What? LOL. Victor was selling options 9 to 12 months out! Weeklies were not even around in 1997. Come on man. Look, you need to learn more before you start doing this. The best book on options is "Dynamic Hedging" by Taleb. Then read his "lighter" read "Fooled by Randomness", then finish up with "The Black Swan". If you really "Care" about being successful, you will read those books and put in some real effort here. Simply saying "this won't happen" or "that won't happen" is not how successful people in life think whether they are traders, elon musk, bull gates or steve jobs. Learn to think like other successful people.
Selling delta 3-5 ES Puts with 40-57 days left
- Thread starter tradelosses
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What? LOL. Victor was selling options 9 to 12 months out! Weeklies were not even around in 1997. Come on man. Look, you need to learn more before you start doing this. The best book on options is "Dynamic Hedging" by Taleb. Then read his "lighter" read "Fooled by Randomness", then finish up with "The Black Swan". If you really "Care" about being successful, you will read those books and put in some real effort here. Simply saying "this won't happen" or "that won't happen" is not how successful people in life think whether they are traders, elon musk, bull gates or steve jobs. Learn to think like other successful people.
There is such a deep lack of understanding here I don't know where to start. It's not the price drop that is going to hurt you, it's vol exploding. Do you realize from aug of 2008 to sept of 2008 in the span on "one expiration period" the market dropped 40%!!!!!!!!!
But it's not the price drop, it was vol going up 100% in that span while margins went up 10 fold that blew people out. You really need to put more time and work into this. You are coming across as a hobbyist trader. And hobbies are not profitable.
Hey Mav I can't believe you are still on here giving out good advice. I would have burned out years ago lol. I'm about to go somewhere without internet for a while and am loading my kindle with books to study. Any others you can recommend? I'm a full time worker that is investing mostly in my Roth IRA buy and hold these days, but hoping to eventually manage it somewhat actively. Currently studying Passareli's book on greeks and McMillon on Options, and Benjamin Graham's books. I'm going to check out Dynamic Hedging. More specifically, anything that could help an amateur learn to model volatility?
christ ..it goes from delta 4 to 17 in a single day? And then delta 28 a few days later http://www.surlytrader.com/wp-content/uploads/2012/04/Put-Selling-in-2008.jpg That means the ES put sold for 3 ($150 credit) become worth 30 unit. You die
also interesting http://managedfutures.absolutereturns.com/2012/05/perfect-chart-global-sigma-plus.html
also interesting http://managedfutures.absolutereturns.com/2012/05/perfect-chart-global-sigma-plus.html
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Like baggerlord mentioned, just before reading his post, i was thinking exactly the same thing - that its amazing you are providing such useful info here after so many years. You are an asset to ET and for the trading community in large. Hats off to you.
And this question is though hard to ask (as in not many people try to think for long enough; since its not simple to answer), its even harder to get an answer to. Sometimes i think i have a glimpse of the answer, then again it doesnt seem so clear anymore. Exactly what your edge is.. that is.
-gariki
I found this book to be outstanding. It's very heavy lifting (in weight that is), but man alive, this book takes away all the bullshit and throws shitloads of data in your face on the efficacy of every strategy alive and gives you the cold hard numbers, both good and bad. It basically helps understand what works, what doesn't and why. It does NOT say, here go do this and make a lot of money. To capture the alpha in these strategies is very difficult. It is simply saying there is where the alpha is if one has the ability to capture it. It's VERY data heavy. I have to forewarn you. It does not read like a children's book with lots of pretty charts. It has tons of black and white data. This may be the best book on trading ever written that nobody has read. Partly because it's just not easy to chew, lacks charts, and if you can't tell by now, there are no easy paths in this business. Much easier to skip on over to "tasytrade" and swallow that. But if you are "serious" and you truly care about being successful in this business, you will read this book.
You need to have a clear answer. Edge has to be quantified. If you don't know what your edge is, there is a good chance your counterparty who you just traded with does know.
are you talking about
Dynamic Hedging: Managing Vanilla and Exotic Options by Nassim Nicholas Taleb
?
That's the one.
There is the infamous story, I think from McMillan, of the popularity of selling teenies during the 1980s bull market. Month after month, year after year, traders collected their premiums, selling deep OTM index puts.
It must have seemed like free money to them.
Then came the Crash of '87. Options sold for 100s were now worth 10,000s. Traders went bankrupt. Some brokers went bankrupt. And option margins were raised substantially.
The years of profits were wiped out and then some.
During 2002 and 2008-2009 we saw ES limit down more than once. When that happens the options markets go berzerk, because the UL cannot trade. They essentially cease to function, except for the folks forced to trade out.