Quote from falconview:
Thankyou for the nice comments friend Don Bright
In a rather subjective review over two years. The straight option buyers did better than the option sellers. Admittedly, we didn´t get any kind of measuring returns from most sellers. The straight option buyers and these were small traders, who have no use for the amateur trading forums, were trading $5000, to $10,000 and even $30,000 in one case and were Washington, D.C. Federal employees with discretionary cash. They traded once or twice a year and favored stock companies in natural gas and coal. In one case also oil. All traded options on stocks using ONE YEAR and TWO YEAR LEAPS. They tried to pick the season for company profitable movement. Their returns over two years using their WHOLE ACCOUNT ( 100% ) was reported between 80% and 120% for the year. They were straight buyers and used LEAPS to avoid THETA decay. One guy and his wife just spent 4 days using my pull out sofa, at the beach apartment. He took his wife to see the progress on the second story, of their vacation house under construction out West here, across the Mopan River, white water rapids, from Xunantanich Mayan temple ruin. He has built this property over the last few years using his profits from his trading LEAPS and buying options.
The exception to the rule was Ryan Patrick trading Behavioral Trading on large swinging stocks on earnings reports. His return over six months was somewhere between 400% to 500%. This method requires an intimate knowledge of company stocks over perhaps 3 years earnings reports, to predict behavior. He was straight buying.
The best spread trading reported was 70% for a year on account. These were mainly sellers of options strategies. Most selling traders, were reluctant to report actual account balances. Sort of the temperature guage as an analogy, to measure cold or hot. Going by reports of individual trades on elite trader, spread traders as a group, did not perform well. This may be, because it is the nature of conservatism to limit losses, which also limits profits, using spreads. Profitable and losing trades fluctuated, but did not seem to indicate any sort of sustained revenue stream.
People consistantly using credit spreads and iron condors, seem to get wiped out once, or twice a year.
One player using LEAPS was trading multiple debit spread verticals, over a diversified stock portfolio, reported making money, but gave no percentage of account equity growth, so there is actually no way to judge this one.
Butterflies seemed a favorite of a number of players, this is a selling THETA strategy. In only one case was any sort of return reported, which was 70% for the year. The others seemed to win and lose in erratic, but rather equal amounts. Insufficient data on returns to judge this strategy.
Buyers of options seemed to do far better with fewer trades and long term LEAPS, than short term buyers acting on short term action. Based on the results of the equity curve over a year.
So what does a newbie, or novice like me get from this?
a) It is important to limit losses.
b) It is more important to trade much less frequently, but WIN. Choose your moment carefully.
c) The equity curve growth, if any, is the ultimate proof of trading competency and strategy choosing.
d) The winners, seemed to think that Elite Trader forums were counter productive to winning. Too much time spent on discussing intricacies of different strategies, which hid the fact that the most productive was straight buying and selling. This required TIMING. The promotors of selling strategies claimed better success than buying and selling. The actual results using equity growth, indicated LEAPS for buyers and few trades, but using all your account was a better productive dollar earner.
What will I do this next year if I trade. Change to far out months. At least nine months, maybe a one year leap. Trade less. Still working on that method.
One of the interesting debates was that between chartists and indicators, tape readers, and greek option traders. Many strategies of spreads used the greeks. My own opinion was that it did not matter much whether you used the greeks, or graphical charts and indicators. Tape reading was a seperate method and intuitive through practice, like learning to play a violin. Neither the greek method or the chart method forecast the future. They only reported where you were in the present and in some sense gave you a historical context. The future did not do what either method promised on any consistant basis.
