Quote from iceman1:
with all due respect-- I'm sure you have more insight than 90% of the ET.com members - including (with all due respect) "cnms"! Personally I like your LEAPS strategy.
...
--- lots of critics and "ANALysts" - but few traders-- and few input as to strategies that can and will work when utilized by experienced and nimble traders!
You
can't be sure, I'm sorry. I used
hankster's strategy in the past, and unfortunately for me it is the strategy I lost the most money with. I'd like for others to learn from my experience without repeating it.
Regarding
strategies that can and will work: there is no strategy that works over all the market conditions. More, all options strategies start with a negative expectancy due to slippage and commissions. This doesn't mean you shouldn't trade options, it just means that you can't use only one strategy over all the market conditions and issues. I disagree with anybody that claims that you can use sytematically the same options strategy and constantly make money of it. Obviously I may be wrong, but I feel it is my duty to share my opinion with those that think otherwise, hoping that they'll not repeat mistakes that they can avoid.
Currently I'm trading only front or back month slightly in the money straight calls and puts, or vertical spreads (long itm / short otm, when iv is higher). They work well for me, and they are the strategies I recommend to anybody who asks.
But independently of the strategy anybody uses, I recommend to use defensive money management (position sizing). I mean by this to not risk more than 2% of your trading account on any individual position (I use 1%), and not to risk more than 6% on all your position opened at any given time. But be careful, this is less than your maximum risk you take, and you should have that in mind too.
Hand in hand with this I recommend to write down a trading plan before opening any position. This has to spell out clearly what is your stop loss, and based on it you should calculate the size of your position that meats the 2% maximum risk. Then never open a larger position than your calculated size.
Immediately after opening your position I recommend to place your hard stop orders, and not to rely on mental stop orders.
One final basic recommendation is to calculate your planned position reward / risk ratio before opening it, and if this ratio is less than 1, not to open that position.
Obviously these are my opinions, and others will disagree with me. I'd feel that I met my goal if at least some of the people reading this post would spend a little thought on it.
Don't take my word if you don't feel like doing so, but study, read books, discuss with others with an open mind, be flexible and wise.
With all due respect too ...
