Options Mentoring

Some other thoughts after I posted the initial post.

I realize now that even if you were to give Dan's trading rules to someone who's new at this, without having access to OptionVue backtesting software and the webcasts, he probably won't be able to make it work.

I learned the most from watching the webcasts, putting on the trades myself using the backtesting software and learning how critical certain criteria are for success, and making mistakes in my judgement and learning the consequences.

Secondly, I learned from doing backtesting that trade selection is perhaps 60% of the key to success, and risk management make up the other 40%. If I followed Dan's rules in selecting trades, I mostly end up profitable. Even if I lose, the losses are small compared to the winners.

Sometimes I put on trades and ignore the selection rules, just to practice my adjustment skills. Then I run into trouble for exactly the same reason that I spotted when selecting the trade.

Dan is also very self-deprecating in his webcasts, often making jokes about his own IQ. After watching him in action, and seeing how he thinks, I don't believe a minute of it. The man is extremely sharp, and he knows what he's doing.
 
hlpsq

If I may ask ... what kinds of returns do you think you are realistically capable of now and in the future?

Thanks
 
Quote from Joab:

hlpsq

If I may ask ... what kinds of returns do you think you are realistically capable of now and in the future?

Thanks
More...

Joab, I can't really answer that question till I trade the strategies live for 1-2 years I think.

However, the yields on strategies such as calendars, dbl calendars and butterflies are typically very high, and most of the time you want to be out in 3 weeks. Yields on winning trades go around 10% to 30% or more if you stay in the trade longer (in about 1 month).

Of course you need to figure in losing trades as well. That's the best I can answer at this moment. From only my backtesting so far, my gut feel is that if you follow the rules for trade selection and adjustment/locking in profits, your winning percentage is quite high, even in months when things go wrong you may still come out with a profit if enough time has passed.

Things may be different when I trade live though, so it's too early to say for sure.
 
Hi hlpsq,

Indeed that was very informative!!! I just attended a conference by the OIC and CBOE was one of the sponsors...
Anyway, Dan was there presenting one segment of the conference.
I guess my question to you is:

1. Did you start the mentoring program with him as a newbie or did you have some experience and knowledge of trading options?

2. Would you recommend a newbie to sign up? what books would you recommend a newbie to read before getting into the program?

3. Were you on the waiting list to get into the class? Is there a waiting list to get in at all?

Thanks!
 
Hi PopTart,
Here's my answers to your questions:

1) I'm a newbie in that I've never traded options live before. But I do have an acceptable level of head knowledge pertaining to strategies, greeks, how dividends affect option prices, exercise and assignment etc. that I've gained from reading options trading books for 3-4 years.

2) Actually I feel that a newbie has some advantages coming into the program. When you don't know anything, you have a greater tendency to listen to your mentor. I believe most of the students coming into Dan's program have never traded a single contract in their lives before.

You won't believe the number of students who've had a little experience and don't listen to Dan's instructions to trade 1-2 lots until they get good at what they do, and start trading big lots. And they don't follow his rules and have to learn the hard way. You'll see this quite a bit in the one-to-one mentoring archives.

You do have to remember, that Dan has a lot of experience training people to trade in the pits in his lifetime working for Mercury. He's not just a good trader, he's a good teacher as well. Those two skillsets may not always come together.

The method that he's using to teach you is the way he taught new market makers to trade in the pits. Dan mentions this in one of his webcasts, and I go from memory. How does a trading clerk become a trader? An experienced trader sees that you're conscientious and responsible, and he'll teach you. Then he'll ask you to trade 1 lots for 1-2 months and see how that goes. Then gradually increase your trading size when you get comfortable and can prove that you can be disciplined and follow the rules. And so on. Nobody starts off by trading 10 to 50 lots. You don't last very long in the business that way.

However, I do not recommend you to come in as a complete newbie. The basic materials on options theory that Dan provides in his notes are definitely not sufficient to get a complete newbie up to speed. The homework, especially on the Greeks, will not be easy.

However, Dan is very good in this way, I think he mentioned that he'll send you off to CBOE (I don't know if he meant the place or the website, I wasn't paying attention) to learn the basics for 1 - 2 months first if you come into the course and cannot catch up. I'm not absolutely certain on this, you'd need to check with Dan himself.

The best resource I've come across so far for learning the basics on options is free:

http://www.21stcenturyinvestoreducation.com/page/tce/courses/course-201/

I personally found it better than most books out there. Another I'd recommend is Lawrence McMillan's Options as a strategic investment, you'd probably just need to read the first 2 chapters and note down the mechanics, and if you have the time, read the rest on the specific strategies. Read the whole book if you can find the time (it's thick). There's a lot of valuable info in there (but Dan's adjustment strategies are far better I feel).

I want to say this. I feel that Dan's main motivation is not money, or turning over his students as fast as possible. I've seen enough evidence of this to be convinced. He has made decisions in the past that were for his students' best interest, and not his own. I can't say the same for many of the other trading education programs out there.

His main motivation is to see you trading successfully 5-10 years from now. He'll do anything reasonably possible in his power to make it so, including lengthening your mentoring time (I hope I don't get shot for saying this). Dan's a rare breed, there's not many out there with his level of integrity or commitment to his students, and I really respect him for that.

3) I was on a 6 month waiting list. I don't know how long this list is now though. You'll need to pay a deposit to secure your place in the queue. Months before my mentoring started, I got a copy of OptionVue shipped to me to allow me to familiarise myself with the software.

Quote from PopTart:

Hi hlpsq,

Indeed that was very informative!!! I just attended a conference by the OIC and CBOE was one of the sponsors...
Anyway, Dan was there presenting one segment of the conference.
I guess my question to you is:

1. Did you start the mentoring program with him as a newbie or did you have some experience and knowledge of trading options?

2. Would you recommend a newbie to sign up? what books would you recommend a newbie to read before getting into the program?

3. Were you on the waiting list to get into the class? Is there a waiting list to get in at all?

Thanks!
More...
 
Dan's Jan 2008 class has three slots left. However, if you pay 1/2 of the course fee, you get access to the website right away and can start learning through the documents, forums and live and recorded WebEx sessions.

So yes, the next available class isn't until January, BUT, you can start now. By the time the mentoring sessions come, you'll have a huge head start.
 
Hey hlpsq,

Thanks for taking the time to write such an informative post!

I'll seriously consider all that you wrote! I'm also going to check out the site you recommended and the book to start off.... I have only read 3 books on options so far:

1. Options made easy by cohen
2. A beginner's guide to day trading online (not really options, but trading in general)
3. The investor's guide to options by the OIC

Once again, thanks for the recommendations! :)

Quote from hlpsg:

Hi PopTart,
Here's my answers to your questions:

1) I'm a newbie in that I've never traded options live before. But I do have an acceptable level of head knowledge pertaining to strategies, greeks, how dividends affect option prices, exercise and assignment etc. that I've gained from reading options trading books for 3-4 years.

2) Actually I feel that a newbie has some advantages coming into the program. When you don't know anything, you have a greater tendency to listen to your mentor. I believe most of the students coming into Dan's program have never traded a single contract in their lives before.

You won't believe the number of students who've had a little experience and don't listen to Dan's instructions to trade 1-2 lots until they get good at what they do, and start trading big lots. And they don't follow his rules and have to learn the hard way. You'll see this quite a bit in the one-to-one mentoring archives.

You do have to remember, that Dan has a lot of experience training people to trade in the pits in his lifetime working for Mercury. He's not just a good trader, he's a good teacher as well. Those two skillsets may not always come together.

The method that he's using to teach you is the way he taught new market makers to trade in the pits. Dan mentions this in one of his webcasts, and I go from memory. How does a trading clerk become a trader? An experienced trader sees that you're conscientious and responsible, and he'll teach you. Then he'll ask you to trade 1 lots for 1-2 months and see how that goes. Then gradually increase your trading size when you get comfortable and can prove that you can be disciplined and follow the rules. And so on. Nobody starts off by trading 10 to 50 lots. You don't last very long in the business that way.

However, I do not recommend you to come in as a complete newbie. The basic materials on options theory that Dan provides in his notes are definitely not sufficient to get a complete newbie up to speed. The homework, especially on the Greeks, will not be easy.

However, Dan is very good in this way, I think he mentioned that he'll send you off to CBOE (I don't know if he meant the place or the website, I wasn't paying attention) to learn the basics for 1 - 2 months first if you come into the course and cannot catch up. I'm not absolutely certain on this, you'd need to check with Dan himself.

The best resource I've come across so far for learning the basics on options is free:

http://www.21stcenturyinvestoreducation.com/page/tce/courses/course-201/

I personally found it better than most books out there. Another I'd recommend is Lawrence McMillan's Options as a strategic investment, you'd probably just need to read the first 2 chapters and note down the mechanics, and if you have the time, read the rest on the specific strategies. Read the whole book if you can find the time (it's thick). There's a lot of valuable info in there (but Dan's adjustment strategies are far better I feel).

I want to say this. I feel that Dan's main motivation is not money, or turning over his students as fast as possible. I've seen enough evidence of this to be convinced. He has made decisions in the past that were for his students' best interest, and not his own. I can't say the same for many of the other trading education programs out there.

His main motivation is to see you trading successfully 5-10 years from now. He'll do anything reasonably possible in his power to make it so, including lengthening your mentoring time (I hope I don't get shot for saying this). Dan's a rare breed, there's not many out there with his level of integrity or commitment to his students, and I really respect him for that.

3) I was on a 6 month waiting list. I don't know how long this list is now though. You'll need to pay a deposit to secure your place in the queue. Months before my mentoring started, I got a copy of OptionVue shipped to me to allow me to familiarise myself with the software.
More...
:) :)
 
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