 |
falconview
Registered: Jun 2010
Posts: 1465 |
06-17-11 03:31 PM
Forex forex
Okay I did your weeklies and one of my own.
GLD made +$57
GOOG made + $565
QQQ made +$55
SPY lost -$338
Now I have to cogitate on that. I ran that GOOG trade a couple of times and I still don´t believe it, or know why? Since these were all paper 1 contract trades for learning purposes.
Comments anyone?
|
| |
|
Edit/Delete • Quote • Complain |
Dolemite
Registered: Jan 2003
Posts: 77 |
06-17-11 03:40 PM
Quote from falconview:
DOLOMITE
I´m seriously thinking of buying a picture frame and hanging your comment on my wall over the computer desk.
" I spent 14 years trying to find that one option trade I could put on like a robot and exceed average market returns. Unfortunately, I couldn't find it."
Wonderful, as I´m still looking after the last two years. Makes one think, if not give in. 
Options are deceptive, you throw up a risk graph of a straddle then look at a chart and see that the stock can easily move past the break evens and with a little luck you could have a big pay day. My story involved searching for that elusive theta positive trade that would turn the option market into an atm. All I had to do was find that adjustment or rolling technique to stay in long enough for the market to move in my favor since I thought time was on my side. I would backtest all kinds of strategies and adjustments and think that I had found the holy grail. The problem is that the market only resembles what it did in the past, there are enough differences that the adjustment that worked last time didn't work so well this time. I remember reading something similar to this years ago and thinking how I was different and I was going to find that one magical trade. To win in the options market you have to have an opinion and trade that. It can be a direction, opinion of volatility, or where a stock won't go, but you have to have an opinion. The biggest mistake I made is that I underestimated the dynamics of greeks and how volatility impacts pricing. If I had it to do over, I would read every book I could find on volatility until I understood what they said and trade a bunch of small trades over and over while keeping a journal of what happened with the market/stock and how my trade reacted.
But I will say this, if you truly enjoy trading options never give up. I quit so many times over the years but kept coming back. Contrary to opinions on this site, there are a lot of people making above market returns trading options.
|
| |
|
Edit/Delete • Quote • Complain |
Dolemite
Registered: Jan 2003
Posts: 77 |
06-17-11 03:48 PM
Quote from falconview:
Forex forex
Okay I did your weeklies and one of my own.
GLD made +$57
GOOG made + $565
QQQ made +$55
SPY lost -$338
Now I have to cogitate on that. I ran that GOOG trade a couple of times and I still don´t believe it, or know why? Since these were all paper 1 contract trades for learning purposes.
Comments anyone?
GOOG volatility shot up yesterday afternoon when the stock dumped fast after 1pm. The increase in vol inflated your option prices. With a move like that the best thing to do is take the profits. Pull up an intrady chart of each option in the straddle in thinkorswim and you will see the price spike that correlates with the jump down GOOG had yesterday afternoon.
|
| |
|
Edit/Delete • Quote • Complain |
falconview
Registered: Jun 2010
Posts: 1465 |
06-17-11 03:52 PM
Dolomite
Thankyou for the kind words. Sometimes we are all hard learners. There is a guy on Howard Cohodas Credit Spread forum. I got so impatient with some of them, I wanted to know their bottom line? Post a statement or something. Most went silent or made huffy comments.
One guy who always treated me very helpful, can´t remember his name, with old age comes forgetfulness, but he fairly promptly posted his monthly brokerage statement which showed he made $22,000 for that month. WOW! I was never the same again. IT IS POSSIBLE!
|
| |
|
Edit/Delete • Quote • Complain |
falconview
Registered: Jun 2010
Posts: 1465 |
06-17-11 03:56 PM
I´m playing with the GREEKS this morning and yesterday a bit. Trying to see if the GREEKS will forewarn me of a trend reversal?
Tracking Gamma, Delta and Vega for the straddle in SPY with 127 strike.
Now you make a comment and throw in THETA, I think I remember it, but not sure? Going to have to make another learning column I guess on paper. Seems to be no end to this stuff.
|
| |
|
Edit/Delete • Quote • Complain |
Dolemite
Registered: Jan 2003
Posts: 77 |
06-17-11 04:06 PM
Quote from falconview:
I´m playing with the GREEKS this morning and yesterday a bit. Trying to see if the GREEKS will forewarn me of a trend reversal?
Tracking Gamma, Delta and Vega for the straddle in SPY with 127 strike.
Now you make a comment and throw in THETA, I think I remember it, but not sure? Going to have to make another learning column I guess on paper. Seems to be no end to this stuff.
Theta is time decay, it is one of the biggest enemies of a straddle. You lose a little every day when it doesn't move. Vega in a straddle will generally help you if SPY goes down and hurt you if SPY goes up.
|
| |
|
Edit/Delete • Quote • Complain |
| Receive
an email whenever a new post is added to this thread by subscribing
to it. |
|
|
|
|
