My Nerves Are Shot

Quote from sle:

Ok, now that we mentioned schooling, let me make a couple points.

First, lets clarify the actual trading style. You are not really selling volatility per se, you are trading the terminal distribution. My understanding is that your selection is based on the following criteria
(a) proportion of the price of the spread to the width of the spread
(b) probability of touching the higher stirke based on some measure (you have not explained how it works just yet)

If you are using the implied volatility for the POT calculations, then you are creating a degenerate system - ratio of premium to the width of the spread is the indicator of probability of touching. If you are using probability of touching based on some other parameters (e.g. historical volatility, historical distributions etc), it would be a valid approach to capture alpha, albeit a very risky one.
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How PoT works: An internet search on "Probability of Touching" + ThinkOrSwim will find at least three PDFs in ToS's library. Tom Preston is the creator.

Degenerate system?: Since PoT is proprietary, I cannot state with certainty what its inputs are. However, for your degenerate hypothesis to be true, the premium/spread ratio should be nearly constant. It does not.

Risky: Well covered here and elsewhere.
 
Quote from Arnie Guitar:

No, just one third of my available funds.
I'm a big chicken.
Doesn't mean I won't get nervous if we break through 1250 by Thursday...
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For me, 1/3 of available funds in one trade is very scary.
 
"Probability of touching" sounds like something my buddies and I used to rate girls in high school.

Seriously, I think you thread jackers are quite rude and wish you'd get your own thread.
 
Quote from HowardCohodas:

For me, 1/3 of available funds in one trade is very scary.
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Really?

I guess that's why they make more than one car in more than one color.

Howard, no offense, but after reading your posts and threads I must say I'm not impressed, and would not be swayed in any of my investing decisions by you. You're probably a nice fellow, but your self opinion of your trading is a little too...well let's say you have no lack of ego.

I would think such a large consensus of opposing views to your posts would lead to a little introspection and reflection. Do you think everyone is wrong?

Now please, keep your squabbling in your own thread.
 
Quote from HowardCohodas:
However, for your degenerate hypothesis to be true, the premium/spread ratio should be nearly constant. It does not.
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Not true. Ratio of the premium to the spread is the risk-neutral skew-adjusted probabilty of the stock expiring beyond the lower strike. Obviously, that is going to vary depending on the vol and on the skew. The degenrate part comes from the interplay of the two components of your selection - in essense, you are using the same market-inplied probability of the asset ending below a given strike twice.

PS. a simple search gives me:
"Tom Preston: The probability numbers themselves are based on formulas that use the current stock price, the target or strike price, interest rates, days to expiration and volatility. They assume that stock and index returns are normally distributed."
 
Quote from Arnie Guitar:

Really?

I guess that's why they make more than one car in more than one color.

Howard, no offense, but after reading your posts and threads I must say I'm not impressed, and would not be swayed in any of my investing decisions by you. You're probably a nice fellow, but your self opinion of your trading is a little too...well let's say you have no lack of ego.

I would think such a large consensus of opposing views to your posts would lead to a little introspection and reflection. Do you think everyone is wrong?

Now please, keep your squabbling in your own thread.
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Um, let’s see, you think Howard is egotistical and everyone has told him that he is barking up the wrong tree, but then you do basically the same trades as him and are so egotistical that you think anyone who bothers to spend many years learning the intricacies of options are stupid because it is all just gambling anyway. Brilliant.

The only thing of interest in this thread are the adults debating a few points that you admit are over your head.
 
Quote from Arnie Guitar:

Really?

I guess that's why they make more than one car in more than one color.

Howard, no offense, but after reading your posts and threads I must say I'm not impressed, and would not be swayed in any of my investing decisions by you. You're probably a nice fellow, but your self opinion of your trading is a little too...well let's say you have no lack of ego.

I would think such a large consensus of opposing views to your posts would lead to a little introspection and reflection. Do you think everyone is wrong?

Now please, keep your squabbling in your own thread.
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A large consensus on only two of the six forums in which I discuss my trading. And by the same people on both. Fancy that.

Since I did not start the squabble here and asked that it be removed to another thread several times, your remarks seem rude to me.

With my "discredited methods", my account (devoted exclusively to credit spreads) balance is up 9.3% since the beginning of the year and that includes a 21% draw down along the way. The "experts" (in the two forums I mentioned) predict I will wipe out. We'll see.

My ego?. I have learned a great deal from those who critique my strategy. I have made modification based on some of this feedback. That I defend myself aggressively when I believe that what I do has been misrepresented you seem to find offensive. I freely admit (see remarks to MG) where there are differences of opinion. Posters are entitled to their own opinions but not their own "facts."

Don't take trading advice from me. However, were I you, I would explore the risk of ruin commentary and see if 1/3 still seems a good idea.
 
Quote from opt789:

The only thing of interest in this thread are the adults debating a few points that you admit are over your head.
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My main point is that Howard thinks he runs with the big dogs, and everything I've read by him or in response to him tells me he's about at the same level of expertise I am, at best. He's always refuted, and argues with everyone.

I'm aware of, and admit my ignorance.



So, you're related to him? :p
 
Now he's bickering with me.


Howard, if you're scared being short the 1230's with the underlying being at 1282 with 3 days to go...


Well, that kinda says it all.
 
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