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This Forum overtrades options
- Thread starter bwolinsky
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Quote from sle:
I do, actually, and I have reasonable doubts that your are as successfull as you claim to be.
By the way how does he KNOW that the forum overtrades options, gulp, I am starting to get a little nervous now. I admit I took an impulsive option trade this week, is he psychic? Maybe others will confess.
Quote from kinggyppo:
By the way how does he KNOW that the forum overtrades options, gulp, I am starting to get a little nervous now. I admit I took an impulsive option trade this week, is he psychic? Maybe others will confess.
Like the indicator Fidelity has that says there's a 90% chance of a 10% move tomorrow?
Used correctly, options are less risky than stocks, futures etc.
Used incorrectly you wont be around long trading.
Most option traders trade to big and use to much leverage.
Leverage is a two edge sword.
The key to successful trading is to trade small.
Work on the art of the execution of the trade.
Money will follow with good execution and vanish with poor execution.
Most new traders make fatal mistakes of being greedy.
Small profits really add up.
Big losses will kill you.
Making only a 6% return will double your money in 12 trades.
90% of winning in trading is discipline and money management, not some holy grail indicator.
Good trading.
Used incorrectly you wont be around long trading.
Most option traders trade to big and use to much leverage.
Leverage is a two edge sword.
The key to successful trading is to trade small.
Work on the art of the execution of the trade.
Money will follow with good execution and vanish with poor execution.
Most new traders make fatal mistakes of being greedy.
Small profits really add up.
Big losses will kill you.
Making only a 6% return will double your money in 12 trades.
90% of winning in trading is discipline and money management, not some holy grail indicator.
Good trading.
Quote from bwolinsky:
Oh, I'm just starting, and I've never said I'm that succesful. My models are, and that's all I'm saying. They will equal billions in the end for me unless I project too much and get knocked off by a looney before I have enough money to pay for a body guard.
So you have a system that has back tested extremely but haven't traded it for any substantial period of time. You are thinking that the idea and execution of this idea will be so far beyond the cro magnons who currently have the money in this trading arena, that when you start relieving of them of their money your life will be in danger?
Interesting thread and thanks everybody. As a newbie directional credit spread trader I recently was burned trying to hit a home run on a weekly and then decided to get away from weeklys as there isn't enough reaction time. Well, thanks to bwo, ice, iv, and others including hankster who partially summarized what I learned, I decided to try the weekly on Thursday afternoon and Friday morning. Traded a OTM put spread and NTM put spread on Captain Kirk and made 10%ROI.
What I figured out on directional credit spreads is that it is hard to decide when to hold or fold when you have a positive credit in the account. As a stock moves around over time between support and resistance everything is fine until it breaks through towards my spread. I need to model into a trade what my acceptable exit point is and stick to it instead of planning on them expiring worthless.
I think someone mentioned trading in the last hour of so of the option period close for some good opportunities. What I observed on Friday is that any big spreads disappeared about 2 hours before the weekly close. However on Thursday afternoon and Friday morning there were some good spreads once I decided on the up direction. They were slipping fast Friday morning though. I figured that NTM spread may lose if there was a late afternoon selloff but there wasn't one this time.
It just appears to me that a number of OTM and NTM directional trades with a small number of contracts on a number of stocks, etfs, and indexes with a decent spread may be better than trying to hit home runs on a trade or two with larger number of contracts. It also looks better with close strike spreads although some stocks only have a $5 strike spread. At least it is quick and I don't need to hit them all. Then I'm just dealing with a small IRA that doesn't have enough capital to go naked on anything too big.
Thanks again and now I'm back to the charts and basics to find some candidates for next week. What I've also found is that once I've studied a stock or the spy and possess better knowledge about it and their direction, I seem to gravitate back to them when looking at spreads.
What I figured out on directional credit spreads is that it is hard to decide when to hold or fold when you have a positive credit in the account. As a stock moves around over time between support and resistance everything is fine until it breaks through towards my spread. I need to model into a trade what my acceptable exit point is and stick to it instead of planning on them expiring worthless.
I think someone mentioned trading in the last hour of so of the option period close for some good opportunities. What I observed on Friday is that any big spreads disappeared about 2 hours before the weekly close. However on Thursday afternoon and Friday morning there were some good spreads once I decided on the up direction. They were slipping fast Friday morning though. I figured that NTM spread may lose if there was a late afternoon selloff but there wasn't one this time.
It just appears to me that a number of OTM and NTM directional trades with a small number of contracts on a number of stocks, etfs, and indexes with a decent spread may be better than trying to hit home runs on a trade or two with larger number of contracts. It also looks better with close strike spreads although some stocks only have a $5 strike spread. At least it is quick and I don't need to hit them all. Then I'm just dealing with a small IRA that doesn't have enough capital to go naked on anything too big.
Thanks again and now I'm back to the charts and basics to find some candidates for next week. What I've also found is that once I've studied a stock or the spy and possess better knowledge about it and their direction, I seem to gravitate back to them when looking at spreads.
Quote from ASE1245:
"A strangle is stupid". Interesting. Trading options delta neutral is a strategy that works, very well, for many traders. Most successful traders are able to make money over long periods of time on the shorts side, but sometimes buying works too. I did this for 25 years with only a handful of losing months. I know other traders that retired younger than 40 years old from trading that way. Still stupid?
ditto
To the OP:
My trading system is based on primarily on short option positions, near as makes no difference delta neutral at initiation. I have structured my system, effectively modified the BS formula to my advantage from the outside and enjoy a 74% win rate with prudent money management (reg T margin has worked great for me).
To those who are new to options trading:
There is no one size fits all solution in options trading(I'm doing this since '95) Neutral strategies work. Explore them and keep an open mind. Have patience and understand there is no get rich quick scheme out there. You need to trade with the pro's and, outlast yourself on the way there in order to succeed. Paper trade in real time. Don't test ideas with $. Your system should be an expression of how you think and see.
Good luck
Good luck
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