Day trading takes the ballz of a burglar.
I’m happy with my General Mills, Chevron, Union Pacific, and Verizon. Cashing checks is way more fun than writing them. 
[quote]Rollsroyce13 wrote:
I did have a fair bit invested in this today…
only 108% gain in one day…
I’m happy
[/quote]
May your career be full of %108 winners!
[quote]Headhunter wrote:
Day trading takes the ballz of a burglar.
[/quote]
It does. Thats why I’ve stuck with a couple of purchases for long term.
Still waiting on that 30,000 * X turnaround though. Might take a few more years.
[quote]Dr. Pangloss wrote:
If you want to do more reading, I’d pick up anything by Jack Schwager but if you’re completely new to trading and markets, then any basic fundamental book will do. Definitely read Market Wizards 1 and 2. I really like Al Brooks book on reading price charts, Mark Douglas’s book, “Trading in the Zone” and “The Futures Game” by Richard Teweles.
The very best educational material is going to come from the exchanges themselves. If you want to trade crude oil, get on the CME website and look at the material they have specific to the crude oil complex. Once you decided on what indicators you want to use - if any - there are many books to choose from.
Trading simulators are offered by many trading software providers and clearing houses. Try implementing some of your strategies and see how you do over time.
If someone came to me and said they wanted to trade for a living, I would tell them to either get hired by a prop shop or have $50k to put in an account as well as 6 months living expenses. You could do it with less but it would be very, very difficult.
[/quote]
Can I ask about your experience/knowledge about traders who deal with options?
Have you seen many traders who managed to make good money just buying calls and puts, but not writing any options? Or did they generally have to work with the complete gamut of options strategies (spreads, combinations, covered positions, etc) to be successful?
I’m interested in getting more involved with options trading, but am not too sure how much to dedicate to the particular breakdowns of the strategies.
[quote]Dr. Pangloss wrote:
If you want to do more reading, I’d pick up anything by Jack Schwager but if you’re completely new to trading and markets, then any basic fundamental book will do. Definitely read Market Wizards 1 and 2. I really like Al Brooks book on reading price charts, Mark Douglas’s book, “Trading in the Zone” and “The Futures Game” by Richard Teweles.
The very best educational material is going to come from the exchanges themselves. If you want to trade crude oil, get on the CME website and look at the material they have specific to the crude oil complex. Once you decided on what indicators you want to use - if any - there are many books to choose from.
Trading simulators are offered by many trading software providers and clearing houses. Try implementing some of your strategies and see how you do over time.
If someone came to me and said they wanted to trade for a living, I would tell them to either get hired by a prop shop or have $50k to put in an account as well as 6 months living expenses. You could do it with less but it would be very, very difficult.
[/quote]
Thanks for those suggestions.
I just want to grind out winners first. Steady winning trades. The $$ doesn’t matter. If I can grind out winners, I can add zeros later.
Dividends are good. I can park some in there at appropriate times, re balancing here and there. I made a leap into DIA when the $NYA200R chart showed lows and it looked like it was leveling off. I get out when the $NYA50R is real high and price is starting to stall. I may lose some return but it is not necessary to squeeze every $$ out of a run. A good deal of many can be made capturing the middle of a run.
I am going to take even more off the table and spread my cash around at the next opportunity in strong dividend achievers. Let that ride until it looks like a full market top and either write somewhat deep in the money calls against them or write calls against the broad market with an equal $ amt. Perhaps I am naive but I have seen that dividend payers tend to get hit less than the broad market on pullback. I could then either buy underneath them creating a vertical bull spread when appropriate, or buy to close.
I dunno. I need to do as noted, practice a methodology, stick to it, and work it until I can add 0’s.
[quote]Surly D. wrote:
Can I ask about your experience/knowledge about traders who deal with options?
Have you seen many traders who managed to make good money just buying calls and puts, but not writing any options? Or did they generally have to work with the complete gamut of options strategies (spreads, combinations, covered positions, etc) to be successful?
I’m interested in getting more involved with options trading, but am not too sure how much to dedicate to the particular breakdowns of the strategies.[/quote]
I’ve traded options extensively. I couldn’t imagine a scenario where you’d be successful only as a buyer. It would be like saying you want to drive F1, but you don’t want to turn left. The most successful options traders I know predominantly sell. I loved to sell. Why would I want to buy a decaying asset? If it was out of the money, I knew it would expire worthless, if it was in the money, I knew the time value would be sucked out.
Think of options as insurance. Which party, taken as a whole, comes out ahead in the insurance industry, the buyers of policies or the sellers? That’s why I want to be a seller.
If you want more info, I’d be happy to elaborate.
Edit: Keep in mind, too, that as an option professionals are hedging everything according to the delta. They’re not making money by being right on the underlying move, but instead by scalping their gamma. I am the world’s worst gamma scalper and have turned some wonderfully profitable trades into steaming piles of dog shit by doing so.
[quote]Dr. Pangloss wrote:
[quote]Surly D. wrote:
Can I ask about your experience/knowledge about traders who deal with options?
Have you seen many traders who managed to make good money just buying calls and puts, but not writing any options? Or did they generally have to work with the complete gamut of options strategies (spreads, combinations, covered positions, etc) to be successful?
I’m interested in getting more involved with options trading, but am not too sure how much to dedicate to the particular breakdowns of the strategies.[/quote]
I’ve traded options extensively. I couldn’t imagine a scenario where you’d be successful only as a buyer. It would be like saying you want to drive F1, but you don’t want to turn left. The most successful options traders I know predominantly sell. I loved to sell. Why would I want to buy a decaying asset? If it was out of the money, I knew it would expire worthless, if it was in the money, I knew the time value would be sucked out.
Think of options as insurance. Which party, taken as a whole, comes out ahead in the insurance industry, the buyers of policies or the sellers? That’s why I want to be a seller.
If you want more info, I’d be happy to elaborate.
[/quote]
I wanted to get another opinion on the “over 80-90% of options expire worthless” idea. I’ve read in some books that the figure is accurate (hence, it would be very good to be a seller). I also read in McMillan’s book that he estimated about a 50-50 split in options that expire OTM. Hard to tell which version is reasonable.
The other reason I tended to stay away from selling options was that I had read (I think Taleb), that selling options over time will lead to a portfolio blow up, since you can’t always predict when the next financial catastrophe will be, regardless of the model used. I can’t recall if they meant strictly naked options though, which obviously would affect strategies.
Would you think it is possible to be successful trading options with a retail account? Or is that simply a scaled down version of what you did with a professional account? I’m asking in terms of holding directional positions, rather than market making.
Also, do options traders stay trading mostly with options, due to the many strategies available to look through, or do they also engage in trading equity at times?
Thanks for the details.
[quote]jp_dubya wrote:
Thanks for those suggestions.
I just want to grind out winners first. Steady winning trades. The $$ doesn’t matter. If I can grind out winners, I can add zeros later.
Dividends are good. I can park some in there at appropriate times, re balancing here and there. I made a leap into DIA when the $NYA200R chart showed lows and it looked like it was leveling off. I get out when the $NYA50R is real high and price is starting to stall. I may lose some return but it is not necessary to squeeze every $$ out of a run. A good deal of many can be made capturing the middle of a run.
I am going to take even more off the table and spread my cash around at the next opportunity in strong dividend achievers. Let that ride until it looks like a full market top and either write somewhat deep in the money calls against them or write calls against the broad market with an equal $ amt. Perhaps I am naive but I have seen that dividend payers tend to get hit less than the broad market on pullback. I could then either buy underneath them creating a vertical bull spread when appropriate, or buy to close.
I dunno. I need to do as noted, practice a methodology, stick to it, and work it until I can add 0’s.
[/quote]
It sounds like you have a system you believe in and have had some success with. Keep trying to hit singles, the doubles and triples will take care of themselves.
Great observation regarding dividend paying stocks, the presence of a dividend “cushions” their fall during a down market.
[quote]Surly D. wrote:
I wanted to get another opinion on the “over 80-90% of options expire worthless” idea. I’ve read in some books that the figure is accurate (hence, it would be very good to be a seller). I also read in McMillan’s book that he estimated about a 50-50 split in options that expire OTM. Hard to tell which version is reasonable.
The other reason I tended to stay away from selling options was that I had read (I think Taleb), that selling options over time will lead to a portfolio blow up, since you can’t always predict when the next financial catastrophe will be, regardless of the model used. I can’t recall if they meant strictly naked options though, which obviously would affect strategies.
Would you think it is possible to be successful trading options with a retail account? Or is that simply a scaled down version of what you did with a professional account? I’m asking in terms of holding directional positions, rather than market making.
Also, do options traders stay trading mostly with options, due to the many strategies available to look through, or do they also engage in trading equity at times?
Thanks for the details.
[/quote]
Your comment about Taleb reminded me of a story I read in the New Yorker about Taleb and Victor Neiderhoffer. Try and find it if you can, it came out maybe 10 years ago.
Yes, Taleb is right and if you aren’t hedged, and if the market opens up against you, you can get smoked. But you can’t not sell options because you’re afraid that another 87 crash or 9/11 is a day away. Besides, his lessons are really for a portfolio manager who has 40:1 or greater leverage, not someone trading options on an exchange that requires nightly mark-to-market.
I’ll tell you what I tell all my friends who want to trade options: trade them as part of an overall portfolio strategy. If you really must use them to speculate, set aside %15 of your portfolio and use that money. What I mean by overall portfolio strategy is this: you’re long stock ABC at the current price of $20. Sell $30 calls on it going out every 5 months or so. If the stock trades down, sideways or up to but not over $30, you keep all the premium you’ve collected. If the stock trades above $30, it gets called away but you’ve made $10 a share plus kept whatever premium you collected up until that time. This is what makes option strategies interesting for the retail investor, being able to trade around an underlying long position in the stock.
[quote]Dr. Pangloss wrote:
[quote]Surly D. wrote:
I wanted to get another opinion on the “over 80-90% of options expire worthless” idea. I’ve read in some books that the figure is accurate (hence, it would be very good to be a seller). I also read in McMillan’s book that he estimated about a 50-50 split in options that expire OTM. Hard to tell which version is reasonable.
The other reason I tended to stay away from selling options was that I had read (I think Taleb), that selling options over time will lead to a portfolio blow up, since you can’t always predict when the next financial catastrophe will be, regardless of the model used. I can’t recall if they meant strictly naked options though, which obviously would affect strategies.
Would you think it is possible to be successful trading options with a retail account? Or is that simply a scaled down version of what you did with a professional account? I’m asking in terms of holding directional positions, rather than market making.
Also, do options traders stay trading mostly with options, due to the many strategies available to look through, or do they also engage in trading equity at times?
Thanks for the details.
[/quote]
Your comment about Taleb reminded me of a story I read in the New Yorker about Taleb and Victor Neiderhoffer. Try and find it if you can, it came out maybe 10 years ago.
Yes, Taleb is right and if you aren’t hedged, and if the market opens up against you, you can get smoked. But you can’t not sell options because you’re afraid that another 87 crash or 9/11 is a day away. Besides, his lessons are really for a portfolio manager who has 40:1 or greater leverage, not someone trading options on an exchange that requires nightly mark-to-market.
I’ll tell you what I tell all my friends who want to trade options: trade them as part of an overall portfolio strategy. If you really must use them to speculate, set aside %15 of your portfolio and use that money. What I mean by overall portfolio strategy is this: you’re long stock ABC at the current price of $20. Sell $30 calls on it going out every 5 months or so. If the stock trades down, sideways or up to but not over $30, you keep all the premium you’ve collected. If the stock trades above $30, it gets called away but you’ve made $10 a share plus kept whatever premium you collected up until that time. This is what makes option strategies interesting for the retail investor, being able to trade around an underlying long position in the stock.[/quote]
Okay, thanks. I’ll start looking into some of the other strategies.
[quote]Surly D. wrote:
[quote]Dr. Pangloss wrote:
[quote]Surly D. wrote:
I wanted to get another opinion on the “over 80-90% of options expire worthless” idea. I’ve read in some books that the figure is accurate (hence, it would be very good to be a seller). I also read in McMillan’s book that he estimated about a 50-50 split in options that expire OTM. Hard to tell which version is reasonable.
The other reason I tended to stay away from selling options was that I had read (I think Taleb), that selling options over time will lead to a portfolio blow up, since you can’t always predict when the next financial catastrophe will be, regardless of the model used. I can’t recall if they meant strictly naked options though, which obviously would affect strategies.
Would you think it is possible to be successful trading options with a retail account? Or is that simply a scaled down version of what you did with a professional account? I’m asking in terms of holding directional positions, rather than market making.
Also, do options traders stay trading mostly with options, due to the many strategies available to look through, or do they also engage in trading equity at times?
Thanks for the details.
[/quote]
Your comment about Taleb reminded me of a story I read in the New Yorker about Taleb and Victor Neiderhoffer. Try and find it if you can, it came out maybe 10 years ago.
Yes, Taleb is right and if you aren’t hedged, and if the market opens up against you, you can get smoked. But you can’t not sell options because you’re afraid that another 87 crash or 9/11 is a day away. Besides, his lessons are really for a portfolio manager who has 40:1 or greater leverage, not someone trading options on an exchange that requires nightly mark-to-market.
I’ll tell you what I tell all my friends who want to trade options: trade them as part of an overall portfolio strategy. If you really must use them to speculate, set aside %15 of your portfolio and use that money. What I mean by overall portfolio strategy is this: you’re long stock ABC at the current price of $20. Sell $30 calls on it going out every 5 months or so. If the stock trades down, sideways or up to but not over $30, you keep all the premium you’ve collected. If the stock trades above $30, it gets called away but you’ve made $10 a share plus kept whatever premium you collected up until that time. This is what makes option strategies interesting for the retail investor, being able to trade around an underlying long position in the stock.[/quote]
Okay, thanks. I’ll start looking into some of the other strategies.
[/quote]
Here’s what you need to know:
The importance of buying and selling options,
The six factors that affect an options price
The most important of those 6 factors
Delta hedging
Basic option strategies like bull and bear spreads, straddles, and strangles, and covered calls.
People can trade an entire lifetime just knowing these basic concepts.
i trade calls and puts (long) exclusively because i have a small account, and options allow me to trade big names such as apple and google. im not into any strangles, straddles, butterflies, iron condors or writing covered calls or any of that stuff though.
i pick options that expire 1-2 weeks out, sometimes a month out if i wanna hold for the week, with a theta that wont kill me if i hold overnight, and only hold them for a day or two, based on how fast i expect the underlying to move.
i mean, what beats putting $1200 into a few apple calls and collecting $400 within 15 minutes.
of course i trade off charts and have decent timing. i just basically use options as a replacement for stock. i try and get near or in the money with a delta over .70 if i can. i also like a high gamma and low theta.
ive read natenbergs “option pricing and volatility” and mcmillans “options as a strategic investment”. as well as o’neils “how to make money in stocks” and “technical analysis of stock trends” by edwards and magee.
just my 2 cents.
of course i only buy the option if i expect a large and immediate move in the underlying stock. theres nothing worse than theta eating up your premium as the stock moves sideways.
Wannabebig, you have a solid handle on options trading. Now, build that account up so you can start selling premium rather than paying for it!
Best of luck and props to you for grasping some really complicated concepts.
[quote]Dr. Pangloss wrote:
Wannabebig, you have a solid handle on options trading. Now, build that account up so you can start selling premium rather than paying for it!
Best of luck and props to you for grasping some really complicated concepts.[/quote]
thanks!
selling premium is a whole 'nother beast im excited to get into
[quote]Dr. Pangloss wrote:
[quote]Surly D. wrote:
[quote]Dr. Pangloss wrote:
[quote]Surly D. wrote:
I wanted to get another opinion on the “over 80-90% of options expire worthless” idea. I’ve read in some books that the figure is accurate (hence, it would be very good to be a seller). I also read in McMillan’s book that he estimated about a 50-50 split in options that expire OTM. Hard to tell which version is reasonable.
The other reason I tended to stay away from selling options was that I had read (I think Taleb), that selling options over time will lead to a portfolio blow up, since you can’t always predict when the next financial catastrophe will be, regardless of the model used. I can’t recall if they meant strictly naked options though, which obviously would affect strategies.
Would you think it is possible to be successful trading options with a retail account? Or is that simply a scaled down version of what you did with a professional account? I’m asking in terms of holding directional positions, rather than market making.
Also, do options traders stay trading mostly with options, due to the many strategies available to look through, or do they also engage in trading equity at times?
Thanks for the details.
[/quote]
Your comment about Taleb reminded me of a story I read in the New Yorker about Taleb and Victor Neiderhoffer. Try and find it if you can, it came out maybe 10 years ago.
Yes, Taleb is right and if you aren’t hedged, and if the market opens up against you, you can get smoked. But you can’t not sell options because you’re afraid that another 87 crash or 9/11 is a day away. Besides, his lessons are really for a portfolio manager who has 40:1 or greater leverage, not someone trading options on an exchange that requires nightly mark-to-market.
I’ll tell you what I tell all my friends who want to trade options: trade them as part of an overall portfolio strategy. If you really must use them to speculate, set aside %15 of your portfolio and use that money. What I mean by overall portfolio strategy is this: you’re long stock ABC at the current price of $20. Sell $30 calls on it going out every 5 months or so. If the stock trades down, sideways or up to but not over $30, you keep all the premium you’ve collected. If the stock trades above $30, it gets called away but you’ve made $10 a share plus kept whatever premium you collected up until that time. This is what makes option strategies interesting for the retail investor, being able to trade around an underlying long position in the stock.[/quote]
Okay, thanks. I’ll start looking into some of the other strategies.
[/quote]
Here’s what you need to know:
The importance of buying and selling options,
The six factors that affect an options price
The most important of those 6 factors
Delta hedging
Basic option strategies like bull and bear spreads, straddles, and strangles, and covered calls.
People can trade an entire lifetime just knowing these basic concepts.
[/quote]
Can you elaborate on the first one?
I take it that the options model being used doesn’t really matter, as long as you understand it, its limitations, and are consistent?
[quote]wannabebig250 wrote:
i trade calls and puts (long) exclusively because i have a small account, and options allow me to trade big names such as apple and google. im not into any strangles, straddles, butterflies, iron condors or writing covered calls or any of that stuff though.
i pick options that expire 1-2 weeks out, sometimes a month out if i wanna hold for the week, with a theta that wont kill me if i hold overnight, and only hold them for a day or two, based on how fast i expect the underlying to move.
i mean, what beats putting $1200 into a few apple calls and collecting $400 within 15 minutes.
of course i trade off charts and have decent timing. i just basically use options as a replacement for stock. i try and get near or in the money with a delta over .70 if i can. i also like a high gamma and low theta.
ive read natenbergs “option pricing and volatility” and mcmillans “options as a strategic investment”. as well as o’neils “how to make money in stocks” and “technical analysis of stock trends” by edwards and magee.
just my 2 cents.[/quote]
Thanks, good advice. What sites do you use to develop your trades?
[quote]Surly D. wrote:
[quote]wannabebig250 wrote:
i trade calls and puts (long) exclusively because i have a small account, and options allow me to trade big names such as apple and google. im not into any strangles, straddles, butterflies, iron condors or writing covered calls or any of that stuff though.
i pick options that expire 1-2 weeks out, sometimes a month out if i wanna hold for the week, with a theta that wont kill me if i hold overnight, and only hold them for a day or two, based on how fast i expect the underlying to move.
i mean, what beats putting $1200 into a few apple calls and collecting $400 within 15 minutes.
of course i trade off charts and have decent timing. i just basically use options as a replacement for stock. i try and get near or in the money with a delta over .70 if i can. i also like a high gamma and low theta.
ive read natenbergs “option pricing and volatility” and mcmillans “options as a strategic investment”. as well as o’neils “how to make money in stocks” and “technical analysis of stock trends” by edwards and magee.
just my 2 cents.[/quote]
Thanks, good advice. What sites do you use to develop your trades?[/quote]
lol what do you mean by develop my trades? do you mean how do i find stocks to trade orrrr?
if thats what you mean, i stick to large cap market leaders that move $2+ a day. like google, apple, amazon, ibm, netflix, celgene, mastercard, visa, linkedin, walmart, ebay, etc.
i have been trying out “SPY” options lately and i like them, they have pretty high gammas and deltas compared to stocks, i find, so little price moves equals bigger move in my option premium.
i draw support, resistance, and trendlines on my charts and just watch for breaks of those landmarks on heavy volume and buy calls or puts accordingly. my “method” is honestly so simple but it works. i just need to work on my timing and trade management.
[quote]wannabebig250 wrote:
[quote]Surly D. wrote:
[quote]wannabebig250 wrote:
i trade calls and puts (long) exclusively because i have a small account, and options allow me to trade big names such as apple and google. im not into any strangles, straddles, butterflies, iron condors or writing covered calls or any of that stuff though.
i pick options that expire 1-2 weeks out, sometimes a month out if i wanna hold for the week, with a theta that wont kill me if i hold overnight, and only hold them for a day or two, based on how fast i expect the underlying to move.
i mean, what beats putting $1200 into a few apple calls and collecting $400 within 15 minutes.
of course i trade off charts and have decent timing. i just basically use options as a replacement for stock. i try and get near or in the money with a delta over .70 if i can. i also like a high gamma and low theta.
ive read natenbergs “option pricing and volatility” and mcmillans “options as a strategic investment”. as well as o’neils “how to make money in stocks” and “technical analysis of stock trends” by edwards and magee.
just my 2 cents.[/quote]
Thanks, good advice. What sites do you use to develop your trades?[/quote]
lol what do you mean by develop my trades? do you mean how do i find stocks to trade orrrr?
if thats what you mean, i stick to large cap market leaders that move $2+ a day. like google, apple, amazon, ibm, netflix, celgene, mastercard, visa, linkedin, walmart, ebay, etc.
i have been trying out “SPY” options lately and i like them, they have pretty high gammas and deltas compared to stocks, i find, so little price moves equals bigger move in my option premium.
i draw support, resistance, and trendlines on my charts and just watch for breaks of those landmarks on heavy volume and buy calls or puts accordingly. my “method” is honestly so simple but it works. i just need to work on my timing and trade management.[/quote]
Yeah, how you found the options to trade. I thought you looked at options only, rather than looking at stocks and selecting the options based off them.
[quote]Surly D. wrote:
[quote]wannabebig250 wrote:
[quote]Surly D. wrote:
[quote]wannabebig250 wrote:
i trade calls and puts (long) exclusively because i have a small account, and options allow me to trade big names such as apple and google. im not into any strangles, straddles, butterflies, iron condors or writing covered calls or any of that stuff though.
i pick options that expire 1-2 weeks out, sometimes a month out if i wanna hold for the week, with a theta that wont kill me if i hold overnight, and only hold them for a day or two, based on how fast i expect the underlying to move.
i mean, what beats putting $1200 into a few apple calls and collecting $400 within 15 minutes.
of course i trade off charts and have decent timing. i just basically use options as a replacement for stock. i try and get near or in the money with a delta over .70 if i can. i also like a high gamma and low theta.
ive read natenbergs “option pricing and volatility” and mcmillans “options as a strategic investment”. as well as o’neils “how to make money in stocks” and “technical analysis of stock trends” by edwards and magee.
just my 2 cents.[/quote]
Thanks, good advice. What sites do you use to develop your trades?[/quote]
lol what do you mean by develop my trades? do you mean how do i find stocks to trade orrrr?
if thats what you mean, i stick to large cap market leaders that move $2+ a day. like google, apple, amazon, ibm, netflix, celgene, mastercard, visa, linkedin, walmart, ebay, etc.
i have been trying out “SPY” options lately and i like them, they have pretty high gammas and deltas compared to stocks, i find, so little price moves equals bigger move in my option premium.
i draw support, resistance, and trendlines on my charts and just watch for breaks of those landmarks on heavy volume and buy calls or puts accordingly. my “method” is honestly so simple but it works. i just need to work on my timing and trade management.[/quote]
Yeah, how you found the options to trade. I thought you looked at options only, rather than looking at stocks and selecting the options based off them.
[/quote]
i just use options as a replacement for high priced stocks. i dont trade them based on the probability of them finishing in the money if thats what you mean. ive seen some traders trade options based solely on historical vs implied volatility and the chance the option finishes in the money though.