- Question about Volatility when selling premium?
- Thread starter Diceman34Mules
- Start date
Exactly. Why bother ?
The key words are broad based index options. Writing naked Puts/Calls on individual stock or options on future are too exciting for an old and poor guy like me.
Less competition is good. I definitely will have a harder time to make money, if high school students show up regularly on CNBC to talk about their option trades.
Just my two cents.
My my,aren't you the smug ones.The patronising tones are obviously due to you and ktm being genetically born to trading options!!I thought the idea of these kind of forums is to exchange ideas and to help people who are new to certain kinds of trading.Obviously to you and to ktm,you are either a professional or a sucker who is there to line your pockets.I have to admit I'm a newbie at options(sorry).I would love it if you guys(professionals)would say,hey!this might help or that might help,but no!You belong to the sacred order of the Kabbalah and your secrets are closely guarded!Please PM me if you have some helpful advice about selling premium,I am humble in my willingness to learn.I am not a proud chap!!BTW I am not from the US so forgive my grammar.Perhaps that makes me even more unsuitable for trading options!!!
johnk49,
Ask away bud. No smugness here. There are no secrets to option trading only good discipline. I'll try to help as best I can.
johnk,
I would love nothing more than for this forum to be a shining example of open exchange of ideas and thought provoking commentary. In my several years here, I have attempted to help a lot of people like you who show up regularly seeking advice. I have also learned a great deal from many here and those who no longer post here. Mine is one opinion only and I respect differing views and methods. Some don't.
Clearly, those of us who partake in the selling of option premium have been ridiculed and repeatedly dismissed as "waiting to blow up" on this forum. I have nothing to prove to anyone, and only wish to learn and help others who wish to do the same. To develop a serious selling program with good potential is many thousands of hours of work, diligence and patience, far from genetics as you suggest. Much has been said here in the past few years, maybe you should go back and read some of it.
To arrive here as a member and start by firing over my bow rather than asking a question is certainly not consistent with someone humble and wanting to learn. Nonetheless, as Maverick stated...if you have something to ask, ask away.
I would love nothing more than for this forum to be a shining example of open exchange of ideas and thought provoking commentary. In my several years here, I have attempted to help a lot of people like you who show up regularly seeking advice. I have also learned a great deal from many here and those who no longer post here. Mine is one opinion only and I respect differing views and methods. Some don't.
Clearly, those of us who partake in the selling of option premium have been ridiculed and repeatedly dismissed as "waiting to blow up" on this forum. I have nothing to prove to anyone, and only wish to learn and help others who wish to do the same. To develop a serious selling program with good potential is many thousands of hours of work, diligence and patience, far from genetics as you suggest. Much has been said here in the past few years, maybe you should go back and read some of it.
To arrive here as a member and start by firing over my bow rather than asking a question is certainly not consistent with someone humble and wanting to learn. Nonetheless, as Maverick stated...if you have something to ask, ask away.
I also, would love nothing more than to help others and learn while at it. I felt my original posts were pretty clear in that I was trying to protect a newbie from the projected gloom and doom that some insist upon posting. Where did that get misunderstood? Anyway, I am always free to share ideas with those who have an open mind and a good attitude. I'm just not sure that casting labels is a good way to get started.
Thanks,
saturnine
Thanks,
saturnine
saturnine,
No doubt from your original post that you and I think (and probably trade) much alike. I must apologize for having become jaded and cynical with the forum. It is hard to discern the genuine from those with an agenda here. I watched this Spring as Aaron Schindler, who had been and continues to be a great help to many here, was publicly abused for his poor fund performance.
This is a public forum and anyone can say anything that Baron allows. What bothered me most was that so few who Aaron had personally helped came to his defense. While I want to help, I have a good memory of how some of our more valuable contributors were treated when they were down. Nobody gets paid here and there is nothing stopping some of our most knowledgeable traders from just lurking and siphoning the few bits of good info that come along. Guys like P2, Aaron, Maverick and Vega (and others) make great contributions of their time and knowledge for all to benefit from.
No hard feelings.
No doubt from your original post that you and I think (and probably trade) much alike. I must apologize for having become jaded and cynical with the forum. It is hard to discern the genuine from those with an agenda here. I watched this Spring as Aaron Schindler, who had been and continues to be a great help to many here, was publicly abused for his poor fund performance.
This is a public forum and anyone can say anything that Baron allows. What bothered me most was that so few who Aaron had personally helped came to his defense. While I want to help, I have a good memory of how some of our more valuable contributors were treated when they were down. Nobody gets paid here and there is nothing stopping some of our most knowledgeable traders from just lurking and siphoning the few bits of good info that come along. Guys like P2, Aaron, Maverick and Vega (and others) make great contributions of their time and knowledge for all to benefit from.
No hard feelings.
With respect to the "JohnK" post, I will only add that anyone who's survived in this business has paid his/her dues many times over, and to ridicule or demand hand-holding is really a poor way to approach experienced traders for direction or advice.
There is no formal mentorship, no union, no on-the-job training available to the retail/upstairs options trader -- you either learn, or burn.
Saturnine, great thread, especially enjoyed your analogies w.r.t. wingspreads. To that end, I will add my $.02 regarding positive expectation and scale of LR vs. UR strategies.
When trading options as a profession, you quickly align yourself in one of two camps: long or short gamma, - or + expectation. The long gamma crowd typically arise from the floor, a vestige of firm trading in which there was a edict to go home net long. This methodology works just fine when there is the +expectation of a weekly paycheck, when the -expectation is backed by a trading firm.
Short gamma traders are an inscrutable bunch... they enter the game with one overriding concern, income production. The tend to view their trading as leveraged-FI terms -- consistent income generation, to eschew home-runs for on-base %.
For me, long gamma trading is a dormant, deeply-recessive gene. I can't for the life of me enter into a strategy that entails a negative expectation, which includes long gamma scalping as well as equity/futures daytrading. Not to say that it cannot be profoundly profitable, it's just an anathema to my trading, always has been.
Yes, I trade URO-positions, I am net short premium! Every single day of the year, and have been for the last 20. I've survived '87, '91 and 9/11. My largest account trades net long gamma, but it's in a public fund and it's required by charter. I only trade long-gamma as portfolio protection, never for a distinct vega play.
For me, the argument to trade wingspread vs. URO is a easy choice, as the outlook for each position w.r.t. position size and scale are simple to dissect.
Using daily theta, or a risk-adjusted parm, such as gamma/theta when comparing the payoff on a long butterfly vs. frontspread or short straddle/strangle, it becomes quickly apparent that the butterfly trade will require a large contract exposure to equate to the daily decay curve of a single short straddle. If I were to risk $20k in debit on a call butterfly, why should I be terrified of trading a single NDX straddle which has the equivalent decay profile and P&L distribution under 2-3 Sigma?
Anyway, sorry for the rambling, it's Friday and I should leave it here...
Best,
riskarb
There is no formal mentorship, no union, no on-the-job training available to the retail/upstairs options trader -- you either learn, or burn.
Saturnine, great thread, especially enjoyed your analogies w.r.t. wingspreads. To that end, I will add my $.02 regarding positive expectation and scale of LR vs. UR strategies.
When trading options as a profession, you quickly align yourself in one of two camps: long or short gamma, - or + expectation. The long gamma crowd typically arise from the floor, a vestige of firm trading in which there was a edict to go home net long. This methodology works just fine when there is the +expectation of a weekly paycheck, when the -expectation is backed by a trading firm.
Short gamma traders are an inscrutable bunch... they enter the game with one overriding concern, income production. The tend to view their trading as leveraged-FI terms -- consistent income generation, to eschew home-runs for on-base %.
For me, long gamma trading is a dormant, deeply-recessive gene. I can't for the life of me enter into a strategy that entails a negative expectation, which includes long gamma scalping as well as equity/futures daytrading. Not to say that it cannot be profoundly profitable, it's just an anathema to my trading, always has been.
Yes, I trade URO-positions, I am net short premium! Every single day of the year, and have been for the last 20. I've survived '87, '91 and 9/11. My largest account trades net long gamma, but it's in a public fund and it's required by charter. I only trade long-gamma as portfolio protection, never for a distinct vega play.
For me, the argument to trade wingspread vs. URO is a easy choice, as the outlook for each position w.r.t. position size and scale are simple to dissect.
Using daily theta, or a risk-adjusted parm, such as gamma/theta when comparing the payoff on a long butterfly vs. frontspread or short straddle/strangle, it becomes quickly apparent that the butterfly trade will require a large contract exposure to equate to the daily decay curve of a single short straddle. If I were to risk $20k in debit on a call butterfly, why should I be terrified of trading a single NDX straddle which has the equivalent decay profile and P&L distribution under 2-3 Sigma?
Anyway, sorry for the rambling, it's Friday and I should leave it here...
Best,
riskarb