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Put_Master
Registered: May 2009
Posts: 1029 |
09-17-12 01:59 AM
Quote from oldnemesis:
<<< Thus the need for judgement and experience to successfully pursue market neutral strategies.
Remember that 90% of option traders lose money... how is it you will be part of the 10%??? >>>
I don't know about the 10% claim, but it all goes back to my original statement to SLE.
No matter what the strategy, it always boils down to the same issues of:
"Experience,.... common sense,.... and risk management"
And btw,.... set reasonable % return goals.
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Put_Master
Registered: May 2009
Posts: 1029 |
09-17-12 02:33 AM
Quote from Put_Master:
I don't know about the 10% claim, but it all goes back to my original statement to SLE.
No matter what the strategy, it always boils down to the same issues of:
"Experience,.... common sense,.... and risk management"
And btw,.... set reasonable % return goals.
An example of setting UNREASONABLE % return goals is,.... having the same % return goal today, with the VIX in the mid teens, as you did when the VIX was in the 25 - 35 range.
Traders need to adjust their strategy expectations, to current market conditions.
(Which btw, leads back to the issues of experience, common sense and risk management.)
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Cereal
Registered: Dec 2010
Posts: 67 |
09-17-12 03:27 PM
Quote from diaoptions:
And the common one line description of options reinforces that MISCONCEPTION.
"Call options give the buyer the right, but not the obligation, to purchase an underlying asset."
Perhaps you should read this post. http://www.elitetrader.com/vb/showt...&threadid=51251
The first thing I recently learned is that my broker by default will exercise all my options that are 0.1 ITM at expiry (even if I would have prefered no to). Luckily I had enough money in my account to purchase the stock that time.
Now I have contacted them and they have told me that I can instruct them ahead of time whenever I don't want the automatic default exercise of long calls or puts.
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sle
Registered: Apr 2003
Posts: 1610 |
09-17-12 05:48 PM
Quote from Put_Master:
The problem with that pure technical approach is, if they actually follow their own guidelines, which they don't, they would only trade once or twice a year.... if that.
Nothing bad about a strategy setting up twice a year if the signal is sufficiently strong and "fool-proof". You just have to have many strategies like that to achieve diversity. For example, calendar trades on indices usually only set up properly after large volatile shocks, yet they tend to be pretty profitable. There is more to options trading then selling risk premium, that's all (even you know that, since you spend most of your time figuring out stock fundamentals).
Quote from Put_Master:
The predictability works better "back testing" vs real time initiating.
That just means that back-testing is being done wrong. If you only had 10 trades in the past 10 years and you add ten features to the model to create a real smooth equity curve - hell yes, you not going to be able to reproduce it in the future. If you taking something that has positive expectation already and add some sensible filters (e.g. don't trade in a certain environment, don't touch certain classes of stocks etc.), usually you will be able to reproduce your backtests pretty well. You yourself use a watered -down version of back-test by looking at support at 2 and 5 year horizon.
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Put_Master
Registered: May 2009
Posts: 1029 |
09-17-12 08:31 PM
<<< There is more to options trading then selling risk premium, that's all (even you know that, since you spend most of your time figuring out stock fundamentals). >>>
I study a stocks funamentals to select my stocks, as I prefer to only invest in companies I'm willing to own.
And if I'm willing to own them, it's because they have dropped below my strikes.
So I study the fundamentals to evaluate whether they are recoverable back to my strikes.
I do that because it gives me other choices, other than selling for a loss.
I use the 2 - 5 year charts to select my "strike prices",... for the stocks I'm willing to own, because I liked the fundies.
There are times i really like a stocks fundamentals, but the tech support sucks. Thus i will probably not do the trade.
And there are times i love the tech support, but the fundamentals are terrible. Again, i will probably not do the trade.
You have no idea how many stocks i review each week, before i find one where the tech and fundies both match up.
It's a pain the the ass and lots of eye strain, particularly since i have sig eye issues. But it beats the alternative of selling for a sig loss, when my strikes are breached.
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sle
Registered: Apr 2003
Posts: 1610 |
09-17-12 08:42 PM
So it sounds to me that in the end we both do the same thing (careful, intelligent process before initiating a trade), me using "whatever" models and you using fundamentals and technical analysis.
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