a call on a stock I admit that I'm speculating on.

 

[luh3417]

Quote from mayo367:

The "big boys" that you refer to Luh3417 is a myth.
The so called "big boy network" is often alluded to by traders that are usually either struggling, experiencing poor returns, reaching for that something extra that appears to be within reach.... but remains elusive, etc.. Think rationally for a moment, these so called "big boy networks" are also humans, have access to the same education, software, they experience the same problems we do, etc.. Oh, let me guess, here is what some traders might suggest to you, they belong to covert societies, with advanced academic degress & thus they're more capable than 'us' the retail trader, hogwash!!

Some of your points are well taken, philosophically, but my specific point is that options market makers get inside fills all day long, get them quickly, listen in on the futures pit (according to Baird) and balance their greeks. I'm willing to ignore the fact that they're all Masons, but all the optimism in the world isn't going to get very far unless we confont those specific advantages of theirs.

And folks, is it really necessary to quote the entire text of the preceding post when you reply to it?

 

[IV_Trader]

luh , did your ever considered just stop trading options ? Its not about MM , spread , greeks or other people's results. Its about your state of mind .
Reread your last two post and you may agree with me.

 

[smitz]

Quote from zdreg:

i am very much use to penny spreads in equities. how does one handle typical option spreads which are usually a minimum of 10 per cent?

based on personal experience i seriously feel trend following strategy,CAN be quite
succesfull, and the performance data from http://www.mytradingsystem.net
supports my claims, but their implementation require great trading skills

 

[daddy'sboy]

Quote from luh3417:

I

"I read a few academic books about options and its quite interesting. But trading them retail, I found that I would never get an inside fill (inside the bid/ask) and it was hard to get my order filled even at the current bid or ask. For every underlying, there are often dozens of derived options, thus they're not very liquid. Further, the idea of putting on complex positions described in the book (strangles, condors, etc.) just seemed overwhelming. I never tried it, but I felt certain I'd get hurt while struggling against the illiquidity, to leg in or leg out of a synthetic position. It often felt like other people were cutting in line ahead of me."

Ok, it seems your main source of grief, from what I can gather reading your long post, is the difficulty of getting filled,and you seem to have the firm belief that the retail trader is at a massive disadvantage. This grievance is for simple long options as well as "complex" spreads like flies, condors etc.. The wide bid/ask spreads. This bid/ask issue is a problem if you are trading illiquid options and I'm sure you know which ones I'm talking about (ok, fotm or ditm or "small" companies). However, there are lots of liquid ones, including indices, that don't suffer that dilemma. You asked for specifics, so I'll tell you what I do to get fills:
1. I always place a limit order
2. I pick the middle of the bid/ask spread
3. I wait to see if I get filled, say 5 to 10 minutes
4. I adjust my bid/ask a little if no fill
example: bid/ask 1.20/1.40, mine: 1.30 bid, if no fill I'll move it to 1.35. Result: fill, usually.
5. I use same rules for placing spread orders and generally I don't leg in but I do adjust positions (which sometimes ends up as a form of legging), e.g. turn a simple long call into a bull call spread or adjust a short vertical to an iron condor, I'm sure you get my drift.
My losses have NEVER been because I couldn't get a decent fill, but are always related to being wrong in relation to one, or more, of the greeks or deviating from my trading plan.
Also, I think it's pretty common knowledge that trading is a zero sum game - so what?
And noone would disagree that it's a negative expectancy event - again, so what?
You can search this forum for a detailed discussion of zero sum/ negative expectancy ... .

"In your positive world, do you think the market maker is your friend?"
I don't need MM friends, I only need a relatively liquid market and decent order execution platform.

Quote from luh3417: "Since all the members of the optimist club above have such a commanding "grasp of what trading is about" would it be very hard for you to share your pearls of wisdom with us? Or address the technical issues? All I've really heard so far is "stay positive"."

My earlier post has nothing to do with optimism or pessimism. So, here is my pearl of wisdom for you: Trading is not optimistic nor is it pessimistic, it just is .
All the best.
daddy's boy

 

[Cache Landing]

Quote from mayo367:

The "big boys" that you refer to Luh3417 is a myth.
The so called "big boy network" is often alluded to by traders that are usually either struggling, experiencing poor returns, reaching for that something extra that appears to be within reach.... but remains elusive, etc.. Think rationally for a moment, these so called "big boy networks" are also humans, have access to the same education, software, they experience the same problems we do, etc.. Oh, let me guess, here is what some traders might suggest to you, they belong to covert societies, with advanced academic degress & thus they're more capable than 'us' the retail trader, hogwash!!

A competent retail trader will never bow down to a so called "dynamic force" that supposedly rules with an iron fist while the retail trader must suffer, because it does not exist, a competent trader accepts responsibility & blames no one. While a struggling trader inevitably arrives @ these far flung theories as the reason for falling short, not achieving a desired expectation. In adhering to these theories, a trader is providing a form of consolation that appeases his own incompetence. In reading your commets near the bottom, ahh, just as I thought, your post is a well crafted cry for help.

Well, you have taken an admirable step by posting your comments in this forum & seeking help. It's really a simple matter, either you need to educate yourself more, hook up with a mentor that knows his craft well perhaps. Remember, profitability for many is earned with experience & experience cannot be wished for, it must be earned. You may have to work at it a little more.

One more thing, don't believe those traders that tell you that the odds are stacked against you, that is a myth as well, if you develop a winning strategy, the odds are never against you, struggling traders always find excuses on why the markets are bigger & stronger than me or you. The world is filled with those that say "it can't be done," or "only the big boys win in the end." These people are usually miserable & cannot stand to be wrong, always with an agenda up their sleeve, always having to prove something to someone. Only to tell you later: "I told you so." Do not waste your precious time with these individuals.

I completely agree!

Several people on this thread have demonstrated a severe lack of understanding and experience regarding options. As hard as I've tried I cannot firgure out the statistical disadvantage that many people speak of. Most arguements have left out important details. Anyway, IMO the "big boys" only significant advantage over the reatil trader is in comissions. They aren't necessarily better traders. They are simply better/more experienced than the losing retail traders. Thus, if you're a losing retail trader, try to develope more skill and gain more experience. Don't lean on some weak excuse as to how the game is rigged against you.

 

[scriabinop23]

Quote from Cache Landing:

I completely agree!

Several people on this thread have demonstrated a severe lack of understanding and experience regarding options. As hard as I've tried I cannot firgure out the statistical disadvantage that many people speak of. Most arguements have left out important details. Anyway, IMO the "big boys" only significant advantage over the reatil trader is in comissions. They aren't necessarily better traders. They are simply better/more experienced than the losing retail traders. Thus, if you're a losing retail trader, try to develope more skill and gain more experience. Don't lean on some weak excuse as to how the game is rigged against you.

Fundamentally, if the underlying moves in the right direction or to the right amount, and vega and theta don't fight you, you're in the black. Nothing to it.

But there are still a few rules to follow, tricks of the trade from experience, to get around losing some extra to the market makers. I think thats the general point here.

The game can definitely seem rigged if you're foolish enough to make market orders at the wrong times (especially when buying or selling cheap otm options).

 

[IV_Trader]

Quote from Cache Landing:

I completely agree!

Several people on this thread have demonstrated a severe lack of understanding and experience regarding options. As hard as I've tried I cannot firgure out the statistical disadvantage that many people speak of. Most arguements have left out important details. Anyway, IMO the "big boys" only significant advantage over the reatil trader is in comissions. They aren't necessarily better traders. They are simply better/more experienced than the losing retail traders. Thus, if you're a losing retail trader, try to develope more skill and gain more experience. Don't lean on some weak excuse as to how the game is rigged against you.

u tell them , CL...
I have a feeling that this thread is about to turn to another "Zero Sum game " bs , lol

 

[luh3417]

Quote from IV_Trader:

luh , did your ever considered just stop trading options ? Its not about MM , spread , greeks or other people's results. Its about your state of mind .
Reread your last two post and you may agree with me.

Actually I haven't traded options for 2 months now, except for that INTC call I picked up a couple days ago.

I wish people wouldn't blow this out of proportion; when I talk about some "axis-of-evil" we're trading against, I mean specifically the market makers and the banks. I don't know why people have to ridicule this, or me, they're qute real, whether or not they're all Masons. One specific point is that they have better spreads, but let's let that go. The other issue though is that they have better execution, and therefore can use this to balance their greeks.

Everyone here is so proud of their understanding of greeks. But nobody admits that they don't balance them out daily or weekly. Why not? Because retail traders get poorer execution and this helps make it too difficult and expensive.

Or maybe you don't do it because you always pick underlyings that move in your direction. If so, my hats off to you. If not, admit to us that you are speculating, pure and simple, and please post back when you blow up. Hear me now, believe me later. Or comfort yourselves and stay positive by ridiculing me and ignoring the substance of my questions and arguments.