Tastytrade

Today's nugget is that they have researched gap fills and concluded it's not a good idea of fading 3 standard deviation gaps.

WOW, really whoda thunk not to fade breakaway gaps, yet they don't go the next step of going with those large gaps.

I must stop watching, my sides are sore.
 
For the naysayers of systematic options trading..

Its funny the box that some trader put themselves in, whether its because they have not expanded their education or they take everything for face value.. I have been a TT listener for just over a month. What brought me over was they have done some of the exact studies that I have done. (In excel, with free historical data). Systematically trading options can be as simple or as complicated as you can dream up and 100% possible. For example, selling a 10 dollar wide strike vertical, on Apple every 30 days, that are 20 strikes away from ATM. I just thought of that, as I don't trade individual stocks, but if you can test that based on 100 plus occurrences over 5 or so years.. You may be on you way to opening your "systematic option trading" mind.
 
N2M said:
For the naysayers of systematic options trading..

Its funny the box that some trader put themselves in, whether its because they have not expanded their education or they take everything for face value.. I have been a TT listener for just over a month. What brought me over was they have done some of the exact studies that I have done. (In excel, with free historical data). Systematically trading options can be as simple or as complicated as you can dream up and 100% possible. For example, selling a 10 dollar wide strike vertical, on Apple every 30 days, that are 20 strikes away from ATM. I just thought of that, as I don't trade individual stocks, but if you can test that based on 100 plus occurrences over 5 or so years.. You may be on you way to opening your "systematic option trading" mind.
More...

Perfect example, collecting 40 to risk 940.
 
DTB2 said:
Perfect example, collecting 40 to risk 940.
More...

i definitely didn't do the math on that, i thought i stated why as well.. if that is acceptable to the trader.. to each his own.. it was just to illustrate a systematic way to find, research, backtest and go thru the process of systematically trading options...
 
I trust no one's backtesting except my own. I have backtested this "blind" method, and once I accounted for volatility, there was no money in it. If, however, you can do better than a coin flip at guessing the direction of volatility, then you can make money.
 
So most options traders including TT seem caught up with probability. I'm more intrigued with maximizing payoff, which is probability weighted reward/risk, p*(reward/risk). The maximum in the payoff curve may come at the ITM strikes.

I've been too chicken shit to sell those strikes, nor have I done extensive backtesting of this approach. Anyone have any words of wisdom on payoff vs probability.
 
I see why conversations like this always fall off the rails. You guys are confusing semantics with your point of view.

"accounting for volatility" in your head might mean something, but to those you are arguing with, that statement is completely vapid. What do you mean once you've "accounted for volatility" there is no money in it.

"analyzing payoff" Huh? If that means something to you great, but it's unlikely to mean a thing of substance to anybody else reading.


It's more likely that most successful option traders are employing very similar strategies, and the reason they disagree is simply because they have assigned improper use of the English language to explain why they are successful. Just talking over each other, same overall principles, but different semantics...
 
I thought I was adding to the conversation about systematic trading. At the end of the day everyone has their own methods and reasons... I for example do not like to sit and analyse all day and I searched for a way to make the same trade repeatedly... It took me over 3 months and 20+ years of backtesting, but i have found a method that work profitably and one that works with the amount of time I have dedicated to trading. @panzerman I'm not focussed on maximizing payoff, as anyone instance of my trade might lose, because I do the trade so frequently it doesn't matter. @drcha you can't just zone in on payoff, you have to find a balance, in all the criteria you look at. risk/reward/probability/timeframe/etc...

Vixtrader has it right, those that think it can't work.. you are building walls around yourself.
 
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