Options Mentoring

We were discussing how Dan's students did today and most were ok. One lost $50k in the June meltdown last year before Dan's mentoring. Yesterday he lost a few hundred in a calendar but no where near the bleeding of last year.

I personally just rolled put spread on an iron condor down. It still has a really good chance of making 10% profit this month. I know one of Dan's longer term students who's trading a large account said he had to shave some positions off to keep his delta where he wanted it to be, but he should be fine (ie..profitable) this month.

Some students did lose of course, but trading is still individual style. Some are less experienced and others might be more or less agressive. It also depends on what instruments you trade and how you trade them. Not everyone lost money yesterday.

Dan isn't for everyone. If you don't like his style, find someone else who's a better fit.
 
I placed a march rut IC a little while ago (49 days prior to expiry) and ended up closing it for a small profit (after commissions) today. I believe I played it as per Dan's webcast instructions to the best of my ability. So I can't complain except that the profit wasn't bigger. But then I didn't expect rut to drop like a rock. It would appear then that one can still make money with IC's even if adverse movements occur, provided one knows how to trade them. If I had just sat there and not adjusted then I would have been in the hole a while ago. Maybe I was lucky? Or maybe I've got an edge, lol? Anyway I'm now tempted to sign up for his mentoring - fine tune things a bit.
Max risk of mentoring = $6000 + time spent learning + potential divorce :)
db
 
Ok, here's what I think after watching the video from Trading Concepts that they sent me, and speaking with Dan.

My personal opinion is that the income strategies from Trading Concepts revolved mainly around trading collars.

What I didn't really like was the many speculative type strategies taught compared to the number of income strategies. There was also a testimonial from one of John's students on the video which essentially says how much money he made in one trade, and this guy had only been trading for a very short time, and is already trading a big account. This troubles me, as I know it takes time to learn the skills necessasry to trade for the long term successfully. I have the feeling that if it were Dan, that kind of testimonial will not even be in there.

I might in future consider spending the money to go learn from John, if only to add a few more workable strategies into my portfolio. John unfortunately does not have the kind of track-record, training and real life trading experience that Dan has.

On to Dan. Dan has 23 years of pit trading experience as a specialist on the CBOE floor. His credentials are verifiable, and impressive. I would say that to be able to be a market maker in the pits, you must definitely know at the tip of your fingers, what you're doing. You have no choice over what to sell, or buy, as customer orders come in. On top of it, you also need to be profitable. No easy task I think.

With that kind of real life experience, in-depth knowledge and doing it for so long, I believe Dan's strategies should work better than a lot of others out there. And learning about them on the webcasts, they make a lot of sense to me. I had a few questions that I asked him, and his answer removed my doubts about his methods, he's very careful with money management and keeping losses small. I believe that is crucial when trading strategies like the IC.

On a personal level, my gut feeling is that Dan is a very sincere, honest and patient guy. (Edited to add: He's nothing like the bigger-than-life, highly extroverted character he portrays in his webcasts! :D) I feel that he sincerely wants to help his students be successful, and that he wouldn't be doing this if he didn't think it could make them successful. Furthermore, from what I understand, his old students join his sessions on Friday night doing live trades, and trading big contracts. If his methods didn't work, I'm sure they'll bring it up by now.

Dan does say that he does modify the details of his methods through the years, but the philosophy and the core ideas stay the same. His opinion was that in all the years that he's mentored students, the difference between those that succeed and those that didn't were not the methods he taught them. It was themselves. Either they didn't follow the rules, they weren't strict with money management or they just got greedy (after a few winning months) and traded way too big too soon without gaining the necessasry skills and experience, and couldn't take the losses, then give up.

I'll definitely be going with Dan's course. Thanks to everyone who contributed and shared your experience, pls feel free to share further if you have any thoughts.
 
Quote from daddy'sboy:

Which webcasts do you mean? I've watched them all and he still seems to be talking about the 1 SD otm short strikes and going 49 days out to give himself some 'wriggle' room. 70 days seems a bit far since time decay is then less than optimal.
daddy's boy
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daddy's boy,
If you watch the older Iron Condor videos, Dan says to go out 1SD and about 25 days.

In the more recent videos, like the Iron Condor Adjustment webcasts, he says to go out 70 days and use the deltas of the short puts and calls (7-9 deltas if I remember correctly) to choose your strikes.
 
Quote from winningtrader:

I was looking to expand my trading into options and decided to take Dan's course. I am not here to badmouth Dan(he is a great guy) and maybe some people got something out of the course but I thought it was a big waste of money. His strategies are not new and debatable if they work for off the floor traders. You will learn more from his web broadcasts. Save your money.
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winningtrader,
Why do you say his strategies won't work for off the floor traders?

All his strategies (ICs, DDs, Butterflys, Calendars, Ratio spreads, etc.) are all strategies regularly traded by retail traders. It doesn't depend on special floor privelages like buying on the bid, or selling on the ask, or trading on low margins etc.

I just want to know why you think what you said. Thanks.
 
Quote from blackchip:

I've been following Dan's strategies as well and I think you will learn most of the stuff he's going to teach you on the webcasts which are very good.

Dan's a great person. I don't like the fact you have to subscribe to OptionVue even tho they say you get a few free months.

Heard thru the grapevine around the middle of 06 was not good especially for the people who were making a lot of money earlier in the year and eased up on their risk mgmt. But that probably happened to a lot of people.
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blackchip,
Is it really compulsory to subscribe to OptionVue, even after the mentoring period? That would really suck as I heard the software and data fees were very expensive!

On students not doing well in middle of 06, I think that will be the fault of the students and not the methods or principles they were taught.

One thing that I was really concerned about was increasing trade size of ICs by 50% when you roll if the underlying nears your short strikes. If the underlying hits the short strikes again, you'd probably have lost 2.5 to 3 months of IC premiums, assuming you didn't hold till expiry. This was my greatest concern.

I asked Dan this and one thing he didn't mention on the webcast, is they have a maximum stop loss in place, they will never want to lose more than 1 month's worth of potential IC income if things went back. He will close out the trade entirely in this case if the stop loss were hit.

Additionally, to roll or not to roll is not a mechanical decision. It also depends on what the market is doing, hence his rule to wait 24 hours. In the case of the 3SD drop in one day, you obviously don't want to roll and stay in the market as an income trader. You'd want to take the loss and get out, and see what happens.

He briefly mentioned that he rolls when the index is moving upwards gradually, without sudden spikes in movement, hence there is a larger probability of the underlying not hitting your short strikes after rolling. Guess this part is the "art" part of trading.
 
Quote from paladincomp:

I went through Dan's mentoring program and think it's well worth it. I disagree that you can just read a book. I have a LOT of books and I never learned as much as live one-on-one mentoring with Dan. You can certainly do hundreds of spread trades and learn it yourself; however, Dan drastically shortens the learning curve.

Dan approached trading differently when he was in the pit due to different margin available to market makers. For instance, they would buy and sell stock as a hedge without thinking about it.
Dan does change his approach on the surface, but the principles are the same. Whether you adjust based on underlying price, delta or some other reason, the principle of reducing delta's in a delta-neutral trade are the same. They are implementation variations imo.

There are several students of Dan who are now full time traders. Some are now with pro firms like Echo Trading. I personally feel very confident now and am meeting or exceeding my monthly targets.

NOTE: I heard optionvue raised the course fee to $6k and there's a six month waiting list.
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I asked Dan the same question, did you trade the same strategies in the pit, that you're teaching us?

His answer is no. He couldn't possibly trade like a retail trader in the pits because he was a specialist, and had no choice in what he traded. If someone came in and wanted to buy 500 puts, he had to sell it to them as that was his job. He couldn't choose.

He could also buy on the bid, and sell on the ask, something that he paid $8000 each month for (to trade on the floor).

Then I asked him how he came up with the strategies, and he said from experience. These are the things that will work for a retail trader, and are strategies which make sense for those who had a day job. He was very open and honest about this, and I think that as he goes along, the strategies are just going to get better and better from a risk management standpoint.
 
Dan Sheridan says: risk management, risk management, risk management.

If you take care of the losses, profit will take care of itself.

All strategies work. They are all variations and combination of vertical spreads and calendar spreads. Iron condo is two credit spread. Diagonal is a vertical spread plus a calendar spread.

Every spread has the exact risk-reward expectation for the seller and buyer. Yes, risk-reward expectation, not risk reward ratio, is the same for the buyer and seller. The buyer of the strategy must believe it is a good trade. The seller of the strategy must also believe it is a good trade. Otherwise, no one will take your trade.

Example: long butterfly. You are not likely to win, but you win big if you ever win. You also loss very little money when you lost. You buy a butterfly for $0.5 and make $5.00. You, the buyer risk $0.5 to win $5.00, not likely, but you only risk $0.50. The butterfly seller takes the easy $0.50 because he believes he is going to keep the $0.50. The Butterfly seller may lose the $5.00, not likely but he is risking $5.00.

Example: short OTM iron condo, (especially the far OTM iron condo, 90% + probability). You almost always win, but you win small each time. You risk a lot each time and loss a lot when you lost.

A SPX $10.00 spread iron condo has the same risk-reward expectation as any other strategies. You collect $0.50 and risk $9.50. You collect $2.50 and risk $7.50. You collect $5.00 and risk $5.00. What does the guy who takes the other side of your iron condo expect? Losing all the time?

It is the risk and money management skill of the trader that makes the difference if the trader will make money in the long run.

Therefore beginning traders must learn how to limit the risk and minimize the loss before profit can begin.

Again, all strategies work. However, each strategy is designed for a specific market condition. You apply the wrong strategy at the wrong time, you are going to lost.

Iron Condo, Double diagonal, calendar... are all market neutral strategies. These strategies would be profitable in a market limited price range and are likely to lost money in a trending market or large price movement.
 
HLSP,

I think I wrote it is debatable wether the strategies work for retailers. Maybe you should talk with somone who had a more postive experience.
I had no problem with the ICs since he uses these on indexes and pretty simple stuff. I had a real problem with stock selections. Even with the formulas Dan gives you to scan Optionvue my stock selections were awful. I followed Dans'rules such as earnings etc and really tried to make it work but my stock selections were awful.
My stock selection did get a bit better but I did not want to spend three thousand dollars on Optionvue to find out in the long run these strategies do not work.
I took the course when it the first year it was offered and found disorganized and rushed. You can bet the best trader in the world but not the best teacher.
The course might be better now since Dan has more experience teaching but my overall experience was negative.
 
Quote from atozcom:

Dan Sheridan says: risk management, risk management, risk management.

If you take care of the losses, profit will take care of itself.

All strategies work. They are all...

...price movement.
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atozcom,

Nicely well thought out and stated: simple, direct, no drama -- just the facts.

Thanks,
 
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