options . . . very hard to make money

Quote from atticus:
One guy I know from CT turned 6k into 200k in a couple of years.
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Not to minimize what he did but was he merely lucky to have an "optimal" strategy during an "optimal" time interval or can he consistently generate large rates of return in any type of environment? :confused:
 
Quote from nazzdack:

Not to minimize what he did but was he merely lucky to have an "optimal" strategy during an "optimal" time interval or can he consistently generate large rates of return in any type of environment? :confused:
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I may be one of those guys who had his 15 minutes of fame (the past two years). I hope I live long enough to see another swan dive (crash of '87, interent bubble, GFC) and I'm not drooling in my depends then... well not actually into the depends. Well, you get the idea :D

Gotcha on the AUM. I could learn texting kingo from dis place !
 
Quote from billyjoerob:

OK, this gets closer to the real difference between equity and options trading. You say that predicting volatility is easier than predicting price. I don't see why that's the case - volatility is a function of price, I don't see how predicting volatility is easier. Your explanation is that volatility is easier to predict because it's mean reverting ("normally stays within a set range"). One non-mean reverting blowup can incinerate years of steady profits. Who could have predicted the VIX would reach 80?
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Volatility is not only a function of price. Vol. can change by several percent while the price of the underlier hardly budges, and that happens quite often. Indeed, one non-mean reverting blowup can wipe out years of profits, as you point out (and as I said myself in regards to 9/2008). That is why I stay with the vol. buying strategies for the most part and never get on board until after IV makes a pop. I wait until IV is at the 10th percentile of the annual range or lower, is below HV, and then pops to the upside. I don't hang out for long if the trade isn't profitable, lest theta takes its toll. Nothing wrong with selling vol., though. Just have to make sure you watch your position like a hawk and adjust with iron-clad discipline.
 
Quote from stevenpaul:

Good research. You list to some compelling examples of your point. However, bid-ask spreads aren't always prohibitively high, particularly when the underliers are highly liquid. Check out the bid-ask spread on the SPDRs, for example, or say, Citigroup (although there may be other reasons to steer clear of that underlier). Regarding leverage, I don't think options should be used for leverage, for some of the reasons you state. It's the volatility edge that intrigues me. As McMillan explains it, change in volatility is easier to predict than change in price. Trading price is a sucker's game where anything goes, whereas trading volatility has a basis in statistics. Sure, high IV can keep going higher, as we saw two years ago, but normally it stays within a set range. Over time, high-probability trades should result in above average returns, and volatility trading is one type of trading that can be done so that it is mathematically favorable and the planned outcome, somewhat more probable.
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Mostly agree, but it takes money (sometimes lots) to hedge against other Greeks.
 
Quote from nazzdack:

Not to minimize what he did but was he merely lucky to have an "optimal" strategy during an "optimal" time interval or can he consistently generate large rates of return in any type of environment? :confused:
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He's continued to do so. Earned 32k last week.
 
What kind of standard deviation of returns does this guy have? What's his Sharpe Ratio? Is he laying out a hadful of bets at a time hoping to get one big hitter every few months or is he making bankable income every week?
 
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