Who is really making a living trading options??

[nnfx]

Ok, lets talk about what really gives u an edge in trading options

1) i understand all those 20-25 strategies and i paper traded them but overall i was at breakeven and it was just gambling becouse without knowing where the stock will go or whether the certain commodity will rise or fall this is just gambling.

2) Options are fairly priced so that neither sellers or buyers are in initial advantage. I understand this concept.

So who in here is actually making money trading options and how do you guys do it? I know some of you dont want to share your secret methods ...but for those of you who are kind to give some advice i have simple question

-->>> what kind of strategy do you use and what excatly gives you and EDGE? (is it finding some mispricing in volatility or sth else? trading the earnings?)

 

[jb514]

The market makers and the financial advisors

 

[nnfx]

Quote from jb514:

The market makers and the financial advisors

Im sure there are some retail traders who are also making nice money out of options. They might not be in majority tho BUT that doesnt mean it cant be done.

 

[iceman1]

Quote from nnfx:


1) i understand all those 20-25 strategies and i paper traded them but overall i was at breakeven and it was just gambling becouse without knowing where the stock will go or whether the certain commodity will rise or fall this is just gambling.

I have an option on making money... March 2012

Actually I see the edge as being good at directional (knowing where a stock will 'likely' go - could or might likely go - within X time frames) and using option selling and buying to leverage and to trade equities, ETFs, indexes wherein you may not have enough capital to trade underlying. I think other more astute option gurus on ET have said the same thing

 

[spindr0]

Quote from nnfx:

So who in here is actually making money trading options and how do you guys do it? I know some of you dont want to share your secret methods ...but for those of you who are kind to give some advice i have simple question

-->>> what kind of strategy do you use and what excatly gives you and EDGE? (is it finding some mispricing in volatility or sth else? trading the earnings?)

This is the internet where everyone makes money and few tell the truth


There's money to be made from earnings volatility plays but it's not easy money. It's a lot of work finding opportunities and a good exit involves some art, some luck.

I no longer speculate with options. My bread and butter comes from trading equities and occasionally hedging with options. It pays the bills.

 

[mikeenday]

I have a bad habit of overtrading, option trading helps me to get excited when I feel the urge to trade.

The trades are mostly breakeven, occasionally scores big.

But most profit comes from SPY/QQQ/ZC/ZW/ZS/CL.

BTW, don't forget Mike's rule #1:

"all tradings build on directional play." so read price moves first, then it doens't matter what tickers you are trading.

Quote from nnfx:

Ok, lets talk about what really gives u an edge in trading options

1) i understand all those 20-25 strategies and i paper traded them but overall i was at breakeven and it was just gambling becouse without knowing where the stock will go or whether the certain commodity will rise or fall this is just gambling.

2) Options are fairly priced so that neither sellers or buyers are in initial advantage. I understand this concept.

So who in here is actually making money trading options and how do you guys do it? I know some of you dont want to share your secret methods ...but for those of you who are kind to give some advice i have simple question

-->>> what kind of strategy do you use and what excatly gives you and EDGE? (is it finding some mispricing in volatility or sth else? trading the earnings?)

 

[nnfx]

Quote from mikeenday:

I have a bad habit of overtrading, option trading helps me to get excited when I feel the urge to trade.

The trades are mostly breakeven, occasionally scores big.

But most profit comes from SPY/QQQ/ZC/ZW/ZS/CL.

BTW, don't forget Mike's rule #1:

"all tradings build on directional play." so read price moves first, then it doens't matter what tickers you are trading.

thx for your input. what kind of strategy do you use for trading indexes? do you take volatility into account?

 

[Pinozi]

Quote from iceman1:

I see the edge as being good at directional (knowing where a stock will 'likely' go - could or might likely go - within X time frames) and using option selling and buying to leverage and to trade equities, ETFs, indexes wherein you may not have enough capital to trade underlying.

I totally agree, options allow you to profit in different ways than just by trading the underlying, but if you can't trade in the first place then options may just be giving you a false sense of security while you continue to pick up pennies in front of a steamroller

 

[iceman1]

Quote from nnfx:

thx for your input. what kind of strategy do you use for trading indexes? do you take volatility into account?

Volaitlity is great/important for the gurus and those that can teach options or write a book. When I took a class with Sheldon Natenberg years ago... we talked about all sorts of theoretical stuff. Since then during my 6 year sabbatical, I have come to believe that except with -some specific situations- (like before earnings and the like) IF you trade options to nail direction then volatility would be 2nd or 3rd on the ladder so far as constructing a successful trade in options.

i.e. if you had bought itm puts or sold itm calls on NDX near highs today what difference would it make what VIX is at that moment. Now if the VIX plummets before Oct expiry then it would hamper profits. But IF you closed at end of today or tomorrow morning, assuming lower lows tomorrow, then who cares.

However if you did not foretell an NDX sell-off, and thus went long near the earlier highs, what diff would having a Ph.D in volatility matter much to a typical, smaller trader.

However if this interests you a lot then buy "Option Vola & Prcing Strategies" by Natenberg and read it twice. Thereafter, if you still can't get direction and price range correct - -a lot of the time - - it will be a wasted read, and Edwards & McGee would serve you better, for example.

 

[iceman1]

Q for the opening poster:

Where do you see the NDX and AAPl (for example) trading between now and October 16th; where do you see SPX, DIA and NDX tomorrow?
What underlying are you paper-trading?