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Simple, Highly Profitable & Safe... Strangle-to-Collar
- Thread starter jones247
- Start date
Walt,
You may have checked this thread http://www.elitetrader.com/vb/showthread.php?s=&threadid=117842&perpage=6&pagenumber=1
If you did not, I suggest you do. Read for instance some responses from Atticus to straddle writing. People in general try to get away from pin risk. Atticus went the opposite way. A fund took his idea and make a money machine with it. The morale of the story I think is related to what I said earlier: challenge everything even the most accepted traditions! So pin "risk" might in fact be pin "reward"
You may have checked this thread http://www.elitetrader.com/vb/showthread.php?s=&threadid=117842&perpage=6&pagenumber=1
If you did not, I suggest you do. Read for instance some responses from Atticus to straddle writing. People in general try to get away from pin risk. Atticus went the opposite way. A fund took his idea and make a money machine with it. The morale of the story I think is related to what I said earlier: challenge everything even the most accepted traditions! So pin "risk" might in fact be pin "reward"
Quote from riskfreetrading:
Walt,
You may have checked this thread http://www.elitetrader.com/vb/showthread.php?s=&threadid=117842&perpage=6&pagenumber=1
If you did not, I suggest you do. Read for instance some responses from Atticus to straddle writing. People in general try to get away from pin risk. Atticus went the opposite way. A fund took his idea and make a money machine with it. The morale of the story I think is related to what I said earlier: challenge everything even the most accepted traditions! So pin "risk" might in fact be pin "reward"
You have to look at the whole picture and not compare apples to oranges in regards to how you want the stock to move if you are short or long options.
Another good post to read:
Don't believe in option exp pinning?
http://www.elitetrader.com/vb/showthread.php?s=&threadid=114482&perpage=6&highlight=pin&pagenumber=1
Quote from riskfreetrading:
Walt,
You may have checked this thread http://www.elitetrader.com/vb/showthread.php?s=&threadid=117842&perpage=6&pagenumber=1
If you did not, I suggest you do. Read for instance some responses from Atticus to straddle writing. People in general try to get away from pin risk. Atticus went the opposite way. A fund took his idea and make a money machine with it. The morale of the story I think is related to what I said earlier: challenge everything even the most accepted traditions! So pin "risk" might in fact be pin "reward"
Thanks for the reference; however, I posted my confusion about such a tactic on that thread. Hopefully, someone can demonstrate the profitability of such a system.
Walt
Quote from jones247:
Thanks for the reference; however, I posted my confusion about such a tactic on that thread. Hopefully, someone can demonstrate the profitability of such a system.
Walt
I'm not in a position to demonstrate the profitability of the system. The method earns via a dispersion model in which component vols exceed index. Position are taken on a strike touch. I can't comment on the hedging. Pinning is best case, but it's not a model assumption. Initial transaction neutrality is a model condition.
Quote from atticus:
I'm not in a position to demonstrate the profitability of the system. The method earns via a dispersion model in which component vols exceed index. Position are taken on a strike touch. I can't comment on the hedging. Pinning is best case, but it's not a model assumption. Initial transaction neutrality is a model condition.
Atticus......why are you posting on ET? You are showing a poor example to all your supporters of the ET boycott.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=117554
Quote from riskfreetrading:
Walt,
I did not mean in my post to be negative. I rather want to say that you seem to have the right temperament and attitude to be successful in options trading. Continue to question everything (even if what you question is right) as this will strengthen your understanding and skills. An edge does not need to be necessarily a mathematically/experimentally proven edge. It could also be that you are or will be better than the next fellow playing a similar game. If view options trading as "gambling", there are differences. In this case you design the system and you set your own rules as opposed to gambling in a casino where you are subject to their rules. Even if you were to go it with the probability/gambling edge (in terms of designing your system) it is still not really gambling as you are offering a service to the finance services. Remember, options that you write may be used by others to hedge which is useful to society. There is some value here, but your business will need to be managed as a business even if sometimes you may have to ran it as a "gambling" house. Probably you should rather view it as an insurance business (if you are a net writer of premium).
In my reference to long premium, I did not mean that you should be overall long premium. In fact I think you should not, because we know that the general public is general long premium and the professionals are predominantly short premium. What I was trying to say is that you should buy those 1cent to 2cent options to protect yourself. Take their cost from your profits, and you will feel/sleep well.
There is also the other protection that the long options offer. Imagine your broker decides to change his margin. It is the broker's right to do so. If your margin is not there, they will liquidate your position at the worse price and possibly even with a huge bid/ask price. Your position can profitable if held to expiration. But if the brokers close it, you would lose your position, potential profits, and would close it at a bad/negative results.
The point is that you should make sure you are the commander of your ship/destiny, and that you make the calls and no one else. Control is priceless!
Lastly, I do not think you should abandon your idea. Push it further. If it does not work, another idea will pop out. Your idea created debate. That is good, and a sign that greater ideas will be coming. What I and others say, while are written to help and are genuine, they remain opinions/views etc. So do not hesitate to pound on them and questioned them (even if they are right).
Bottom line will be that you will make money. If I have to bet, I think you are or will make money.
hello,
this thread is very interessant, tks to everybody and particurarly tks to walt and riskfreetrading. tks for your contribution....
i'm a partime futurestrader (not a good one.....fortunately i've a solid work alternative to trading.....) since many years, i tested with very little result almost everything with easylanguage in order to find a solid strategy to automate....but for me nothing works. indicators, averages, divergences, bollinger, fibonacci, eliot, spreads, ross, etc. ..... never found a strategy with a solid, good profit factor...(the only very good pattern and strategy in my opinion is the ross hook.....but needs a good trader...).
with options i'm a newbe but i'm very interested in OPTIONS SELLING. I've read the libertytrading book (james cordier) about option selling and i think they're right. i know what everyone says about option selling and about the "risk" on naked options. I'm convinced that the best strategy on SP500 would be the one described in this post by james cordier (the strategy used by cordier works on commodities and only a few trades on sp 500...): please read the post....
http://www.libertytradinggroup.com/market-commentary.html#article
i'm not able to find the error in cordier strategy, probably why i'm a newbe, but it seems to be all very simple.
I'd like to open an account with libertytrading group and if everyone has an experience with those guys or something to say on my post and on libertytrading strategies, it will be very appreciated.
Walt is right, liberty trading sell naked options (very OTM) but only on commodities after a fundamental analisys. On sp they sell covered calls or covered strangles (very OTM options) using a part of premiums in order to edge the position (credit spreads). In this cases (with covered positions) where is the risk (a little loss ok....but no more of a little loss i think....)??
where is the error? am i blind? perhaps the problem would be with "pin risk" (every strategy has a stoploss, cordier exit at double, and i think i'ts possible exit the options without going to expiration....and to pin risk...)
tks in advance for your replies but please read before james cordier commentary......
michele
If there was a tactic out there that produces 0 to 20% profit (which means no loss risk) the whole investment universe would collapse. Your idea can't exist. Its like a perpetuum mobile. The chance on gaining 20%/month with the risk of going b/e??? Oh my god. Guys: Think logically.