Position Sizing For Options

[ironchef]

My favourite trader is Michael Burry, his forum writings from the early 2000's show he is on another level mentally, and he took big risks when he was almost guaranteed to win, I followed in his approach

Love to read about him.

 

[Stockolio]

He made $8.9B for himself prior to 2010 and is worth $7.8B in 2017 meaning he did not make that much since 2010. Perhaps:

1. Survival bias. We only hear about those that gambled and won. Hundreds during that time probably gambled and lost and were never mentioned in the press.

2. One trick pony. Since their (e.g. Paulson, Ackman, Loeb) early successes, their returns are now merely ordinary.

Of course even now they still run rings around me.

Yea... Paulson fell off, very good trader tho and self made billionaire

 

[andylethal]

I like to use just ITM options as a stock replacement. If I want to own 2000 deltas of AAPL, and don't have $312K or do not want to tie up that much margin or want an implied stop by using options vs stop orders to limit losses, I'd use a just IMO option. My time frame needs to match the time to expiration I choose. For a day trade, I'd likely go out a week or 2. For a trade that will last days or weeks, an expiration that extends more than a week past my expectations.

An example from Friday's close would be to buy the Feb 1 2019 150 calls (about 5.05). With a .73 D, 27 calls give me about 1971D. My outlay and risk is only $13.635.

Thanks Robert...Appreciate the input as stock replacement is really the strategy I'm looking to build.