SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
Yeah, like all premium sellers, I am pretty sure he sells crack out of his garage.
You also said if I could demonstrate double digit returns and a less than 5% drawdown, you would issue an apology for your typically insulting comments. I did better than that, showing audited numbers going back 7 years from a CTA with 40MM AUM. But of course you crawfished and instead accused the CTA of being a crook. How convenient.
You also said that 5% short-premo wipeout moves happen every day. I see 7 years of trades in the above record, including 9/11. Where's the wipeout?
Its sad really. You have alot to offer, but you suffer from the typical anonymous internet posting syndrome. You can't help but abuse others to try to improve your own self-image. I'm sure you don't talk to people in real life like you do on the internet. If you do, you should probably get some counseling.
I honestly don't have a problem with the meat of your argument. You just come across as such an arrogant bastard, I can't help but take up the other side. That is probably a mistake on my part. I agree that if people just go off selling premium, they are likely to blow up. I don't want readers to start selling the first 10 delta option they can find. But I also don't want people to close their minds to a strategy that *does* work for *some* people, just because of some overbearing broker on a chat board.
Dude, just quit wasting time and gimme your money...Quote from jeffm:
Here is my cynical view on short gamma:
1) 95% of all traders and all strategies lose money
2) A good premium collecting trader can make consistent money.
3) Any short gamma trader (good or bad) can be wiped out by a 3+ sigma event.
So if I can be a good short gamma trader and my only fear is a rare catastrophe, I'm already way ahead of the other 95%. Is that so bad?
If I'm a bad short gamma trader, I will join the other 95% regardless.
Don't do it jeff - make him work for it at the normal static market [edit] theta decay rate of time. But watch him sweat in week 3 when the credit relationship inverts and the money looks like its coming back our way. But if you just hand it to him up front like a premium seller you will kill the average hourly rate for the rest of us. Then everyone with a low opinion of premium sellers will be looking for handouts...
Wait. Gentlemen, I have an idea. I propose a bet - those against the selling of cheap gamma become a market maker for a few periods on SPX. Be on the buying side for those of us that want to sell you the cheap and dangerous gamma at traditional b/a spreads. Winner take all. Or, those predispositioned toward the notion of "Luck Egalitarianism" (http://en.wikipedia.org/wiki/Luck_egalitarianism ) and feeling guilty can donate all winning proceeds to a recovering traders anonymous charity or some other charity of the winner's choice
TS
This silly bet of yours proves nothing. MAV would be the first to tell you that buying that premium is going to lose in the vast majority of cases.
But, if you offered to wager - and if were possible to make such a wager - that you would sell such premium every month for the next 100 years - I'll wager that MAV would accept your terms. But, it's way against the odds for him to accept for some limited amount of time (until you decide you proved your point and stopped selling).
All he is saying is that a wipeout is possible when you sell naked options. Period. An intelligent trader does not expose himself to being wiped out, unless the reward justifies the risk. And I'm speaking with years of experience as a CBOE market maker - one who ignored that ultimate risk. I've carried more than one thousand naked short options at one time (many different times).
I don't plan to ever be short even another one-lot.
Mark