Thanks for the reply! I have been very happy with what I have seen so far in the style/methods that OptionPit teaches.
They utilize volatility to find trades - how much of an edge do you think there is in doing so the way they teach?
Option Pit
- Thread starter Chris Paciello
- Start date
Thanks for the reply! I have been very happy with what I have seen so far in the style/methods that OptionPit teaches.
They utilize volatility to find trades - how much of an edge do you think there is in doing so the way they teach?
I think the edge is in the structure of the trade + vol perspective. Some people find it much easier to make forward vol estimations than guessing the forward price of the underlying. Smart traders will work to structure trades to take advantage of dynamic vol (vol goes up when markets crash - usually comes in when prices have bids). The good thing about options is that they can be used in a lot of different ways, so it gives some room for personal preference.
Thanks for sharing! I’m curious on how Mark from OptionPit utilizes vol to place trades? Is there really an edge there? He looks at historical vs implied volatility.
Edge for vol is the same as edge for anything else. Vol edge is within it's own context but still must adhere to normal rules - either it reverts to mean, or it something you want to trade with momentum. The edge for an option trade is how you structure the trade for the vol environment you're currently trading, this + an experienced opinion of how the market is likely react to new risk is the best formula. OP can teach you this. Maybe look up Mark's books on Amazon.
Dont pay for courses.
all my education came from optionseducation free website and they have a shit load of podcasts. and a few books I read (options pricing and volatility by natenburg etc) and lots of practice over the years.
You dont need to pay anyone to learn options.
Going around hunting for expensive options for the purposes of collecting premium is not something I would recommend. Stick to trading SPY and its options. Avoid those single symbols too dangerous, less liquidity etc..
Listen, I know it sounds really smart to go an be self taught. That's fine, and probably a good idea if you're playing with a replaceable amount of money. It's maybe why a lot of new (and generally younger) traders bottom out a few accounts before they gain a sufficient basis for returns.
On the other hand, if you are planning on an active style of management for your 'retirement' money then I highly recommend spending 1-5% of your money getting professionally educated.
And this can be relative according to what your interest are. If you want to be some sort of slow systematic trader (trend following, etc) then a few books and youtube videos is probably more than sufficient to capture 90% of the theory. On the other hand, if you're going to trade options or other more sophisticated instruments, its highly recommended that you work with people who understand the whole complex, meaning theory to market micro structure.
So if you have 1MM in your account - 40-50K to figure out what the heck you're doing is nothing. And it's much better than getting blown out because you decided to run a short gamma book and didn't know about dynamic volatility and skew shifts.
On the other hand, if you are planning on an active style of management for your 'retirement' money then I highly recommend spending 1-5% of your money getting professionally educated.
And this can be relative according to what your interest are. If you want to be some sort of slow systematic trader (trend following, etc) then a few books and youtube videos is probably more than sufficient to capture 90% of the theory. On the other hand, if you're going to trade options or other more sophisticated instruments, its highly recommended that you work with people who understand the whole complex, meaning theory to market micro structure.
So if you have 1MM in your account - 40-50K to figure out what the heck you're doing is nothing. And it's much better than getting blown out because you decided to run a short gamma book and didn't know about dynamic volatility and skew shifts.
What exactly are you trying to get by paying someone to teach you? Some kind of special edge that only the class can provide? All the free education provided by the industry is plenty, have you been to the optionseducation site? They are have teachers providing education via videos/podcasts and materials you can print. how is this not good?
Also Most of trading is the mechanics of how to enter/exit trades, understanding risk and order types and some market microstructure if you want some more indepth on how orders are handled etc..
The guts of the edge is the years of actually trading/experience. No different than a pilot with tons of flight hours on the cockpit. The more time on the cockpit the better you become and more adept at noticing hazardous situations and dealing with them.
There are tons of people selling expensive education trying to sell you on some "profit making" system, usually it just ends up costing you time and money and probably entering trades that end up backfiring because you tried to memorize some kind of "Edge" via rote learning and was overconfident thinking you had the winning formula.
Also Most of trading is the mechanics of how to enter/exit trades, understanding risk and order types and some market microstructure if you want some more indepth on how orders are handled etc..
The guts of the edge is the years of actually trading/experience. No different than a pilot with tons of flight hours on the cockpit. The more time on the cockpit the better you become and more adept at noticing hazardous situations and dealing with them.
There are tons of people selling expensive education trying to sell you on some "profit making" system, usually it just ends up costing you time and money and probably entering trades that end up backfiring because you tried to memorize some kind of "Edge" via rote learning and was overconfident thinking you had the winning formula.
No one is giving away edge for $1500. "Professional" education is done at a public institutions or hands on experience...not by for profit companies. Remember the adage: those who can, do; those who can't, teach (and those who can't teach, govern). Someone who is looking to get paid isn't doing well in the market, and someone doing well in the market isn't looking to get paid.
I don't care how good their information is, it's nothing that isn't already readily available on the internet, on free web-based university courses, or in books at your library. The stuff that isn't published this way is the discrete edge that traders have and use rather than sell, because it's worth more to them before someone else figures it out.
A mentor will pass on knowledge so that knowledge is preserved, not to take a few bucks from the person they're trying to help learn wealth management.
That same 5% spent on education can be pissed away into commissions and spreads getting hands on knowledge of the market and testing freely available ideas.
That's a great analogy.
