Question regarding selling puts for premium
- Thread starter masudhossain
- Start date
I'll stop responding as I can see that you just don't get it, which is fine. You don't have to play this game. If you did, you would understand it. What game do you play? I prefer to be the House not the player playing Craps. At any rate, I do wish you success, but to think selling options is crazy, well, is crazy. If it scares you then just sell cash secured Puts. It sure beats buy and hold. If you can do better, then move on and keep doing what you do. Adios....
Maybe you're right. I'll admit that my response is inflammatory, but Xenomorph's phobia is irrational.Your response isn't helping other than prove the fact that options traders are angry people.
Not true. I have many years of options trading experience so I can say with some authority that trading options is a flawed and inferior way to 'trade'. It's not even trading. It's gambling. No matter how you buy or sell options you cannot escape the fact that you are trying to predict how far price will or will not move, in what period of time this will or will not happen, and in some cases even which direction price will move. This is way too much for a human being to predict consistently. There are much more reliable and safer ways to make money in the market that don't require a trader to guess any of these things. Another problem is making up losses. Say you claim to have a 'great' options methodology involving spreads that you think can average 1% to 3% a month using only 30% of your account. If you get slammed by a landslide and lose that 30% you think, no big deal. It was only -30%. You still have 70% of your account left due to your forward thinking money management. You believe you can weather such a 'draw down' in a worst case scenario. Now, contrast this, with a trend following system that averages 1% to 3% a month with a max draw down of -30%. With such a system you may experience the same draw down as the spreads methodology, but what the spreads methodology cannot do (that the trend following system can do) is snap back and be up +65% or more. But how long will it take the spreads methodology to make back a -30% loss at 1 to 3% a month? It will take forever. And what if you are slammed by yet another landslide in the meantime? You'll be down -60% and struggling to comprehend how you will ever make it back at 1% to 3% a month. With options spreads there is no reasonable chance to have a +65% profit after a -30% loss. And somewhere along the line the options trader begins to lose his battle with the gnawing temptation to allocate a larger portion of his remaining account balance to the next trade. Most people who trade options do not realize they are caught up in gambling until it is too late. And even when they realize there is no way to trade options without gambling, it can take years for a trader to quit options forever. I am not surprised by the hostile responses to my comments. I try not to take them personally. I'm sure I would have made the same comments myself 15 years ago. If venting makes you feel better I understand. But maybe weeks or months from now you will continue to ponder some of the things I have said.
Last edited:
I agree with Xeno in this sense:
Trading options takes more skill and calmer judgment than might be obvious at the outset. It can look like a quick and easy buck until your trade goes against you. If you have not developed appropriate responses and do not have the calm judgment to use those responses effectively, and in time, you can be seriously hurt.
Also it takes more than having read a book and understanding the basics of how options work to have a successful option trading experience.
I myself tell people they need to actively paper trade for at least a year before going live. Probably most people ignore that advice and plunge in before they should.
PERHAPS the average reader/poster of this board does not have adequate skill to make option trades . I don't know.
Having said that, I also agree that Xeno's crazed condemnation of option trading is irrational.
Every trading route involves risk and requires judgment and effective execution in times of stress. Perhaps Xeno had a bad experience with trading options. Perhaps he blew his account. Perhaps he did it more than once. It's been known to happen. I remember seeing stats from the CBOE that seemed to imply that 90% of people who try trading options fail and blow their account. That stat does not surprise me. Some of those people end up here with dilated pupils and drooling mouths blabbering about monsters in the woods. We know, we know: life sucks and then you die.
Perhaps Xeno should consider the problem my be him and not the instrument. The problem of traders loosing their judgment and reverting into gamblers is common to all types of trading and can happen to anyone who does not have adequate reserves, does not use adequate money management, and simply does not have the personality to be an effective trader.
Options are what they are. Trade em if you can, don't trade em if you can't.
I too have been trading options for a number of years. I make a pretty steady income out of it. I hold a very conservative portfolio of trades. I review all trades in my portfolio twice a day. I know enough to keep my eyes peeled and make a hasty exit if events warrant. I have enugh knowledge of economics and of the industries I trade to smell a rat when one is present.
I have made a hasty exit on a few occasions, but have never had a disaster... and I don't expect to have a disaster.
It's not rocket science after all.
Trading options takes more skill and calmer judgment than might be obvious at the outset. It can look like a quick and easy buck until your trade goes against you. If you have not developed appropriate responses and do not have the calm judgment to use those responses effectively, and in time, you can be seriously hurt.
Also it takes more than having read a book and understanding the basics of how options work to have a successful option trading experience.
I myself tell people they need to actively paper trade for at least a year before going live. Probably most people ignore that advice and plunge in before they should.
PERHAPS the average reader/poster of this board does not have adequate skill to make option trades . I don't know.
Having said that, I also agree that Xeno's crazed condemnation of option trading is irrational.
Every trading route involves risk and requires judgment and effective execution in times of stress. Perhaps Xeno had a bad experience with trading options. Perhaps he blew his account. Perhaps he did it more than once. It's been known to happen. I remember seeing stats from the CBOE that seemed to imply that 90% of people who try trading options fail and blow their account. That stat does not surprise me. Some of those people end up here with dilated pupils and drooling mouths blabbering about monsters in the woods. We know, we know: life sucks and then you die.
Perhaps Xeno should consider the problem my be him and not the instrument. The problem of traders loosing their judgment and reverting into gamblers is common to all types of trading and can happen to anyone who does not have adequate reserves, does not use adequate money management, and simply does not have the personality to be an effective trader.
Options are what they are. Trade em if you can, don't trade em if you can't.
I too have been trading options for a number of years. I make a pretty steady income out of it. I hold a very conservative portfolio of trades. I review all trades in my portfolio twice a day. I know enough to keep my eyes peeled and make a hasty exit if events warrant. I have enugh knowledge of economics and of the industries I trade to smell a rat when one is present.
I have made a hasty exit on a few occasions, but have never had a disaster... and I don't expect to have a disaster.
It's not rocket science after all.
Last edited:
Ask yourself why the great books about trading that highlight the best traders in the world (e.g. Market Wizards) never interview options traders. Because options traders who have had long term success are as rare as unicorns. Without audited returns to back up his words, the claims of a 'successful' options trader mean less than nothing. Less than nothing.
I should go long to let the unbounded gains get me?
According to Taleb, Baird, common sense, and my experience yes.I should go long to let the unbounded gains get me?
My guess is Xeno is quite correct that selling puts has no edge, as everybody can do it from the first day of options trading to earn premium!
http://www.elitetrader.com/et/index...nsidered-dangerous.292077/page-4#post-4133142