SPX Credit Spread Trader

[kapil]

Quote from andysmith:

Well, Mav, I gotta say I can't disagree with anything you've said here... thanks for answering.

I am curious, what does it take (account at your firm, account size?) to have you share your 11 years of development (the win-win being that your firm shares the success of the person you share your learnings with)?

I would be interested in this as well Mav.

You should share what you are comfortable sharing and not feel obligated to divulge more. I would prefer to read what you are willing to talk about rather than nothing at all. I am learning a lot from you and many others on this thread and want to give a belated thanks.

Kapil

 

[rallymode]

Quote from cohenmichaela:

I suppose my only point was that Mav originally said he never sold naked premium and that only bad traders do so. I find this to be a very abrasive and totalitarian remark.

Actually it isnt and i think it is spot on. Perhaps a little rude but i believe it was meant so to strike a point. If you have traded on the floor you would know that the successful traders almost always bound their short gammas. It is a very common theme amongst new traders to sell naked gamma lured by the credit received or cheap gamma lured by the high probability. A person who intends to do this for a living and live to tell about it is almost always bounding short gammas or hedging against it. The ones that dont, end up either LUCKY if they quit while they are ahead or BAD if they lose it all. Which one would you like to be?

 

[cohenmichaela]

Quote from IV_Trader:

would you agree with me that one should trade successful/proven strategy on compound bases ? if yes , then naked selling ( OR credit spreads) is always ONE bad trade/biblical event away from losing it all. And its doesn't matter if you shorting only 10% from your portfolio : the fact is that naked selling as a stand alone strategy lost it ALL . As time passes , odds for this bad trade to happen is growing.
Good trading to you

I agree with you that one should trade the strategy that offers them the most profitability with the least amount of risk. I'll express this again, I personally am not advocating anyone to trade strategies in which they don't fully understand the risk (including selling naked premium).

Taking that further I'm not advocating any strategy in which to trade. I'm only making a simple comment regarding the singular nature of Mavs post.

It's very easy to say people should think (and trade) like I do and if they don't they're bad traders. I personally think it's more beneficial to share educational facts and experience, and let individuals decide for themselves what is right for them.

With this in mind, I believe there are successful naked premium sellers in this world who manage their risk effectively although I am not one of them. I'm not saying they don't lose money or even have very large losses on trades. I'm just saying that I believe there are people who use this strategy (over time) profitably.

Good trading to you as well!

 

[cohenmichaela]

Quote from rallymode:

Actually it isnt and i think it is spot on. Perhaps a little rude but i believe it was meant so to strike a point. If you have traded on the floor you would know that the successful traders almost always bound their short gammas. It is a very common theme amongst new traders to sell naked gamma lured by the credit received or cheap gamma lured by the high probability. A person who intends to do this for a living and live to tell about it is almost always bounding short gammas or hedging against it. The ones that dont, end up either LUCKY if they quit while they are ahead or BAD if they lose it all. Which one would you like to be?

If the choice is trade like floor traders or lose everything then I think I'll pass on this whole business. Luckily for me that's not the case as there are many ways to be profitable that aren't necessarily what someone on the floor is doing. I suppose it's extremely lucky for me as a friend of mine at the CBOE is telling me his profit margins are shrinking on a daily basis with the advent of more competitive processes.

I believe you are trying to protect people from the lure of premium who don't fully understand the risk. I applaud you for your efforts but I think history and statistics will show that just telling someone it's bad to do something won't have your desired effect.

 

[rallymode]

Quote from kapil:

I would be interested in this as well Mav.

You should share what you are comfortable sharing and not feel obligated to divulge more.

I cant help but note how this is turning into a "figure out the way mav trades" discussion. I dont want to be rude but it almost sounds like people are asking for a handout. In my opinion, if you havent figured out the way mav trades by now, you will not be able to manage the greek risk of his month to month approach anyway, much less pull income out of it.

Below is the biggest giveaway for all you "detectives" out there. There is only one way to achieve this. Perhaps you should do you homework.

Quote from Maverick74:

Let's just say I'm a premium seller that is net long contracts that attempts to own as much curvature as possible for little or no cost.

 

[rallymode]

Quote from cohenmichaela:

If the choice is trade like floor traders or lose everything then I think I'll pass on this whole business.

It has nothing to do with being like floor traders. It was only a reference used to emphasize the professional aspect of the argument. You are doing this for a living arent you? Isnt job security an important part of your assessment?

 

[LeonPhelps]

Quote from Cache Landing:

And guys, you really shouldn't be giving MAV a hard time. You're asking someone to put in a decade of research and hard work, and then just turn it over to you for free.

Hey I don't want nothin fo free. I'll offer to give up my four generation dry rub rib recipe handed down by my gran-ma-ma (God rest her soul).

 

[domestic]

Quote from rallymode:

Actually it isn't and i think it is spot on. Perhaps a little rude but i believe it was meant so to strike a point. If you have traded on the floor you would know that the successful traders almost always bound their short gammas. It is a very common theme amongst new traders to sell naked gamma lured by the credit received or cheap gamma lured by the high probability. A person who intends to do this for a living and live to tell about it is almost always bounding short gammas or hedging against it. The ones that dont, end up either LUCKY if they quit while they are ahead or BAD if they lose it all. Which one would you like to be?

probably what gets people worked up is the perceived rudeness and arrogance. for the record, i understand it; mainly because i can act like that occasionally in my position outside of options. it took me over a decade to master my business; and now that it is among the best in our state, i sometimes come off a little ....arrogant. human nature.
now to options. i don't know how it got to naked writing; but in my case i have been doing that to some degree for 11 years. none "unbounded". i just do not discuss those details. i have always made money; just now i am trying to step it up a little. maybe when i have a naked play, i will include how each one is hedged.

i would like to learn how to build those positions that mav alludes to and also be able to manage them effectively....maybe i may try to see if i can become a "vested interest also"....

 

[cohenmichaela]

Quote from rallymode:

It has nothing to do with being like floor traders. It was only a reference used to emphasize the professional aspect of the argument. You are doing this for a living arent you? Isnt job security an important part of your assessment?

I believed it was a reference. I've read posts of yours in the past and know you have both knowledge and experience in this industry. I was merely trying to make a point that there are many ways to be successful and the only consistent rules I've experienced pertain to creativity and risk management, not specific strategies.

Your argument (as well as others) is that you can't be successful managing risk while selling naked premium. It is here that we'll have to agree to disagree. I'm not successful at selling naked premium because I don't do it (nor do I advocate it). But there are people who are.

To answer your question I have multiple sources of income both in and out of the financial markets. And yes both short-term and long-term success (job security as you put it) are very important to me.

Cheers

 

[cohenmichaela]

Quote from domestic:

...
i would like to learn how to build those positions that mav alludes to and also be able to manage them effectively....maybe i may try to see if i can become a "vested interest also"....

Easy, just search for "Perfect Position" and "Wrangle". You'll find all of Mav's secrets.

Sorry Mav, I couldn't resist