Trading Long Straddles

Okay, found private mail on here.

It has been a week of soul searching. I´ve decided to start trading with Long STRADDLES/STRANGLES. Probably pull a CONDOR or Butterfly if the QQQ goes into a range, congestion also. I don´t have much in the way of money in the account, so will start with one contracts and see how it goes?

These latter two were useful in a trial and error way of guess estimating the weekly high and low.

I´m going to give the Straddle and Strangle a go, based on the comments and experiments I´ve made with adjustments. This morning I noticed that I did not have a STRADDLE on the option chain, but there is a STRANGLE, one strike apart. Going to think about that differential a bit, and how to adust using such a trade.

There was a suggestion by Whispering Leaf who trades LEAP type Vertical Spreads, about 50 + at one time running. He suggested I trade almost any type of trade I like, ALL are good, when used properly with TIMING. The important thing is become familiar with the strategy and learn all the tricks and nuances. I thought that was a good suggestion. I think I will trade 90 day STRADDLES/STRANGLES with my own idea of adjustments. One thing he said, he dropped Butterflies, Condors and Calendars, because of losing too much money. From that he inferred it is better to trade something you are familiar and comfortable with. Sounds like a good idea.
 
Long Straddle , sold half the straddle, the PUT, as I put in a price target sell order and had to go do business elsewhere, running errands. It got filled while I was away for four hours, a gain of .80 cents. Less .10 cents commission, + $70. ( +12% )
However I am now holding a long call, now OTM. I'm probably going to AVERAGE it down and buy 2 more, about 2 strikes down. That would be then 3 - 62 CALLS, all together, intended to lower my breakeven on any re-bound. I am waiting for the next STRADDLE to equalize PUTS AND CALLS, hopefully around the 60 STRIKE. Then I will buy another straddle. That's the plan, at the same time, expect that would be when I also buy another 2 OTM 62 Calls to lower that breakeven.
The 62 Calls right now are about $2.03.
If I had closed the STRADDLE it would have grossed $16. So by closing the winning side it made gross $80. It would lose for such a small move as a long straddle and needed to move 2.5 or 3 strikes. Just using the winning side, I could price target the market action and forget it.

I'm looking to put on another STRADDLE if the PUTS and CALLS come even again, somewhere around the 60 or 61 STRIKE.
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I did a paper trade on the overnight WEEKLY Thursday/Friday STRADDLE. Closing the failing side, at a half hour into the market for .04 cents. The winning side just closed it ( paper theoretically ) for a gross gain of +.55 cents. I'm not convinced this is a good trade yet, so will probably only paper trade it each week, to see how it runs over more samples.
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CONDOR
With a down trend, I was very scared to guess the STRIKE or index for a CONDOR TRADE. But it would have made money had I done so, as if I remember rightly my guess for the CONDOR was in 61 strike range. I sort of wanted it on Thursday, but it did do that on Friday for expiration weekly. A trade never made unfortunately.
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LONG STRADDLE TO THE HALF STRADDLE TRADING.

The method of trading the Long Straddle as a unit, for entering, but exiting by using the half straddle, has it's own problems. The Straddle being a non directional trade, is a fine trade. You sit and wait for the market to come to you, at your price targets. No guessing. The trouble with it, is that entering and exiting as a full straddle trade, it doesn't earn much, about 3%. Takes long sometimes to cover the fluctuations also in market movement. In the QQQ it takes about 3 strikes. If treated as entering as a UNIT, the Long Straddle, the exiting with a fixed target profit, occurs much faster, and more profitable. You can sell off the HALF STRADDLE winning side for a bigger profit, faster at about a 1.25 strike movement in the index. This half straddle profit earns about 12%. The other variable, is how many times can you repeat with it?
Then you are stuck holding a half straddle, LOSING SIDE. What to do with it? About the only two ways I have so far tried and figured out, is to either AVERAGE DOWN, the losing HALF STRADDLE, to lower the breakeven point. With one side winning 12%, the other side only has to break even, and does not need a profit. Or re-establishing the profit side you just cashed in. Using DELTA NEUTRAL to figure out how many contracts you would need. In another 1.25 index strikes, you would have a profit again and repeat ad finitum. At some point I suppose you would have to let the Long Straddle run for the full 3 strikes needed to close it again as a UNIT. I would think, just guessing, you could get three, ONE HALF WINNING PROFITABLE trades out of a LONG STRADDLE, before going to the trouble of letting it trend, to exit as a unit. In order to eliminate TIME DECAY as a factor using 90 day options.
I'm at that point where I am dealing with what to do with the left over LOSING HALF STRADDLE. A work in progress. My original intent, or mission goal, was to create a trading system, that had absolutely NO LOSING TRADES. Ignoring any GREED FACTOR in building equity. I sort of thought if I could, after paying the IRS 40% of the profits at the end of the year, and end up with 18% to 20%, I would be in business, conservative and safe, and far better than the 1/2 of 1% my savings account is currently paying me stateside.
 
Quote from falconview:

. My original intent, or mission goal, was to create a trading system, that had absolutely NO LOSING TRADES.
More...


When you do that do you plan to share?:p
 
Ha Ha Richard. This is a work in progress. Just follow the bouncing ball. If your not old enough to remember Saturday movies, that had sing alongs, with a bouncing ball, well, what the heck can I say.

My views on what to do next, change nightly. As I dream about it.

I'm rather amazed that any of you long term traders, would even read the gibberish of a novice? I'm being forced to trade by the option chain, I can see in this building experiment of a trading system. The charts are sort of interesting, but it is the prices that dictate the next action. Something new I've learned.

I sort of posted on here, so you EXPERTS would kibbitz and catch some of my errors. So far, it has been DEAD SILENCE. I haven't a clue how to interpret that?
 
Can't speak for anyone else but honestly Falcon I don't read most of your ramblings. Just glance thru and shake my head...sorry...and quite surprised anyone else esp. Atty bothers. There is NO substitute for experience, even if its just paper trading for a year. Most people don't have the patience, they want to get their money to WORK NOW. After a number of years I'm still a bloody novice...still get caught with my pants down. The only difference is I have learned to take my loss before it becomes unmanageable and live to trade another day. Perhaps one of these days I actually WILL go away in May.

Having said all of this, what you are going thru has been gone thru by many and these forms have a ton of info. Most just don't want to bother re-hashing all the talk that has gone on before. What I did was pick people and go back and look at old posts and threads that covered the topics I'm interested in and wade thru all the crap. Over the years....and I repeat...YEARS...I've actually picked up a few bobs of gold.
 
Aaaah well! This novice keeps on trying, until I lose some money.


Just reading one of those threads of Richard done my Maverick. It was interesting reading. It was about a butterfly front month and a wrangle on the back month. CALENDAR. It was sort of interesting, then it got too convoluted. As a novice, I just want one or two strategies that I would learn well, with all the adjustments, tricks and nuances solved and learned. Then repeat endlessly. It's the nuances that are the problem under different market conditions. All strategies seem to work under their best conditions of playing. Identifying instinctively, or by finding something that fits the framework, like a stock seems to be the secret to applying strategies on a regular basis.

I was fascinated by the LEAPS, vertical debit spread system, but lack the money and TIME to get into it at this point. I have to build back my cushion with some wins, before I experiment much more learning. The idea that you could make four trades, and 2 would win, 2 would fail and you still would PROFIT 200% from that particular one trade was fascinating. Or one win, and two lost trades and you break even. So you can hit many vertical debit spreads if you go OTM for under $1 spreads. That sounded like a good system. Perhaps in the future.

Right now I'll keep persueing my LONG STRADDLE system until I either get it to work the way I envisage, or lose some money and become discouraged. Got a bit of time invested in this idea over the past two years of learning different strategies. I'm also in favor of condors and butterflies. Just not yet ready to go wandering around the stock universe looking for congested range bound prices. My small capital is invested in the LONG STRADDLE, until I either make it work, or fail. I like KISS methods.
 
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