Short put is deep ITM. Advice!

Cmon,Vic was massively overleveraged...Cant comapare selling cash secured puts vs some mainiac punting and praying while the clearing agents were fast asleep...

If anything,make a case for trading naked puts vs spreads and take into account that hes a retail guy looking to buy value stocks at a further discount and not running a vol book..At the end of the day,in a never ending bull market,its obviously very hard to outperform long equities without some leverage



syswizard said:
Vic Niederhoffer sold Put options in the S&P 500 index.....and made a ton of money for quite a while.
Then one day he blew up. Actually it happened twice.
Vic just wouldn't trade with a hedge in place....like long a OTM put.
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He's a newbie. He's not going understand how to manage all the aspects of rolling a trade or utilizing other strategies to cut losses. I think he just wanted immediate help - not a full on tutorial (there are so many variables involved that it's complicated).
 
For his style of trading he really doesnt need to understand the greek alaphabet assuming he can define and stick to his gameplan...

Hes doing what every other retail newbie does by rolling...

Odds are his next move it to sell an OTM call not realising hes locking in a loss for pennies on the dollar...

Been there,done that :)



Secatu said:
He's a newbie. He's not going understand how to manage all the aspects of rolling a trade or utilizing other strategies to cut losses. I think he just wanted immediate help - not a full on tutorial (there are so many variables involved that it's complicated).
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I totally agree, but I don't think he needs to make it worse. I'd recommend cutting losses.
I hate to keep use a poker analogy for trading, but they're very similar. The guys that lose the most are newer players that keep throwing chips in pot, hoping and praying for a a single card on the turn or river. It still boils down to managing risk.
 
Secatu said:
I'd recommend cutting losses.
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MacBookProHo said:
Traders should always cut losses,
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OP: just get out. Don't negotiate with your losers, dump them!

It's much easier to think clearly when you're no longer getting flogged.

If you hold, it might work this time but you will have been trained by the market to eventually get wiped out.

If you can't cut losses, it's only a matter of time until that happens.

Train yourself with discipline to get out when the trade is not working.

Since you are not a trader, but an investor, this is the first rule of trading for you to practice.

"Cut losses, cut losses, cut losses. If you can do this, you might have a chance". - one of the most successful futures traders ever to enter the markets.
 
Guys he a buy and hold investor who trades off the fundamentals..Hes not a MoMo guy,he doesnt set stops...I would question if the put he is selling is a better play than scaling in,averaging down...

Unless Vol is thru the roof,I would rather be in a risk reversal as the biggest sin is to be right and not catch the move
 
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