Niederhoffer's year end contest! ($2500 prize for 3 best 2011 trading ideas)

Also, why not venture out onto other commodity options where the implied vol and therefore the premiums are higher e.g. oil future options?
 
Quote from Ghost of Cutten:

http://www.newyorker.com/reporting/2007/10/15/071015fa_fact_cassidy?currentPage=7

'Toward the end of 1996, another profitable year for him, Niederhoffer decided that he wanted to invest in Southeast Asia, which was widely seen as a growing market. He dispatched an old friend, Steven (Bo) Keeley, to the region. Keeley, a veterinarian who spent six months of the year living in the California desert without a telephone or electric power, had trekked in dozens of countries. On one trip, while paddling down the Amazon, he had contracted malaria, briefly gone blind, and been comatose for a week. Keeley believed that assessing a developing country’s economic prospects involved not only meeting with the C.E.O.s of leading companies but studying the lengths of discarded cigarettes—the theory being that the wealthier people are, the longer their butts—and the state of the brothels. After a couple of months in Asia, he reported to Niederhoffer that the brothels in Bangkok had recently become much cleaner and safer, and that Thailand was an excellent place to invest.'
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You are missing the point. You are taking one single observation that did not work out and extrapolating it without merit. Victor tests everything, and I mean everything. You would be shocked at how many latent phenomena can be made manifest into profitable trades.

The point is that markets are interrelated with the outside world, and many seeming subtle correlations do in fact have a basis that can be identified, tested, and exploited.

It was a bet that did not go according to plan, but it was because Victor was operating outside his normal field of expertise. It seemed like a good idea at the time, but hindsight is so ever clear. Incidentally, Bo Keeley did have a good experience in Thailand, and many traders could follow in this methodology to identify a theory, develop a hypothesis, and take full advantage of it. I think we can all agree on this.
 
Quote from Visaria:

Also, why not venture out onto other commodity options where the implied vol and therefore the premiums are higher e.g. oil future options?
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Visaria,

That is a good point, we do in fact trade other contracts. We like the SPX because of many reasons (data availability and favorable skew and profound upward bias), but it is important not to limit one's universe. The universe is infinite, and so are potential trading ideas. It is also favorable to expand into other contracts because that limits risk, and it has the advantage of seeking non correlated markets. Limiting systemic risk is a key ingredient to successful trading. I hope you realize I speak from integrity and I am a Real McCoy. I do intend to help you and others, even though you insulted me many times over without provocation.
 
Quote from thoreau777:

Visaria,

It is not as easy as it seems to multiply your money many times over within a year. Many investing contests ask just that, with a particularly famous one where $10 thousand dollars (real money trading), is multiplied close to one million dollars (typical amount that wins the contest). A famous trader Larry Williams won such a contest and discusses it in seminars.

It may seem easy to simply sell OTM SPX puts and do this with no effort and skill, but in practice maybe less than 1/10 of 1% of any traders can do this. Consider that last year was a spectacular year to do this strategy, but you have to watch out for the landmines. Consider the week of 5/3/10, the SPY went from 119.38 to 111.26 and closed the week towards the lows. If you were short options and did not hedge, an entire year's worth of gains would have been ruined.

Recall that selling OTM puts on the SPX is not just a bet on direction, but also a bet on contracting volatility. So if you are right, and your short strike is not pierced and is close to where the underlying gets pinned on expiration, you can make money on the delta, vega, theta, and also the option "charm". I do not trade options as much anymore, but it is an incredible way to multiply your money, as I have done. Simply selling OTM puts on the SPX during a period of low volatility (like the current environment) without hedging is difficult. You cannot even get meaningful premium when you go far out. To get even 10% on a .10 delta put option these days on ROM, you can only venture out just a few handles on on the SPX. A minor news event can easily let the powers that be harvest your account for their next son's bar mitzvah.
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I included the edit above that you also make significant money on the put options' rapid theta decay, in addition to the option charm, delta, and vega. You can also scalp gamma at this time. Towards expiration, if I think the big houses will pin the underlying at a particular strike I sometimes balance out the short puts with short calls (turning it into a strangle), or maybe even turning it into an iron condor or doing a box or calendar. The possibilities are endless. Simply selling put options is actually quite complicated, and should be just one tool in your workshop.
 
Awww, great thread. Regardless of how mr Vic faired in the marketplace in the end, the indisputable fact remains that many great traders and money managers were taught by him. This fact alone should engender respect.
 
It's important to note that this site attracts mostly market fanboys and bashers who take out their significant anger on others. While a few real traders post. Most are fanboy or failed fanboy basher types who dream of trading again.
 
Quote from Skittremblant:

It's important to note that this site attracts mostly market fanboys and bashers who take out their significant anger on others. While a few real traders post. Most are fanboy or failed fanboy basher types who dream of trading again.
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Surf, you ought to try Zermatt. Tremblant is so last decade. :D
 
Quote from Skittremblant:

It's important to note that this site attracts mostly market fanboys and bashers who take out their significant anger on others. While a few real traders post. Most are fanboy or failed fanboy basher types who dream of trading again.
More...

Just to make you all aware, Skittremblant is yet another Surf alias, a basher of the highest order . . . banned yet again.
 
Quote from Skittremblant:

It's important to note that this site attracts mostly market fanboys and bashers who take out their significant anger on others. While a few real traders post. Most are fanboy or failed fanboy basher types who dream of trading again.
More...


Just to make you all aware, Skittremblant is yet another Surf alias, a basher of the highest order . . . banned yet again.
 
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