Options Portfolio

H

HtownTrader

How many stocks/options do you follow/look to trade? And how many positions are usually in your portfolio at any given time?

Trying to find that middle ground between following enough tickers so I can get in enough trades and enough different tickers to diversify, yet not follow too many that it becomes detrimental as I don't focus enough on each one to make the best decision possible.
 
For me, I hold onto about 5 options trades at one time. When I close one position, I usually, put another trade on. That is a good number to follow. Not too many but, enough to give you substantial returns on your options trades. I am an options directional swing trader. I look thru multiple stockcharts daily because you never know what you will find. Do not have a fixed watchlist. At times, you cannot find any setups and other days, there are lots of setups. Then, you have to pick which ones would probably, give you the best bang for the risk you are taking on that trade.
 
What your describing sounds more like a stock portfolio. For an options book you want to look at it like a matrix of multiple risks. If you want to use options as a directional tool you are in for a ride, be ready to say "What the F*&^ I guessed the direction right, why is my position down!!!!". Build a strategy, then build a screener. But IMO trade the underlying not the option.
 
It depends...right now I am in something like 22 names (this is extremely heavy for me), and on some of those I'm holding 3 or 4 options contracts. I'm pretty much at the limit of what I can manage with this much--and position management is taking up about 3/4 of my day...but that massive total number of individual legs is very much a function of being built in after a few weeks of signals firing off like crazy.
 
TheBigShort said:
What your describing sounds more like a stock portfolio. For an options book you want to look at it like a matrix of multiple risks. If you want to use options as a directional tool you are in for a ride, be ready to say "What the F*&^ I guessed the direction right, why is my position down!!!!". Build a strategy, then build a screener. But IMO trade the underlying not the option.
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If I were to head back to individual equities, I would bring an "overnight risk" tool with me: I took the BSM PDE, and stepped it out over -1.0 -0.5 -0.25 0.0 +0.25 +0.5 +1.0 steps, for a duration of 6.5 hours. (That means it works well for overnight, AND for roughly a full trading day.) When done by color (red-closest, deep green - furthest) I can tell, puts or calls, buy or sell, what needs to happen at each expiry, in order of the overall portfolio effect. I haven't given it *too* much thought, but if I were aimed at equities in the near future -- or trading anything *besides* the S&P, I'd develop some weighted/beta ability to translate all the applicable BSM greeks into S&P equivalents, and recreate that tool right there. Otherwise: head explosion. Mess. Paperwork. Ugliness.

But then, too: even a dozen underlyings? with 2 or 3 expiries each?? Nooooo -- this needs more thinking.....
 
tommcginnis said:
But then, too: even a dozen underlyings? with 2 or 3 expiries each?? Nooooo -- this needs more thinking.....
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I've often wondered, how many individual legs do you have open on the SPX at any given time? (And do you trade VIX or IWM, or anything else?) I always imagine you trading somewhat like me--sinking many lines and see what gets bit.

I spent a lot of time trying to figure out just how to keep my notes in order to streamline the review process. Probably takes 5-8 mins per position per day...the trade is laid out in my notes so all I have to do is give it an "all's well" check, or update my notes with anything noteworthy. With my stable stocks most of this is just committed to memory and takes on a few seconds, so that reduces load. And 8-12 is much more normal for me. And I can scan my notes titles which note important thresholds and price points (or set alerts for same). The multiple legs from rolling / building in is totally mechanical and a mindless task of risk management. And then it's just a matter of keeping portfolio theta and gamma at acceptable levels which saves me having to do any meaningful risk assessment on each position in that positions which conform to my position sizing, time frame, probability, and theta / gamma rules that I've previously determined are within risk appetite. It's an extension of that and realized gains in the form of uncommitted capital that has driven up position count.
 
beerntrading said:
I've often wondered, how many individual legs do you have open on the SPX at any given time? (And do you trade VIX or IWM, or anything else?) I always imagine you trading somewhat like me--sinking many lines and see what gets bit.
More...

I've gone from 'many' $5wides, to much less $10-$15-$20-wides, benefiting by having half to a third to a quarter of the entry commissions. 'Rolling'/escapes are done almost exactly the same, but with much less volume. (Again, lesser commissions.) But, less than the absolute number of positions is the numbers of expiries: I *desire* 2-3 -- but this calendar year, it's been more like 3-4-5 expiries. Why? Too many split/rolls, where I buy a troubled spread back, resell a less-delta on the next expiry, and sell a second spread on the the other side to go revenue-flat. It's reflexive and not always thought out.

Scary! And then they get stacked up. This afternoon, I liquidated
2895 long
2900 short
2905 short
2910 long -- and have a token
2915 long
2920 short
remaining.
Not all longs were matched to shorts -- the last time the market had dumped down, I bought some pretty pricey options back for 30¢-ish, and that leave these extra longs "rich" right now.
Still, I'd rather sell time, than own market position. Creeps me.

In the meantime, after 5 years of nearly 100% verticals, I've got a nice metric to turn off the credit-spread tap, and have gotten a nice end-of-day signal going to fill in the times when IV<HV. So, aiming (carefully, craftily) back to the ol' ES, I guess...... But it fills a hole I've been working on for years and years, and it's like "Phew!" off the shoulders.
 
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