Options Mentoring

I just want to comment on one thing here. The idea that you can take off an IC when you reach a certain loss point is laughable to any of us that have traded for a living. When markets roll over, spreads explode. There is no such thing as being able to just take off a spread at a given price. Your 10 delta vertical that you are short for .30 will go to 4.00 on one print. So if you think you can just get out when the spread goes to .60 in order to preserve the credits you have earned in past months, the drugs you are taking are too strong, lighten up on the dose.

Unfortunately in the options world, stops don't work the same way as they do for futures or even stocks. Even if you put a stop order at .60 to get out, it becomes a market order when touched and your fill will likely be 3.00 to 5.00. If you decide to hold it and wait and see, you could possibly blow out your entire account.

I'm sorry, but this is not a viable risk management strategy. The only way I know of in my 13 years of trading to protect against losses in options trading is to ALREADY be long enough strikes to offset the move when that move occurs. You can't repair the position after the fact. Options simply don't work that way.

My ideology in options trading is if you are going to sell juice, you better make sure you get as much juice as possible. A .40 credit ain't going to cut it. There is nothing wrong with selling premium, just make sure you are long enough options and for God's sake people, don't be afraid to roll your shorts in.
 
Quote from winningtrader:

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.
More...

Thanks for the input!
 
Quote from winningtrader:

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.
More...

Check out this website:

www.sheridanmentoring.com

You should be able to get in as an alumni. If you find anything interesting in there (strategies not working etc.) pls let us know.
 
I don't know what the deal is now. You might call them and ask. I seem to recall it was something like 2 mos included and then regular billing while the mentoring goes on. I believe Dan requires Optionvue during mentoring so everybody is on the same page. He has mentioned that there is other software that works fine, but for the mentoring AFAIK it's just the Optionvue tie in for now.



Quote from hlpsg:

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.
More...
 
I've also had a question about why Dan uses individual stocks from the OV scans instead of ETFs. I know other traders have asked about this and the explanation was this was just the way he did it. A cynical view would be that it is a good way to make people continue to use Optionvue since that is what their software does.

I have to say I do know more than a few people that use Dan's methods more or less and make good money. They didn't all mentor with Dan since these methods are common among market makers. The problem with learning them is there is no mass produced info on the entire trading approach AFAIK, so you either have to learn it from a mentor or learn it on your own from the market.

I agree that the most important info Dan teaches is risk management and Dan's insistence on starting out trading very small until you develop a consistently positive track record.

Quote from winningtrader:

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.
More...
 
Thanks for the info blackchip.

I just had a thought that I want to throw out to Dan's ex-students and other experienced options traders. Disclaimer: I'm not an experienced trader, so let me know if my assumptions are way off.

I'll make a few assumptions here, because I'm not sure what kind of portfolio Dan teaches, but from what I've gathered from reading posts here and elsewhere, it's something like this.

On a $5,000 portfolio:

- 3 iron condors, one condor on each on 3 different instruments, all trading one contract.
- one double diagonal, one contract.
- one calendar spread, one contract
- one butterfly, one contract

I was just thinking about the type of commisions such a trade will generate in just one month. I'll assume $1 per put/call.

- iron condor, 4 legs, 3 condors, $12
- double diagonal, 4 legs, $4
- calendar spread, 2 legs, $2
- one butterfly, $2 for wings, $2 for body, $4.

Total to put on positions: $22.

As I understand it, we don't hold till expiration. I'll not consider the additional commissions generated from trade adjustments, I'll just assume we take off all positions 1 week before expiry.

Total to put on and take off positions in one month = $22 x 2 = $44.

Commissions per year: $528

Percentage of total portfolio taken by commissions (not counting adjustments): 10.56%

With such a huge hurdle to clear, it looks like its very difficult to be consistently profitable, or am I mistaken?

Pls advise me thanks!
 
Quote from hlpsg:

Thanks for the info blackchip.

I just had a thought that I want to throw out to Dan's ex-students and other experienced options traders. Disclaimer: I'm not an experienced trader, so let me know if my assumptions are way off.

I'll make a few assumptions here, because I'm not sure what kind of portfolio Dan teaches, but from what I've gathered from reading posts here and elsewhere, it's something like this.

On a $5,000 portfolio:

- 3 iron condors, one condor on each on 3 different instruments, all trading one contract.
- one double diagonal, one contract.
- one calendar spread, one contract
- one butterfly, one contract

I was just thinking about the type of commissions such a trade will generate in just one month. I'll assume $1 per put/call.

- iron condor, 4 legs, 3 condors, $12
- double diagonal, 4 legs, $4
- calendar spread, 2 legs, $2
- one butterfly, $2 for wings, $2 for body, $4.

Total to put on positions: $22.

As I understand it, we don't hold till expiration. I'll not consider the additional commissions generated from trade adjustments, I'll just assume we take off all positions 1 week before expiry.

Total to put on and take off positions in one month = $22 x 2 = $44.

Commissions per year: $528

Percentage of total portfolio taken by commissions (not counting adjustments): 10.56%

With such a huge hurdle to clear, it looks like its very difficult to be consistently profitable, or am I mistaken?

Pls advise me thanks!
More...

Commissions are tough to over come, yes. But not nearly as tough to overcome as the slippage you will encounter when you are forced to take action.
 
Everyone learns a little bit differently but I've found that focusing on one type of trade until I really understand it works best for me.

Initially I did just vertical debit and credit spreads...fairly short learning curve. Then I focused on calendars...longer learning curve. I did OTM credit spreads with good success until market changed on me. Only recently have I been dabbling in diagonals which is the combination of vertical and horizontal spreads. The hardest and longest (learning curve) has been understanding and managing butterfly's.

Of course really understanding (intuitively) synthetic relationships is critical and that has its own learning curve.
 
You must log in or register to reply here.
Back
Top