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Trading Long Straddles
- Thread starter falconview
- Start date
We are friends Atticus. At least I look at it that way. No problema! You are not offending me.
If you really want order details, could do it by private email. I'm just summing up the results of the orders outstanding on here. There is only one or two fine details of entry, or exit I might discuss, that is not on here in the public forum. I doubt they would add anything to your knowledge that isn't already on here.
The whole theory relies on my being able to work the average balance toward the breakeven. On the losing side and I haven't got enough trades yet, to say whether it works or not. Next three weeks should show that one way or another. I'm just averaging down.
If you really want order details, could do it by private email. I'm just summing up the results of the orders outstanding on here. There is only one or two fine details of entry, or exit I might discuss, that is not on here in the public forum. I doubt they would add anything to your knowledge that isn't already on here.
The whole theory relies on my being able to work the average balance toward the breakeven. On the losing side and I haven't got enough trades yet, to say whether it works or not. Next three weeks should show that one way or another. I'm just averaging down.
CAN AVERAGING DOWN USING THE MONTHLY BAR CHART, WORK AS A VIABLE PROFITABLE TRADING STRATEGY USING OPTIONS?
I'm trying it, but curious what others might think?
I'm trying it, but curious what others might think?
Quote from falconview:
CAN AVERAGING DOWN USING THE MONTHLY BAR CHART, WORK AS A VIABLE PROFITABLE TRADING STRATEGY USING OPTIONS?
I'm trying it, but curious what others might think?
You're all over the place. If you want to invest passively then write some puts, cash secured. You're not going to make much, but booking some gains will feel good. If you goal is a philanthropic nest egg then you have some time to do that.
Do you want me to post some candidates?
Quote from falconview:
We are friends Atticus. At least I look at it that way. No problema! You are not offending me.
If you really want order details, could do it by private email. I'm just summing up the results of the orders outstanding on here. There is only one or two fine details of entry, or exit I might discuss, that is not on here in the public forum. I doubt they would add anything to your knowledge that isn't already on here.
The whole theory relies on my being able to work the average balance toward the breakeven. On the losing side and I haven't got enough trades yet, to say whether it works or not. Next three weeks should show that one way or another. I'm just averaging down.
I am not doubting you in the slightest. I couldn't follow it, but it's not important. I hope you're killing it. You may want to peel off some of those long calls when we touch 54-55 on ES today.
Well the only question in my mind is the averaging, on the losing side. The accumulation of long options as you average. I've read up this morning a bit about it. People are all over the place as far as opinions.
The difficulty is in pin pointing the high, or low of the monthly bar. There is a problem averaging, if you go on too long in a trend. I'm watching my 60 PUTS accumulation right now with trepidation. This one is the real test. There is an edge, so to speak; in that I don't have to make a profit on this leg. I only have to break even, to keep the profits from the other winning side of the straddle. The other thing is to keep my spacing wide enough to stay within my ability of capital to do averaging. I'm allowing three trades, per monthly bar for averaging. Doubling up each time. I've done the arithmetic and that seems the best performer for averaging. The other blessing is that the further OTM you go, the cheaper the options get. I think I am going to be able to stay under $1000 total with this averaging leg. With the goal, solely of hitting breakeven at some point in a five week period.
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I ran across this trading method by somebody named ( whoops didn't write his name down ) Anyway the Elite trader post was 2 years old. Said it was successful, but he was scalping. I checked the scalping idea, but while that might work, it would put me into day trading possibilities, which is verboten by the Exchange. If I widen the gap, to two strikes, it would fit in a weekly trading format. At any rate, the guy says he buys options 5 strikes out the money, both puts and calls, then scalps. I did some figuring on paper with it. It didn't seem too far different than what I'm inventing, for the losing leg of a straddle. In his case, he said to trade, or scalp DOLLAR AMOUNTS and not contracts. I'm trying a paper trading on the idea to what happens, with this. Of course going against such an idea is that OTM, or the further out you go, the smaller the premium moves. Looking at the QQQ this moment, the 69 CALL is at .48 cents and you would need 2 strikes to get .78 cents. That would earn .30 cents. ( About a ten day swing ) On the PUTS the 5 strike OTM is much higher in premium at $1.48. I'm sure the difference between .48 cents and $1.48 in premiums for 5 strike, OTM CALLS and PUTS is telling me something about the expectation of the market, but I do not recognize what that premium differential is saying? At any rate, I was looking for confirmation of averaging the monthly bar would work, if not to make another profit, but at least reach a new breakeven closer into the market action. With the idea of solely closing the whole long straddle altogether, keeping the original profit. The stuff I have been reading is not conclusive enough. So it will have to be trial and error, with my real cash money.
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The difficulty is in pin pointing the high, or low of the monthly bar. There is a problem averaging, if you go on too long in a trend. I'm watching my 60 PUTS accumulation right now with trepidation. This one is the real test. There is an edge, so to speak; in that I don't have to make a profit on this leg. I only have to break even, to keep the profits from the other winning side of the straddle. The other thing is to keep my spacing wide enough to stay within my ability of capital to do averaging. I'm allowing three trades, per monthly bar for averaging. Doubling up each time. I've done the arithmetic and that seems the best performer for averaging. The other blessing is that the further OTM you go, the cheaper the options get. I think I am going to be able to stay under $1000 total with this averaging leg. With the goal, solely of hitting breakeven at some point in a five week period.
_______________________________
I ran across this trading method by somebody named ( whoops didn't write his name down ) Anyway the Elite trader post was 2 years old. Said it was successful, but he was scalping. I checked the scalping idea, but while that might work, it would put me into day trading possibilities, which is verboten by the Exchange. If I widen the gap, to two strikes, it would fit in a weekly trading format. At any rate, the guy says he buys options 5 strikes out the money, both puts and calls, then scalps. I did some figuring on paper with it. It didn't seem too far different than what I'm inventing, for the losing leg of a straddle. In his case, he said to trade, or scalp DOLLAR AMOUNTS and not contracts. I'm trying a paper trading on the idea to what happens, with this. Of course going against such an idea is that OTM, or the further out you go, the smaller the premium moves. Looking at the QQQ this moment, the 69 CALL is at .48 cents and you would need 2 strikes to get .78 cents. That would earn .30 cents. ( About a ten day swing ) On the PUTS the 5 strike OTM is much higher in premium at $1.48. I'm sure the difference between .48 cents and $1.48 in premiums for 5 strike, OTM CALLS and PUTS is telling me something about the expectation of the market, but I do not recognize what that premium differential is saying? At any rate, I was looking for confirmation of averaging the monthly bar would work, if not to make another profit, but at least reach a new breakeven closer into the market action. With the idea of solely closing the whole long straddle altogether, keeping the original profit. The stuff I have been reading is not conclusive enough. So it will have to be trial and error, with my real cash money.
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As to candidates for Selling. No I don't need them right at this minute. I'm working on using the CONDOR, or the Vertical Debit spread. That study was really educational for me. Especially the tidbits, or tricks that people put in. Presuming all goes well, the condor, or debit spread, and the Long straddle if it works out, would be the basic core of my new endeavors. It takes weeks to find out, but no longer have the pressure of having to make money on my account, as I missed my $10,000 breakeven June deadline and the next deadline is Xmas. I'm relaxed and if the debit spread works out as 1/2 a condor, will probably switch in a week or two to cash trades. Until I fail at the cash Long Straddle, plan to keep doing it. It is slow and mechanical almost.
I know averaging works, but if you get caught in a trend, it doesn't. I remember 35 years ago when trading stocks, keeping three dogs in a stock trading method and it took me 9 years to trade them to 20% profitability. We shall see on this monthly bar thingy if it will work out? I think if you had a GAPPING monthly bar though in a trend though, you would lose money.
I know averaging works, but if you get caught in a trend, it doesn't. I remember 35 years ago when trading stocks, keeping three dogs in a stock trading method and it took me 9 years to trade them to 20% profitability. We shall see on this monthly bar thingy if it will work out? I think if you had a GAPPING monthly bar though in a trend though, you would lose money.
Falcon, you opened this thread stating that you failed at credit spreads.... do you mind if I ask what "rules" you used to enter those trades....
I have been working credit spreads successfully for a few months now...
Only trade on items such as IWM, RUT, NDX, SPX, etc.
No more then 40 days to expirations
Delta of less then then 5... looking for less then 4.
I have been close a couple times (within 10% of ATM)... Try to be far enough out so I so not have to "adjust" or dump the trade...
Have added over 5% to my account using this over the last few months...
I have done a few other things such as Naked Puts and Covered Calls that I have not been so successful at.
Knock on wood... I reamin so lucky...
I have been working credit spreads successfully for a few months now...
Only trade on items such as IWM, RUT, NDX, SPX, etc.
No more then 40 days to expirations
Delta of less then then 5... looking for less then 4.
I have been close a couple times (within 10% of ATM)... Try to be far enough out so I so not have to "adjust" or dump the trade...
Have added over 5% to my account using this over the last few months...
I have done a few other things such as Naked Puts and Covered Calls that I have not been so successful at.
Knock on wood... I reamin so lucky...
I did credit spreads at or 6 STRIKES OTM.
You can compound the available capital and increase your take. Double your account money in about 5 months. the occasional Iron Condors boost your take.
The problem is a BLACK SWAN EVENT. Quick market drop. Volatility and premiums go through the roof. Wipes you out. It happens so fast. Some years you get a lot of BLACK SWAN MOVES, or market drops.
There really isn't any use in using credit spreads. Unless you compound your account. The risk, reward ratio is so poor.
That opens you up to wipe out with a Black Swan event. Lot of people think they can beat the catastrophic losses that occur with a Black Swan event. Seems to happen to everybody. You build up a lovely account, double, or even triple your account, then WHAMMO!
You can compound the available capital and increase your take. Double your account money in about 5 months. the occasional Iron Condors boost your take.
The problem is a BLACK SWAN EVENT. Quick market drop. Volatility and premiums go through the roof. Wipes you out. It happens so fast. Some years you get a lot of BLACK SWAN MOVES, or market drops.
There really isn't any use in using credit spreads. Unless you compound your account. The risk, reward ratio is so poor.
That opens you up to wipe out with a Black Swan event. Lot of people think they can beat the catastrophic losses that occur with a Black Swan event. Seems to happen to everybody. You build up a lovely account, double, or even triple your account, then WHAMMO!
atticus confusion
Looking up trade history, on the EBB AND FLOW METHOD.
Started not to long ago. With the 62 strike Long Straddle, then the 60 Long Straddle, then the 62 Long Straddle, then the 64 Long Straddle. As you can tell, I'm putting straddles every 2 QQQ strikes.
The only one CLOSED completely was the first one, the 62 long straddle.
Currently OPEN with the 60, the ( 2nd time) 62 and 64 long straddles still.
Looking up trade history, on the EBB AND FLOW METHOD.
Started not to long ago. With the 62 strike Long Straddle, then the 60 Long Straddle, then the 62 Long Straddle, then the 64 Long Straddle. As you can tell, I'm putting straddles every 2 QQQ strikes.
The only one CLOSED completely was the first one, the 62 long straddle.
Currently OPEN with the 60, the ( 2nd time) 62 and 64 long straddles still.