Trading Options as a business

[luisHK]

I would definetely not dismiss selling options as a way to trade or improve returns on buy and hold, I think the studies on selling atm monthly puts on on indexes have been discussed here many times and point to smoother equity curves and slightly better overall returns than buy and hold.
If i had to systematically buy or sell options I would rather sell them, and if I was into buy and hold investing while still beeing willing to monitor the markets and trade regulary, I would also consider selling monthlies rather than just holding the underlying long term. But there might be vastly different tax treatments on both methods depending on where one lives which make the monthly trades a handicap.

 

[galvinlee888]

and if I was into buy and hold investing while still beeing willing to monitor the markets and trade regulary, I would also consider selling monthlies rather than just holding the underlying long term. .

Most of the major move in the equities world are happened in less than 10 days in a year time (equity will generally not move gradually to one direction, it will shot up due to whatever reason such as news or earnings or etc). If you short the options (call in buy and hold case), you will most likely miss those major moves due to the cap to the upside when you write the call options.

There was a research papers that proved that buy and hold is indeed outperform covered call in long term. Apologies I can't find this paper anymore since my old laptop gone to the bin.

 

[luisHK]

If anyone can come up with the study you mention I'll be glad to read it.
Below is the link to the CBOE PUT index (selling unleveraged monthly atm puts against the SPX) page with attached studies which from memory point to smoother equity curves and slightly better returns.
I understood it's similar with other indexes but not so clear against individual stocks (there was another study published on this forum I think from a major investment bank, where some stock selection was necessary to outperform, so it was not as systematic as with the indexes)

http://www.cboe.com/micro/put/

 

[destriero]

Mainly binary options, which are really options at all, pure gambling, will the market be higher or lower in 30seconds time,the payouts are so small, you have to be tight 66% of the time, just to break even.

High risk, high reward and they get around the pattern day trading rules, why i switched to them.

No, not binaries. That's a pick-em bet. There are no analytics involved so the front-end can be lean and you simply import a 12% edge on entry (best shops). There is no short gamma there.

The OP wants this fool-proof short condor stuff. You know, the stuff the pros trade. He's here to discuss with like-minded geniuses.

Anyone trading at a 32% edge loss (turveyd) failed the IQ test.

 

[JTrades]

I think you have lost your mind.

Or tough love, depending on how you take it.

 

[Turveyd]

No, not binaries. That's a pick-em bet. There are no analytics involved so the front-end can be lean and you simply import a 12% edge on entry (best shops). There is no short gamma there.

The OP wants this fool-proof short condor stuff. You know, the stuff the pros trade. He's here to discuss with like-minded geniuses.

Anyone trading at a 32% edge loss (turveyd) failed the IQ test.

Hey that's 1 test im good at, i dont trade that just had a demo mess whilst bored.

Iqoptions tries to make it look like you risk 50, get 88 profit, but it's actuslly 33profit, as they deduct the 50 first, sneaky.

 

[destriero]

I think you have lost your mind.

Perhaps. The same could be said about your delusions of market making. Find out how quickly your order locks while attempting to post a bid and offer, simultaneously, on the same option or spread/combo.

There is a lot of money to be made, but not with this "option income" BS. You will never make it if your strategy relies on short wings. IOW, don't trade if you can't trade ATM.

 

[Brighton]

There are too many cynical day traders on here, who make all sorts of incorrect assumptions off their own negative experiences.

I have a large amount of money acquired through my professional employment. I am not out for a short term gain like many of the people on here, I am out to try and develop a sustainable trading operation. Hopefully that will give you a better idea of where I am coming from.

When people ridicule the "treat it like a business" and "I'm not going to speculate" comments, put on a thick skin and listen to what they're saying. At least three of the posters have a decade or two experience in options, and two of them (under different names), have written a huge amount of useful information on this site about trading, about options, and about the risks to those who view selling OTM options as a steady and safe source of income.

Keep doing research, dig into the archives here, check out the "options selling" thread on Big Mike's site (some recent blowups selling naked 3 delta ES puts ~Aug 24, 2015), check out the equity curve of LJM partners, learn about Victor Niederhoffer, ask yourself why so many coaches/mentors/authors/newsletter writers/software sellers are "former CBOE market makers" and now they're coaching, writing, etc. It's a difficult endeavor to make money from trading, even if you were in the thick of things in a different era.

With some time, you'll be able to cut through the jargon and see the wisdom in statements like "it's 100% speculation" (which is fine, just don't kid yourself that it's anything but) and "get closer to, or at-the-money."

 

[galvinlee888]

When people ridicule the "treat it like a business" and "I'm not going to speculate" comments, put on a thick skin and listen to what they're saying. At least three of the posters have a decade or two experience in options, and two of them (under different names), have written a huge amount of useful information on this site about trading, about options, and about the risks to those who view selling OTM options as a steady and safe source of income.

Keep doing research, dig into the archives here, check out the "options selling" thread on Big Mike's site (some recent blowups selling naked 3 delta ES puts ~Aug 24, 2015), check out the equity curve of LJM partners, learn about Victor Niederhoffer, ask yourself why so many coaches/mentors/authors/newsletter writers/software sellers are "former CBOE market makers" and now they're coaching, writing, etc. It's a difficult endeavor to make money from trading, even if you were in the thick of things in a different era.

With some time, you'll be able to cut through the jargon and see the wisdom in statements like "it's 100% speculation" (which is fine, just don't kid yourself that it's anything but) and "get closer to, or at-the-money."

The OP thinks that he can arbs options in the exchange (if you read one of his previous posts). This is the biggest joke I ever heard, my previous firm (which was one of the biggest options market maker) are not able to do this consistently, not sure how this OP with "professional" skill in other industry can make this happen.

 

[Brighton]

The OP thinks that he can arbs options in the exchange (if you read one of his previous posts). This is the biggest joke I ever heard, my previous firm (which was one of the biggest options market maker) are not able to do this consistently, not sure how this OP with "professional" skill in other industry can make this happen.

Ha! Never say never, but I have no idea how a new retail investor is going to find something to exploit in market/micro structure that more experienced and better capitalized individuals and firms haven't already tried.