Any option traders here?

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Any option traders here?

Postby Mayhem » Mon Oct 24, 2016 6:18 pm

I’ve been studying option trading for over a year now and it has been a blast. I’m still learning though, I want to be familiar with more strategies.

I’ve been paper trading this year and I only lost one major trade and it was on Monsanto back in May where that buyout rumor fucked me in the ass. I deserved that ass rape for using a credit spread strategy on an individual stock. I was a big noob; however I didn’t exit my trade because I was more interested in furthering my knowledge. Also for educational purposes on that trade, my position sizing wasn’t taken into account.

Right now I want to learn and employ volatility, volatility reversion, and directional price reversion strategies. I only use one technical analysis study and that is the RSI 2-6.

My long butterflies have ended up in failure; I still don’t know how to employ that strategy in a non theoretical way.

My debit spreads and long condors are on point.
My last covered call was a success and it was on Microsoft. I bought the stock when it was high 56ish and I wrote a call at 60 and I made money through the premium (because of time decay) and the stock movement itself. It made a big after market move and I sold all my shit the next day.

Things that I took to heart once I moved out of the theoretical aspect of option trading:

1. I will almost never use credit spreads, but if I were to do so it would be on European style indexes with healthy volatility. Still fuck credit and I don’t care what the professionals say.

2. I won’t short for shit but I might try covered puts in the future just to have an idea.

3. Liquidity and volatility are extremely important.

4. It seems it is common consensus and agreed upon by professionals that long straddles on stock announcements is a get rich quick strategy but that’s really bad because volatility is usually high on earnings and the movement is already priced for so it’s like buying the contract when it’s heavily inflated in a short term bubble and hoping to profit from such a move.

5. Fuck the professionals and expensive training programs, all you need is to pirate some books and watch youtube videos of these training programs, they usually give out a lot of useful information but I guess they lure people due to their lack of confidence or target personality types that need assurance.
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Re: Any option traders here?

Postby Dissenter » Wed Nov 16, 2016 10:29 am

I have done quite a few option trades over the years. At this point I feel like they are valuable when I see a technical pattern that suggests a big move may be coming. In these cases, I buy out of the money calls or puts as they increase in value very quickly when the stock moves in the expected direction. I've had a few profits of 500-1000%. Unfortunately, many of these are not profitable so I end up losing 50% or more of the premium when I realize the move isn't going to happen. For every huge gain there always seems to be many of these smaller losses that offset them.

The other negative with options are the huge spreads. It's not like stocks where there are a cent or two spread. With options you may have a 50 cent spread to get out which means a sizeable loss even if you get out when the stock is at the same price.

At this point, my view toward options is that they are useful and fun to play with when I see something that I feel strongly about and want to get involved with, but the spreads and the swings in equity require that I only have very small positions (less than 2%) in order to avoid big losses.

Have fun!
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The dissenter is every human being at those moments of his life when he resigns momentarily from the herd and thinks for himself - Archibald MacLeish
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Re: Any option traders here?

Postby Mayhem » Sat Dec 17, 2016 8:11 pm

Dissenter wrote:I have done quite a few option trades over the years. At this point I feel like they are valuable when I see a technical pattern that suggests a big move may be coming. In these cases, I buy out of the money calls or puts as they increase in value very quickly when the stock moves in the expected direction. I've had a few profits of 500-1000%. Unfortunately, many of these are not profitable so I end up losing 50% or more of the premium when I realize the move isn't going to happen. For every huge gain there always seems to be many of these smaller losses that offset them.

The other negative with options are the huge spreads. It's not like stocks where there are a cent or two spread. With options you may have a 50 cent spread to get out which means a sizeable loss even if you get out when the stock is at the same price.

At this point, my view toward options is that they are useful and fun to play with when I see something that I feel strongly about and want to get involved with, but the spreads and the swings in equity require that I only have very small positions (less than 2%) in order to avoid big losses.

Have fun!


Buying out of the money is statistically the least successful strategy in options trading and by the time you expect a large move to occur through news events or what not then the price for that move is already accounted for via volatility. Kudos to you if you actually succeeded but I’m not a big fan of that strategy because extrinsic value contracts have terrible theta.

You are correct about the wide bid ask spreads, especially in option trading because there are only a few symbols with very high liquidity.
Yes, in options trading trade occurrences is the name of the game. People with six figure accounts usually trade only 1% or .75% of their account size on a given trade.

What technical pattern or study are you comfortable with?
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