Writing options for a living

[riverun]

Or I guess selling options. The answer is yes it is. But I will tell you why I was inspired to even comment. Today I was trying to teach someone very close to me so of the very basics on trading options for a living and I realized and she realized that it was not her cup of tea and that was the end of it. And you know what, she was smart to drop it right then and there.

Years of hard work, study and even failure are essential but that's not enough still, you have got to have the talent.

I've heard it all from the super analyticals to the touchy feely types and most of them aren't going to make it. They just don't get it and it's not their fault really, it is inherently skill and talent just as any great musician or great athletic possesses. I could no more be a great athlete or musician that fly to the moon backwards. It the same with trading.

So most of you out there in forum land, don't quit your day jobs. For the two that that say bullshit, I can do, I must do it, I'll pay the price, I know I have the talent, I work, sweat blood, do what ever it takes. One of you will make.

 

[HedgefundTrader2]

Look at Mike Tyson, he made a lot of money using his hands, but because he could not use his head, he lost it all again, and actually ended up in prison.

Always think about what you do, and if you are not 1000% sure that you know exactly what you are doing, then odds are you will end up like Mike Tyson, although I hope you will never see the inside of a prison, that was total stupidity !

RPT [/B][/QUOTE]


With all due respect, may I point out that Mike Tyson had no clue about options trading, he would have lost it even faster if he knew how to trade options.

 

[HedgefundTrader2]

Quote from RealProTrader:

It is very easy if you know what you are doing !

What is the biggest risk you take when you decide to trade, and I don't mean in $ terms, I mean in trading terms.

Once you know what your biggest risk is, then you can work backwards and lessen the risk. The more you work on it, the less and less risk you will take, until, eventually, the risk associated with your trading will be so small that you will then see your 5-10% per month, easily.

Do you fully understand this concept ?

If not, then you have a long way to go and a lot of learning to do.

RPT

Nothing is easy in Options trading. Its one of the most toughest professional involvements for a person constantly risking lots of margin. Never for a moment say you can make 5-10% easily, cause you don't. You have to put up 95-90% of your own money as collateral to make that.

 

[HedgefundTrader2]

Quote from just21:

When selling options my biggest risk is that the market moves to the strike price. If it reaches the strike then I delta hedge. This is why my return is less than 5-10% as I need to have margin available for the hedge. Using SPAN margining I made 2.8% last month.

Try keeping all your positons to be one standard deviation away from the price.

 

[segv]

Quote from just21:

When selling options my biggest risk is that the market moves to the strike price. If it reaches the strike then I delta hedge. This is why my return is less than 5-10% as I need to have margin available for the hedge. Using SPAN margining I made 2.8% last month.

What if the market gaps through your strike by 5%?

 

[Profitaker]

Quote from just21:

When selling options my biggest risk is that the market moves to the strike price. If it reaches the strike then I delta hedge. This is why my return is less than 5-10% as I need to have margin available for the hedge. Using SPAN margining I made 2.8% last month.

What about Vega risk ?

 

[polpolik]

Yes, it is very possible to make 20% per month, and I would even go as far to say that it is possible to make 30% per month.

:eek: :eek: :eek:

Leveraged to make 30% a month of your money? You'd probably wipe your account out if a minor event such as Thursday or Friday happened.

And I thought my aim of 4% a month selling call spreads was risky.

 

[Eliot Hosewater]

Quote from RealProTrader:



07-25-07 08:09 AM

How many of you caught the blowoff and bought the bottom just now, not too many I would say.

I can do this with one hand and still make money, and the reason is, I know what I am doing.

RPT

Oops, shoulda used both hands.

 

[just21]

Quote from segv:

What if the market gaps through your strike by 5%?

ES futures are open 23 hours a day and I am along way from the market even after last weeks sell off.

 

[just21]

Quote from Profitaker:

What about Vega risk ?

I am taking that risk.