that's true, that's exactly why enough capital is vital to an option trader when trading for a living. I have found through experience that what works for me is aiming for 10% on the conservative side and 30% on the aggressive side. This balance has worked for me for a while now. Whenever i try for more, i introduce more risk and my performance tends to suffer over a longer term. Obviously to live off of these returns i need atleast a 500k account.
SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
that's true, that's exactly why enough capital is vital to an option trader when trading for a living. I have found through experience that what works for me is aiming for 10% on the conservative side and 30% on the aggressive side. This balance has worked for me for a while now. Whenever i try for more, i introduce more risk and my performance tends to suffer over a longer term. Obviously to live off of these returns i need atleast a 500k account.
I dunno , Fear is a much more powerful emotion than greed. Panic selling is the thing I hate to see the most when I'm in a PUT spread.
-----------------------------------------------------------------------------------
On the PUT side,there is a fear losing the capital and then there is a fear of losing profits.
On the Call side, there is a fear of missing out(or greed) which can be powerful too(like we found out in late 90s).
I guess thats what trading is all about.Gauging the market sentiment and entering and exiting and protecting.So when you find yourself on the otherside of the market and cant let go of your ego(mental map of reality), thats when you get in trouble.
-----------------------------------------------------------------------------------
On the PUT side,there is a fear losing the capital and then there is a fear of losing profits.
On the Call side, there is a fear of missing out(or greed) which can be powerful too(like we found out in late 90s).
I guess thats what trading is all about.Gauging the market sentiment and entering and exiting and protecting.So when you find yourself on the otherside of the market and cant let go of your ego(mental map of reality), thats when you get in trouble.
Quote from Synaptic:
Coach,
The volatility changes over the last month have me thinking that I don't want to do PUT spreads anymore, only CALL spreads. I'm just concerned that a black-swan event or run of panic selling could crtically hurt my account and psyche. I'm starting to think that I only want to do credit spreads exclusively when stochastics look right and I can stay FOTM. I want to then possibly augment these trades with debit spreads where my potential loss is known up-front. Any comments ?
i dont want to open a can of worms but i believe the FOTM folks on this thread dodged a bullet with this selloff. I think due to the timing of the selloff most people here escaped this with no/minimum damage. However, if the selloff had begun as May positions expired and not 10 days prior, many people would've been in trouble with their june bull put positions which would've been put near the top. I've said this many times before but if you must play the put side, atleast wait until we are near a low which would somewhat increase your odds. I will never understand the rush to be in a position each and every month.
I was in the same position as you with respect to capital needs but once I got into daytrading futures I realized I could spread the cash flow among a few sources so one security was not responsible for all my cash flow. I am trading the options and the futures so I do not put too much stress or reliance on anyone trade or position. ( I am not advocating moving into futures, just an idea to think of other types of trades to spread the money around).
Also, what helps with leverage is bringing in some other peopl's money. I brought in a partner and combined my capital with him and threfore had enough to trade with sooner than if I did it myself. Sure, the profits are split but I am getting more overall since the whole pie is much bigger.
Try and find another like-minded individual or family member to combine funds. You can start small now and in 2 years or so you might both have more funds to get to where you need to go. Just another approach/thought.
Also, what helps with leverage is bringing in some other peopl's money. I brought in a partner and combined my capital with him and threfore had enough to trade with sooner than if I did it myself. Sure, the profits are split but I am getting more overall since the whole pie is much bigger.
Try and find another like-minded individual or family member to combine funds. You can start small now and in 2 years or so you might both have more funds to get to where you need to go. Just another approach/thought.
I am a big fan of Robert Kiyosaki.Most of my options profits go into buying Real Estate which gives passive income.I am researching PPMs to indugle in some speculation.
Or stick far OTM as possible and stop being cute lol. My spreads were at 1215 and although my eyebrows were raised I still had quite a cushion with support in between. It is because of the levels I chose for my strikes based on analysis of the market that I felt the drop would collect itself. Those who were at 1250 or so were cutting it close in my opinion given the range of the market prior to the run up. The market could have easily shaved another 30 points, don't get me wrong. If so I would have adjusted out and move on.
I think I proved with my 1250/1255 spread what happens when you try to get cute AND CHASE PREMIUM.
But Rally's point should be taken that timing of entries is key. If the market is running away from you, no need to chase it with puts because it will most likely come back to you and if you are to close, BAM.
I think I proved with my 1250/1255 spread what happens when you try to get cute AND CHASE PREMIUM.
But Rally's point should be taken that timing of entries is key. If the market is running away from you, no need to chase it with puts because it will most likely come back to you and if you are to close, BAM.
Not at all. I gives both of you the means to trade better with each other to rely on. My partner is completely passive so it is quite easy. As long as I make money each year, he does not care about month to month fluctuations. But partnering up shaved a few years of capital saving and allows us both to make more money than apart. It is not more risk if you have a good relationship/arrangement with the other person. That is why you need a like-minded individual. In other words, do not take Uncle Jake's money who HATES investing and is scared to lose even $1.00.
The effort it takes to please yourself should please the other person anyway so no added stress for me.
The effort it takes to please yourself should please the other person anyway so no added stress for me.
but coach, you have to agree with me that if your may position had expired when the SPX was at around 1325(and selloff was delayed by 10 days), you would've opened up the put side with a short at around 1240 or so for JUNE and many here wou;d've done the same. Now we all know how that would've worked out with the magnitude of the selloff and vix spike.
Well since I like you I will not launch into my anit-Kiyosaki tirade. let me just say that the little he writes about options in his book are so wrong I almost wretched.
But you understood my point in general. I also invest in real estate and have been teaching at GW here for different streams of income. It smoothes out the income bumps and also keeps you mentally diversified. Also is quite fun!
But you understood my point in general. I also invest in real estate and have been teaching at GW here for different streams of income. It smoothes out the income bumps and also keeps you mentally diversified. Also is quite fun!