Options Mentoring

my point being (at least for myself) putting on all different types of trades when you are first learning would be too confusing. I do agree that while your learning very small number of contracts is important and call it tuition.
 
Quote from Maverick74:

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.
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Maverick is definitely correct when he says that stops do not work.

Questions:

1. Is it easier to take off your spread at certain prices using index options?

2. When Maverick says to roll your shorts, would you roll a short that went from .30 to 4.00, would you roll that? How much would you roll and at what price?

Thanks,

Torontoman
 
Quote from rallymode:

LOL Yes, you are correct. I havent seen any books recommend selling cheap gamma to generate income but i am sure if i looked in B&N i can find a couple.

I didnt say a few books will surely make one profitable, but neither will any of those two. Paying for an options theory regurgitation is a losing proposition given its all available for free. There are no secrets in options trading. Give me one of those secrets and i will link you atleast 3 free references. :)

BTW, what makes you think Dan is even profitable? Would you pay money for a mentor who is losing money?
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What makes you think the author of any book is profitable or knows what he is talking about?

Your "free" resources is worth precisely what you paid for it. You get the basics, but that does not make you profitable.
 
Quote from RichardRimes:

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.
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Great point that you make Richard, I'll keep that in mind.
 
I fully agree with Richard, too many strategies at the same time will very likely result in confusion, loss of capital and subsequent depression. Therefore it would be wise to become proficient in options prior to taking the mentoring course. That way one will extract maximum value from the mentoring and hopefully also progress more quickly (rather than having to ask time consuming 'beginner type' questions of the mentor). The only question left to answer is 'how does one know when one is proficient enough to enrol in the mentoring program'? I guess that's the $6000 question.
Best
db
 
I'm the one who built www.sheridanmentoring.com to build an online community for Dan's students. There are about 200 of us using it. It's a nice focused group of Dan's students doing similar types of trading. There are several active members trading large accounts doing quite well. More than a handful are now full time traders. Several are with pro firms (Echo trading for instance).

You DO NOT have to use OptionVue software. As part of the mentoring fee, you are given access to the OptionVue 5 software while you are Dan's student. When the weekly mentoring sessions end, OptionVue Systems puts the squeeze on you to purchase their software. THIS IS NOT REQUIRED! Many students choose not to purchase for various reasons...cost being the biggest from what I've seen.

Dan emphasizes to stay small for six months at least. The idea is to keep losses small while you're doing the Laurel and Hardy imitations and learning. Try doing 4-5 live trades per month for six months. Mix up the types...iron condors, butterflies, calendars, etc to get a feel for how different strategies work. As we all should know, there is no one holy grail of option trading. One strategy is not better than the other. They all have advantages and disadvantages.

I did the OptionEtics thing. I have more trading books than I care to admit. You don't learn this stuff from books, web sites etc. You learn it from doing it with live trades and someone experienced looking over your shoulder coaching you. Dan's the coach for his students, but you could do this without Dan if you have someone experienced to help you out.

It's helpful to know a bit about options before starting Dan's program. You don't need tons of experience, just be familiar with the basics. Just about any options book will likely fill the bill. Dan's program really goes on beyond when the weekly sessions are over. Dan says you're stuck with him for life. He says he knows how hard it is to learn trading and his goal is for his students to be doing this 20 years from now.

If anyone is has questions about Dan's program, please call him. He's a great guy and always willing to talk! If you want to ask me any questions, I don't check this board very often so send me an email directly.

Kind regards,

Tom Nunamaker
tom@ sheridanmentoring .com

PS: I am NOT affiliated with OptionVue Systems. My affiliation with Dan is I'm a continuing education student... a graduate if you will. I built sheridanmentoring.com initially as a place for me to keep all of Dan's ideas in one place for me...but it quickly grew into an online community that no other program I've seen has. (shameless plug.. :) ) So far, I've kept my site free and intend to do so as long as I can....but it's ONLY for Dan's students.. sorry.
 
Thanks for the info Tom. I also did the 'optionetics' thing which btw I thought is quite good for learning the basics and mechanics of options but not really that helpful when it comes to actually making money trading.
db
 
For the most part I've gotta agree with Rally on this one. There is only one thing you gain from having a mentor. I call it a crutch. Others claim that it is confidence, experience, or something along those lines.

You get to sit there with someone who makes some difficult decisions that you would otherwise have to make for yourself. Successful trading isn't about finding the perfect strategy. It is about making the correct decisions at the appropriate times.

Personally, I've tried to get really good at 4 different core strategies. I develope a forecast and then determine which strategy would work best if I'm right. No trader should stick to one strategy under all circumstances. For the newbies out there, it might help to consider 4 main circumstances:

Increasing Vol Bullish
Decreasing Vol Bullish
Increasing Vol Bearish
Decreasing Vol Bearish

Another couple situations to consider:

Making new highs
Making new lows

Have a preferred strat for each environment and then learn how to fit it to the chosen ticker. The idea that certain valuable things aren't found in books is very debatable. The only thing that isn't in books is experience; you can get that for free through either 1-lot or virtual trading.

Personally I'm glad I never paid money to join a course. All the info you need is in books and on free forums. Experience comes in time. I wouldn't delay experience by relying on someone else to make all my trading decisions for me.
 
Cache Landing,
Not saying I disagree with you, but this has been my personal experience, and my thoughts on this.

Each year we spend trying to find a workable strategy, we could be making 20-30% on our money.

There are tons and tons of books out there, but very few of them have workable strategies that are imparted to you in their entirety. The objective of most authors (I realise) is to 1) sell their books, and 2) promote some service that they're offering.

Having read my fair share of trading books, only 2 come to mind as having made any kind of tangible effect on how I would approach trading. The rest offer nice information, but I would have difficulty applying them to the markets in any meaningful way. Some are just a total waste of time and money.

So the time spent to read through so many books, how much has that cost us in terms of personal time as well as the cost of not having a viable strategy to trade?

We could go on trading one lots to try out strategies, and I'm sure someone who's persistent could make it. But trading one lot will still cost you money, and without the certainty that you'll finally succeed, few people will have the persistence to press on.

Having successful mentors who know what they're doing to model our trading after will greatly shorten this journey, and you could always get your questions answered. And you could probably start slowly ramping up your trade size after trading one lots for 2 - 3 years and got everything figured out and been through most kinds of market conditions.

I think I've been reading trading books for 7 years? Still haven't found anything viable that I would dare to commit my life savings to.

Just one (still searching) man's perspective on this whole retail trading business.
 
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