Best Thread The Options edge (Writing Vs Buying)

[SOCRATES]

I have only one simple question;
Am I conversing with someone who is sane, or have you completely lost the plot?

jog on
d998

And I have a very simple answer for you ducatti...

Ants are deaf, remember...deaf as a post.

I went to great lengths to prove it to you unquestionably 2 years ago, or do you not remember ?

Now...think about it and reflect deeply...:cheesy:

Let us see if it lands...

 

[ducati998]

Soccy baby

So CYOF is one of your sycophants then?

But, irrelevant to the thread really.
If you wish to discuss Options, as it pertains to this thread, then "let's get in on baby!"

jog on
d998

 

[CYOF]

CYOF

You have made an assumption that in my previous post I was referring to traders.
This is incorrect.
I was in point of fact referring to the contracts.
For every winning contract bought/sold, there will be a matching loss making contract bought/sold.

Therefore, the remainder of your post, and succeeding questions are irrelevant.

The trading of Options for profit, far exceeds the simple question of; should I buy, or sell?
This naive and simplistic quantification process removes the inherent flexibility of Options trading that differentiates them from purely directional instruments, as common stock, or Futures.

It is the quantifiable variety of risk, that can be matched to the qualitative market risk, that makes Option trading both a joy and source of frustration.

jog on
d998

Ducati

With all due respect, please read the title of this thread again! Try reading it 6 times if need be, until you fully understand it.

The topic is on traders and NOT on the number of contracts.

WHO HAS THE EDGE?

THE WRITER WITH 1-5ML CONTRACTS OR THE BUYER WITH 1-5ML CONTRACTS.

YOU HAVEN'T REPLIED TO MY POST ON 10 PEOPLE ENTERING THE BETTING SHOP WITH CASH IN THEIR POCKETS, AND ONLY 2 ARE WINNERS. WHY DONT WE HAVE 5 WINNERS AND 5 LOSERS?

THERE ARE OVER 2ML PEOPLE THAT BET EACH DAY ON HORSES & DOGS IN THE UK. DO YOU REALLY BELIEVE THERE ARE ALSO 2ML WINNERS. THE SAME THING HAPPENS WITH OPTIONS TRADERS.

DO YOU REALLY BELIEVE THAT IF 500 TRADERS LOSE THERE HAS TO BE 500 WINNERS?

IF YOU BELIEVE THIS, THEN I SUGGEST YOU STOP TRADING TODAY :idea:

OH, AND THIS ADVICE GOES TO ALL MEMBERS HERE AT T2W


I put it in the CAPITAL LETTERS in the hope that you finally understand what the topic on this thread is - writers vs buyers - not the size of contracts.

KNOWLEDGE AND UNDERSTANDING are the two keys to successful trading in the derivative markets. However, If you dont understand properly, then you will never gain the knowledge, period. Common sense I would have thought :!:

 

[CYOF]

There's something seriously wrong with you .....why do you feel the need to continually draw attention to yourself and the other members of S CLUB 7 .....dum de dum ...back to work

In case I haven't mentioned it , and for those that cannot understand PROPERLY I am been watched. I cannot give more than I am doing because of the Elite 3.4S club rules. I don't want to give the impression that I'm evading anyone, or any questions.

Yes, I think you should get back to work and stop trading as that 7+ standard deviation extreme move can arrive any moment, and when you get blasted into space, you might just try and find Profitaker :cheesy:

 

[ducati998]

CYOF

The topic is on traders and NOT on the number of contracts.

WHO HAS THE EDGE?

But again you miss the point.
The trader must assess the contract that he is buying or selling to understand the risk he is assuming, and the potential reward he seeks...........on an exclusively buy/sell analysis;

There is no point in selling a contract if the IV is low with concurrent low historical volatility, as the probabilities become very much lower of successfully realizing a profit, if however IV is priced high, this becomes a possible trade subject to further analysis.

Conversely, if the IV is low & historical volatility is low, it [as a starting point] makes more sense to consider a buying strategy.

There is no edge differential between buying or selling indiscriminantly.

jog on
d998

 

[zupcon]

In case I haven't mentioned it , and for those that cannot understand PROPERLY I am been watched. I cannot give more than I am doing because of the Elite 3.4S club rules:

CYOF

Are you able to enlighten us all as to the percentage of traders who are trading options as a stand alone speculative instrument, and the percentage of those who are using derivatives as part of a much wider strategy?

I think that before you start talking about edge, its important to compare like with like.

regards
zup

 

[CYOF]

I have only one simple question;
Am I conversing with someone who is sane, or have you completely lost the plot?

jog on
d998

Well d998, maybe you NEED HELP FROM SOMEONE to answer that question for you.

What is it you trade at present?

It is very obvious that it is NOT derivatives.

I dont like SIMPLE questions. I just happen to prefer the NON simple ones. The ones that you actually have to think about :cheesy:

 

[A Dashing Blade]

I told you all, agian and again, that I ACTUALLY BELIEVE that I KNOW NOTHING ABOUT ANYTHING.

Whereas WE KNOW . . .

Sorry TW2, I'm out of this debate as I belive this is Bulldozer's twin brother.

 

[CYOF]

CYOF


But again you miss the point.
The trader must assess the contract that he is buying or selling to understand the risk he is assuming, and the potential reward he seeks...........on an exclusively buy/sell analysis;

There is no point in selling a contract if the IV is low with concurrent low historical volatility, as the probabilities become very much lower of successfully realizing a profit, if however IV is priced high, this becomes a possible trade subject to further analysis.

Conversely, if the IV is low & historical volatility is low, it [as a starting point] makes more sense to consider a buying strategy.

There is no edge differential between buying or selling indiscriminantly.

jog on
d998

But AGAIN d998,

What is the title of the thread!

You are doing nothing only stating some textbook teachings - and you still fail to see what the real discussion should be about - EVEN AFTER BEEN TOLD

I need to be very careful here, in case I let something of real value slip, and then, I really will regret it.

 

[ducati998]

Well d998, maybe you NEED HELP FROM SOMEONE to answer that question for you.
What is it you trade at present?
It is very obvious that it is NOT derivatives.
I dont like SIMPLE questions. I just happen to prefer the NON simple ones. The ones that you actually have to think about :cheesy:

Self diagnosis of any pathology is fraught with difficulty. A neurological pathology, would be that much more difficult assuming functional aberrations. Therefore, a difficult question.

I trade Options, amongst other's, hence my interest with this thread.
Unfortunately, as is so often the case, the hyperbole exceeds relevant discussion.

An example;
GoldCorp Inc [GG]
Expiry 21 July 2007
Strike $30.00
Type PUT
Price $5.00
Stock Price $26.27

delta [-57.5]
gamma 4.8%
Vega 0.072
theta [-0.007]
rho [-0.058]

IV 41%
HV 48%

Based on this initial information, what strategy [if any] might you suggest?

jog on
d998

 

[CYOF]

Whereas WE KNOW . . .

Sorry TW2, I'm out of this debate as I belive this is Bulldozer's twin brother.

Well, I sincerely thank you for that comment Dblade, for from what I have seen and read about BULLDOZER, he is the only one who is showing that he knows what he is talking about.

The rest of you start off, do a little fishing, and then, when you are confronted with the FACTS, you all suddenly start to disappear.

What a JOKE - do you guys wan't to learn something or not.

If you wan't to skid addle, then by all means do, but at least be as honourable as ION was, and admit that you know nothing about Options. Save your face.

You may actually benefit from such a noble act :idea:

 

[ducati998]

QUOTE=CYOF]Well d998, maybe you NEED HELP FROM SOMEONE to answer that question for you.
What is it you trade at present?
It is very obvious that it is NOT derivatives.
I dont like SIMPLE questions. I just happen to prefer the NON simple ones. The ones that you actually have to think about :cheesy:[/QUOTE]

Self diagnosis of any pathology is fraught with difficulty. A neurological pathology, would be that much more difficult assuming functional aberrations. Therefore, a difficult question.

I trade Options, amongst other's, hence my interest with this thread.
Unfortunately, as is so often the case, the hyperbole exceeds relevant discussion.

An example;
GoldCorp Inc [GG]
Expiry 21 July 2007
Strike $30.00
Type PUT
Price $5.00
Stock Price $26.27

delta [-57.5]
gamma 4.8%
Vega 0.072
theta [-0.007]
rho [-0.058]

IV 41%
HV 48%

Based on this initial information, what strategy [if any] might you suggest?

jog on
d998

 

[A Dashing Blade]

Yawn was bored, did some trivial digging . . .

This is one of CYOF's very first posts . .
http://www.trade2win.com/boards/showpost.php?p=250136&postcount=5

"I swore that I would not write long posts ever again - but what the hell.

I daytraded full time for over 1 year - with all the setups for daytrading Nasdaq Tech Stocks.

When I made the decision to go fulltime, I was committed to learning what was required and allowed for 1 year fulltime trading without expecting to make any money worth talking about for the full year - this was my training commitment.

I traded using multimonitor setup (10 monitors) for sector based trading and using E-signal datafeed with broadband connection - IB as broker for low commissions required in learning stage.

In order to raise capital I formed a trading company and brought in a partner, which looking back was a mistake.

During the fulltime year of trading I traded Nas Tech Stocks and the E-mini ES (I had to revert to trading the ES when I got rid of the partner and his capital).

Only when I had gained the experience to actually increase the size (as all my trades were only 100-200 shares until I was happy that I could make money every week) my capital was running out so I had to return to a "real job" to earn some money contracting - which I am still doing at the moment. I plan to return to trading when the contract work finishes.

Stopping trading was the best thing that I done - as I was able to reflect on what I was "actually doing". From this experience, which I believe very few have (some people will call you an entrepreneur, others will call you a fool - but how you feel yourself is all that matters) my personal opinion (which most people will probably not be able to associate with, as you have to have similar experiences to understand the reasoning of what I am talking about) in relation to trading the markets is as follows:

1. Daytrading is the best approach - as you are in control at all times and not using any stops that shows what your opinion is - market makers gun for these stops at certain times of the day and this is why most people get taken out with a loss in their swing trading positions.
2. You don’t need any TA what so ever, as they are based on historical information and with daytrading (we will consider daytrading to be in a trade from 30sec to 3-15 min depending on momentum) you need to react to what is happening "NOW", as it will more than likely only last a few minutes.
3. You do need to understand Level II and how to read the size of the bid and offers at the first 4-6 levels either side of the inside -current - B/A - this is ensure that you can get out at your desired mental stop if need be.
4. More importantly, you need to learn how to read the tape - Time & Sales - as your main objective is to enter a trade just prior to a significant movement (which can last from anywhere from seconds to minutes). The last thing you want is to be in a trade that is going nowhere. This has the potential to 1) Loose you money and 2) Miss other opportunities - these are the 2 main factors that prevents traders from making money - common sense I would think.
5. Position sizing is crucial to making money in daytrading - a typical metaphor to describe why this is required is as follows: what happens when you dip your toe into a basin of hot water - you instinctively pull it out of course. The same with daytrading - test the water first to ensure you don’t burn your big toe, as a big red toe can be very sore.

This is not to say that traders don’t make money swing or position trading, but the fact that you have your money in the market overnight means that you have to be able to accept the associated risk - along with the wide stops that are required to stop those market makers running the prices up and down to these stop levels that are like shining beacons for them. This is a totally different approach, which requires different tools and money management techniques.

Then, of course, you have the Options and the Commodity Futures markets to trade. You can even combine Options and Futures to limit your risk further, if you want to learn how to do that.

What style of trading one decides to embark on is entirely a personal decision, and should be considered based on some simple facts like, risk capital, available time, patience, commitment level, family matters, etc.

In relation to teaching people “How to Trade”, this is where it gets a bit hairy fairy. If I was asked by an individual to teach them what I have learnt to date, I would have several suggestions and conditions noted before any decision is made by either party.

1. I would not do it for free – no free lunches in this world as we all know too well.
2. I would not expect anyone to pay me any monies until I first proved to them that I am successful –i.e., show them my trading statements.
3. I would get them to answer a simple questionnaire to ensure that they know what they want to do and in what timeframe – as most people don’t have any idea of what are the basic requirements needed in order to learn how to trade the markets.
4. I would stop any further training if the person demonstrated that they were only wasting their time, and more importantly, my time. It is better to tell someone up front that trading is not for them, based on their actions.

Overall, in the absence of someone teaching you how to trade, I think it would be more beneficial for an individual to open an account with a cheap broker like IB, where they can trade 100 share lots for $1 (.005 per share with a minimum of 1$ per trade – so you can trade 200 shares for 1$ if you feel adventurous) and say to themselves that I am allocating $2k to $3k dollars to learn how to trade – and take that this money is already “GONE”. Your goal should be to make this money last as long as possible –for this is where the real learning is done.

I traded 100 share lots for 6 months, day in and day out, until I was comfortable with what I was doing and I was able to react to the market when needed. I am embarrassed to say how many times I got it wrong starting off, but that is the only real way to learn – DO ACTUAL TRADES WITH SMALL SIZE . By the end of the six months, I was correctly able to dip my toe in the water, get out with a very small loss if the water was too hot ( $10 - $20 max) and guess what, when I was correct the movement was such that you would have 500 – 1000 shares on a stock that has just run up 40 – 80 cent. Your average win / loose ratio can be in the region of + 10/1, figures that you will not be able to achieve with longer term trading strategise.

Again, there are numerous books on Position Trading and System Trading, but unfortunately they are all signing the same tune, in a different key.

Summary:

• There is no easy way to make money in the markets.
• Trading for a living is 10 times harder than a normal job – but the rewards can also be 10 times as much.
• Make a commitment and do some basic study on the markets – there is enough good free information on the internet if you spend the time searching – some of the best material I got was for free – not the numerous books and courses that I purchased over the years.
• Put aside some money for trading tuition fees – papertrade first to get familiar with the software and then start trading 100 share lots – if swingtrading use the SSF’s at OneChicago – which I think is now up to 168 stocks – as the margin requirements are lower and the commissions are still only 1$ per contract (100 shares).
• Draw up some simple rules – and stick to them – like always use a stop when swingtrading, trade in the direction of the trend (buy the pullbacks when UP, sell the rallies when Down), only trade 100 share lots until you are confident that you know something about what you doing, use a time limit to exit if the stock stalls (you can always watch it and get back in)and move on to the next trade – remember missed opportunity is one of the main reasons why traders don’t make money.
• Don’t consider daytrading unless you have at least $30K dollars (margin requirements) and you can monitor the markets full time between 09:00 and 10:30 US time – some days you may need to watch until 11:00 depending on news releases and events – but as a general rule you can shut down the PC after 10:30 – another reason why daytrading is so attractive as a fulltime job.

Glad to share my experiences and I hope that someone may benefit form my humble opinions.

CYOF"

Does that look like the same CYOF we're seeing here?
But hey . . . you decide

So to the person pretending to be CYOF, are you the banned member known as Bulldozer?

 

[grantx]

CYOF,

Question 1.

Personally, I would always go for Limited loss/Limited gains. On a very simple level, this could be interpreted as, for example, long calls, long puts, call/put vertical spreads.

However, I would also place selling options in this category. Of course, ultimately this represents unlimited risk (ignoring the contradiction of negative prices) but as a qualification as long as I can exit a losing short as soon as possible, this would constitute a limited risk.

Question 2.

Professional traders: I would guess limited loss/limited gains, eg in running a book of long and shorts. However, the distinction of risk/reward is possibly a low on the priority list. If there is potential reward, they will trade. It is assumed they are fully aware of the risks at the outset.

Question 3.

Any strategy’s pre-eminence can only be based on statistical, not trading, success. By way of analogy, technical indicators. But to reiterate to the point of tedium, buy low vol, sell high vol.

CYOF, Dashing, anyone,

This Elite s Club, is it an abstract concept or is it something tangible, ie a formal (or informal) club? Or is it FSA authorisation?

Zupcon,

Your compliment is very much appreciated (really does give a lift to a somewhat grey day). However, my knowledge is not what I would consider adequate. I always say, I know more than some, less than others but never enough. How’s that for modesty?

Despite your self-professed lack of options knowledge, your rationalism more than compensates. Keep it coming.

Dashing,

What’s the yield on Khazakstan 10-year Sovereign; what is it for their junk bonds? The mind boggles.

Now, CYOF, where is all this leading us?

Grant.

 

[CYOF]

Now, just in case you guys think I am hiding, like Profitaker, I can assure you I am not.

This debate is only getting started -i have quelled the worries at 3.4S.

I mentioned previously, that my habits are changing for 2007, and my evenings are now fully booked for the foreseeable future.

I will, however, return tomorrow, as usual, and answer all questions.

Please do keep them coming, the more the better, and will someone please put out an SOS for Profitaker, as I am getting a bit worried about him, seriously.

Have a nice evening all,

Regards,

 

[SOCRATES]

Soccy baby

So CYOF is one of your sycophants then?

But, irrelevant to the thread really.
If you wish to discuss Options, as it pertains to this thread, then "let's get in on baby!"

jog on
d998

I have just seen this.

I reminded you that I was able to prove that ants are deaf, but you do not seem to be able to pick up clues, you are the sort of mind that needs everything explained to you A, B, C, D. etc.,

I suggested to you you carefully reflect but you are incapable of doing that...if you were...you would immediately see parallels between ants and other living creatures.

So it is not irrelevant to the thread.

As for discussing options with you, frankly I have neither the patience or the time to do it, no more than discussing the merits or demerits of one football team against another.

If I gave in to you it would mean I would have to sit here and write the equivalent of a thick book. I am not going to do this, not because I cannot but because I choose not to.

If you have a need to discuss options you ought to start a thread specifially for that purpose.

The purpose of this thread is not to revert to textbook form, and it is not about teaching, it is about discussion in harmony with the title of the thread, and nothing else, as it is patently obvious everything else is off topic.

 

[ducati998]

Soccy baby

Glad to hear you are well, still know nothing, and are posturing for any scraps of adulation that might fall your way.

jog on
d998

 

[SOCRATES]

Soccy baby

Glad to hear you are well, still know nothing, and are posturing for any scraps of adulation that might fall your way.

jog on
d998

No, you still don't get it.

I will explain it with another example.

An Ostrich will bury its head in the sand.

Why ?

It misdirects itself to believe that if it cannot see you ...you cannot see it.

Now sit down and properly reflect and see if the realisation of what I am imparting to you finally lands.

You have to do the thinking about this, and not me for you or anybody else for you for that matter.

This is why this thread is about discussion.

It is not about learning or teaching.

It is about discussion, and what is more, it is about discussion in harmony with the title of the thread, and nothing else.

And finally, I will remind you again, everything else is off topic.

 

[CYOF]

Before I head off:


Dblade,

You have said your goodbye so I hope you now make that permanent and DO NOTpost
to me again, as you have nothing of substance to offer to anybody. You are preventing a good debate, so it is better that you are out of it.

Grant.

What I am trying to do is establish how big is the majority who believe that the Buyer has the EDGE or the WRITER, or NEITHER. Also I want to establish which category from the 4 chosen is the highest, and if anyone KNOWS which is the one the PROFESSIONAL OPTION traders use most.

Tomorrow I will present some FACTS from CHICAGO Option pit floor, that will prove who here knows NOTHING of real value, and who here knows VALUABLE information. Now, would all please make sure that all have made their selection on those 4 categories, and reply to those questions asked - that is, if you want to learn anything of value, of course.

Profitaker, or Profitloser maybe?,

We really dont need you as you have proven by your absence that you only show your face when the FACTS are ALL OUT IN THE OPEN. Well the REAL FACTS are NOT out yet, so, there is still time for you to make your mark and make your presence felt. You can still select your answers to the 4 categories I posted.

I really have to run, and tomorrow should be a day of value - both in the markets and here.

Have a nice evening all.

Regards,

 

[ducati998]

Soccy baby

This is why this thread is about discussion.

It is not about learning or teaching.

It is about discussion, and what is more, it is about discussion in harmony with the title of the thread, and nothing else.

But what exactly are we discussing, Options, and the probabilities associated with Buying/Selling, or, are we discussing your and CYOF fantasies?

If Options, then I'm here, ready to play.
If your fantasy life, and secret trading clubs, which seems to be the only topic that you and your puppy are capable of talking at any length about, then frankly who actually is even vaguely interested?

jog on
d998