Purely Mechanical Option Trading

Quote from jeffalvinson:

When you consider that today the SPX is above its rising 10dma, 20dma and 50dma, I would have to say that today's call trade is in the direction of the short term (20dma) and intermediate term (50dma) uptrend, wouldn't you?
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I don't follow traditional TA, so I'll defer to you on the slope and direction of the detrended moving averages. All signals have run counter to the price action on the options. I would define long-gamma trend trading in options as buying on or near the options highs, not lows. Your trades are short in duration. Anyone can make an argument as to the prevailing trend. I suppose we've been in an uptrend since October of 1987.

Looks good so far.
 
Quote from X2GO:

Jeff,

I just wanted to say thank you for sharing all this information. I'm new to options and this helps me to further my education before I start trading.

Thanks again!
SR
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Your welcome, I am happy to be helpful.
The 4 most important things that I can say to a beginning option trader is to be Systematic:
1: Find something that works 65% to 75% of the time and do it over and over, regardless how dark and opposing the market looks when your entering the trades.
2: Know your exact entry price, profit goal and stop before entering a trade.
3: Never have a stop that loses more than your profit goal.
4: Never invest more than 10% of your option trading account into each trade.
 
Quote from dipper17:

Well done Jeff. It would be rude if I didnt give credit where credit is due considering I am a skeptic.
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Thanks dipper. I appreciate both your compliment and your skepticism.
 
Thanks again Jeff. As I am new to this and do not have the expertise for picking profitable options yet can you recommend a paid options picking service / news letter than can issue me profitable daily / timely recommendations until I can learn to do this on my own. I don't mind paying for guidance until I can learn to fly!

Thanks,
SR
 
I have to say this is the first time I saw people who make money by trading options this way. Good work Jeff...
 
Quote from jeffalvinson:

4: Never invest more than 10% of your option trading account into each trade.
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Given your historical results, don't you think this is VERY conservative, given you are in only one position (mostly) at a time, and you have a 25% stop loss. Of course past performance is no guarantee of future results, but given such a record, I would be upping my outlay to say 30% per trade. Yes, a drawdown may happen, but in the end, confident the edge remains, the money should grow at a more accelerated pace.
 
Jeff - Great system and interesting thread. Do not pay attention to all the player haters around here - you have made the market your own, and you should be commended for it.

Quick question, why don't you increase the size beyond 10 contracts (or $2500 equivalent)? Why don't you kick it up a notch and trade like 100 contracts? Seems like you would step on the gas a little with the win/loss ratio being so high...
 
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