Options Mentoring

paladincomp · Sep 23, 2007

Every option trade has both a volatility and directional component embedded within. Condors are short volatility bets. Either implied vol or stat vol. There is no way around that.

I agree that short term all option trades are affected by volatility. I'm just saying that at expiration, why does it matter what your prediction about volatility was?

atticus · Sep 23, 2007

Quote from paladincomp:

I agree that short term all option trades are affected by volatility. I'm just saying that at expiration, why does it matter what your prediction about volatility was?

Because some people don't understand path-dependence.

segv · Sep 23, 2007

Quote from Maverick74:

The same reason why people buy lottery tickets. The same reason people trade futures or stocks. The same reason people sign up for courses on how to buy real estate with no money down. The same reason people listen to their stock broker who has a hot stock tip. People want to "believe". That hasn't changed in thousands of years. The power of "belief" is a very strong part of the human condition. Unfortunately, it's also very easy to exploit.

A lottery ticket costs $1 and might pay $150,000,000, while a share of stock costs $50 and might pay $4 over a year. The motivation for engaging in these two transactions cannot be the same. Undoubtedly there are many options traders with a lottery-like utility, but these cannot make up 95% of traders.

I agree with your general point about books, seminars, and mentoring services. However, people who spend $5,000 on mentoring are a minority. Most people understand that the secret to making millions is not sold for thousands, but is sold for a multiple of its earning potential.

atticus · Sep 23, 2007

Quote from Maverick74:

Even a trained surgeon with 7 years of medical school, 3 years of residency and possibly thousands of hours of surgery under his belt still has trouble and loses many patients in surgery.

7 years of medical school and a 3 year residency? Where?

segv · Sep 23, 2007

Quote from paladincomp:

Volatility helps you if it decreases after entry and hurts if it increases after you enter.. but only if you exit the trade prematurely. If you stay in until expiration, the volatility doesn't matter as all of the time premium disappears at the same time for all legs of your trade.

This is not correct because whether the spread is profitable at expiration depends on the realized volatility over the trade duration.

Maverick74 · Sep 23, 2007

Quote from atticus:

7 years of medical school and a 3 year residency? Where?

LOL. I low balled it. I take it, it's more?

Edit: Maybe Bermuda?

atticus · Sep 23, 2007

Quote from Maverick74:

LOL. I low balled it. I take it, it's more?

Typically, 4 years undergrad [no pre-med req], GMAT, 4 years med, 4 - 7 years surgical residency, fellowships...

General surgical res is 5 years.

paladincomp · Sep 23, 2007

Quote from segv:

This is not correct because whether the spread is profitable at expiration depends on the realized volatility over the trade duration.

Really? So if I put on an iron condor and it stays between my short strikes at expiration and I didn't have to make any adjustments, you're saying the spread profitability depends on the volatility during the duration of the trade???

IV_Trader · Sep 23, 2007

Quote from segv:

Why do 95% of option traders trade options? Serious question.

Edit:

Why must one predict volatility or direction better than 95% of options traders as opposed to 51%?

the 51/49 stats are for CURRENT players that still in the game...eventually the 49/51 trader's account will bleed to zero and a newbie will take his seat. Give it some time and a successful 51/49 trader will become better than 95% ( inc the ones that left the game for good)

blackchip · Sep 23, 2007

I'd like to see some peer reviewed published research on this - any academics need a research project out there? Of course the CBOE isn't going to fund your research.

Quote from Maverick74:

I have some very bad news to report here. I, however, stand by this statement and have more then enough trading sheets to back me up counting 100's, possibly thousands of traders.