Option selling for premium

[Kim Klaiman]

Mr. Klaiman,

I am referring to sweet Bobby not in disrespect but to make a point.

What I learned over the past 5 years trading options is that there are more than on way to trade profitably. None of us have that cornered. To argue otherwise is like arguing about religions.

The fellow who taught me how to trade options only writes straight options (with margins), only on one stock and makes a nice living doing it full time for over a decade, through the 2008-9 drawdown.

I used to believe, from reading McMillan that day trading options are ill advised. Now I know it can be very profitable if you know how.

Many professionals trade volatility and doing well, other professionals only trade spreads, like you, or condors...

Personally, I do both longs and shorts but simple directional bets. I do this full time since 2013 and I admit the drawdown this Feb is actually very minor, hardly a test of my skills/luck and I will not be tested until another 2008 hits.

So, IMHO, to categorically dismiss a method showed ignorance.

I advise you to read the article I linked before arguing.

I NEVER dismiss any strategy. As I mentioned in the article:

The problem is not the strategy. The problem is leverage. Strategies don't kill accounts. Leverage does.

I found my niche, and I wish everyone to find theirs. Unlike many others, our track record is public, for everyone to see, 6 years back. We survived few significant drawdowns, and we did it by trading a mix of strategies, including premium selling, premium buying, volatility trading etc.

 

[tommcginnis]

As long as my margins and assets can stand it, if I stood firm, not act, could I just waited it out?

Wait it out, where??

With 50|50 hindsight, it's still difficult to reconcile ITM spreads (which increase in price the further out in time you are looking). If you were at 2810 on Jan21--Feb02, you've been ITM since.

Take a look also at the lower graph, of light-blue IV against blue-ish HV. Historic vol has exceeded the forward-looking IV for the past two+ weeks. Do you want to sell vol now??
(I sure-as-hell don't!) I used to be able to use that yellow trend line as a fair spot to place call-side options. Right now?!?!?! "Not so much." That line goes back to Dec'15/Jan'16...

 

[lawrence-lugar]

I advise you to read the article

I NEVER dismiss any strategy.

Kim Klaiman...I knew...I've seen you somewhere...!

You look like actor Vincent Schiavelli from Tomorrow Never Dies, 1997 James Bond movie,

,
...The same year ET, extraterrestrial trader, was born.

 

[caacapital]

I agree there are different ways to make money. No one way is the best each person must find there own best way.

Mr. Klaiman,

I am referring to sweet Bobby not in disrespect but to make a point.

What I learned over the past 5 years trading options is that there are more than on way to trade profitably. None of us have that cornered. To argue otherwise is like arguing about religions.

The fellow who taught me how to trade options only writes straight options (with margins), only on one stock and makes a nice living doing it full time for over a decade, through the 2008-9 drawdown.

I used to believe, from reading McMillan that day trading options are ill advised. Now I know it can be very profitable if you know how.

Many professionals trade volatility and doing well, other professionals only trade spreads, like you, or condors...

Personally, I do both longs and shorts but simple directional bets. I do this full time since 2013 and I admit the drawdown this Feb is actually very minor, hardly a test of my skills/luck and I will not be tested until another 2008 hits.

So, IMHO, to categorically dismiss a method showed ignorance.

 

[tommcginnis]

Y'all realize that if prison reform could get passed in these United States, LL would lose his internet access, and the caliber of *innumerable* ET threads would be lifted thereby -- and immediately.

Suggestion?
Register.
Vote.

I mean, what the hell.

 

[ironchef]

Wait it out, where??

With 50|50 hindsight, it's still difficult to reconcile ITM spreads (which increase in price the further out in time you are looking). If you were at 2810 on Jan21--Feb02, you've been ITM since.

Take a look also at the lower graph, of light-blue IV against blue-ish HV. Historic vol has exceeded the forward-looking IV for the past two+ weeks. Do you want to sell vol now??
(I sure-as-hell don't!) I used to be able to use that yellow trend line as a fair spot to place call-side options. Right now?!?!?! "Not so much." That line goes back to Dec'15/Jan'16...

View attachment 183445

Not sure I understand what you just said but I appreciate you took the time to educate.

By the way the chart looks like price is converging to something, calm before the storm?

Regards,

 

[rtw]

Yes this works on options for stocks and ETFs. Check out thinkorswim or tastyworks.

As for education check out tastytrade. It’s free and they present quality information.

i have taken a look at tastytrade. it's nothing but entertainment. talking heads with out-sized personalities, a lot of commentary, lots of smiles and joking, but i didn't saw much substance there at all. if their trading results were good enough they wouldn't be transitioning to now becoming a broker and a platform developer as they are.

i have also read that a lot of people are skeptic about their strategies and that the main personalities there have never revealed their trading records.


on the other hand, at morbidly obese mike's forum i have read hundreds of posts in a thread about selling options futures. the anonymous author who created that thread has been selling their own version of vertical spreads on cme's es contract for years and since around 2011 he has been reporting his trades and positions in that thread the same day he opens them. he explains his methodology thoroughly for anyone to copy and recommends james cordier as an author to read. his results have been available for everyone to see and his methodologies and rationales for the way he does things have been detailed extensively. that's the kind of resources i would be looking for.

 

[ironchef]

on the other hand, at morbidly obese mike's forum i have read hundreds of posts in a thread about selling options futures. the anonymous author who created that thread has been selling their own version of vertical spreads on cme's es contract for years and since around 2011 he has been reporting his trades and positions in that thread the same day he opens them. he explains his methodology thoroughly for anyone to copy and recommends james cordier as an author to read. his results have been available for everyone to see and his methodologies and rationales for the way he does things have been detailed extensively. that's the kind of resources i would be looking for.

Just curious, have you read the book, tried to duplicate their trades and see if they worked for you? Either real money or paper or back test?

 

[Kim Klaiman]

i have taken a look at tastytrade. it's nothing but entertainment. talking heads with out-sized personalities, a lot of commentary, lots of smiles and joking, but i didn't saw much substance there at all. if their trading results were good enough they wouldn't be transitioning to now becoming a broker and a platform developer as they are.

i have also read that a lot of people are skeptic about their strategies and that the main personalities there have never revealed their trading records.

They are definitely entertaining. But many people confuse entertainment with education. Their "education" is very dangerous especially for newbies because it is so one sided.

Here is an example of one of their "quality" studies:
Buying Premium Prior To Earnings - Does It Work?

I urge everyone to read it - it provides a fascinating example how they skew the parameters of their studies to reach the conclusions they want to reach.

As one of our members wrote:

Full discussion: tastytrade review (Tom Sosnoff)

 

[tommcginnis]

KK:
I appreciate your comments on tastytrade.
I myself wailed for a while on
1) the grotesque abuse of basic statistical concepts {"occurrences" among non-correlated underlying(s) comes to mind; and "IID" -- independent, identically-distributed phenomena}
and then,
2) the mathematically unprovable "45 Day Optimum DTE Rule"
which, "Sheeeesh!" is half of tt content.....

I would also admit that, Damnnnnnnn, they are so much better than some!
And while they screw-the-pooch badly as has been noted, they also espouse a Best $$/day Return ethos that is just too seldom encountered. (This is a holdover, I think, from former tt trading research head Al Sherbin -- "one of the Good Guys"...) I give them points for that.

BTW, I recently toured your website and, "Wow!" -- You've got good things going on there. Major .