Just luck. If I tried to trade vol when vol is high, i.e., trade combinations like spread or fly (like @destriero), I don't know how to be profitable. On the other hand: On Mar 23rd, I looked at ABBV, @ $63, PE ~ 11 dividend > 7.5% volatility was sky high because stock dropped like a rock from $97 in Feb. This is a company with strong growth and highly profitable. So I bought some stocks and juiced it with some long calls. I thought it was a reasonable bet. I also long FB and MSFT calls at the same time, same reasoning. I mentioned these in some of my posts at the time. No fancy recipe, mathematics or backtests, just some simple logic and got lucky this time.
It is really not a strength. Most years ended OK but I don't want to live like this, a +/- 40% swings every year. I want to be like @destriero, steadily printing money.
Chef... do you finding yourself buying single options or putting on spreads and more complex strategies? Just curious about your trading style.
Only single, buy/write call/put depends on my opinion of the underlying. Never made any money with spreads or flies or condors or calendars...
Hedge funds and the big boys also, buy options. Nobody talks about it but, where do you think the huge option interests come from? And at times, they would have multiple strikes being bought all at once. There are more monies to be made buying options than selling them. Like multiples of them. For every $200 you make selling options, $1,000 or more being made buying those same options. As long as my trade is aligned with the trend, I am not worried. The big boys will drive that stock price as high as they want. I am just along for the ride.
I found this statement in Sinclair. I realized now I am a position trader, not a volatility trader: So that was what I did at times. Best regards,
From the little I know of you,that was my impression.Its very difficult to transition from position trader who overlays/hedges with options to "derivatives/vol trader"..
I think it is possible to be a position & vol trader. I'll let the more pro vol traders comment on this but when I put on a bwb or spread trade it almost always favors a direction. The goal of being on the right side of volatility is giving your position some breathing room. I completely understand having a directional bias. Visit me at 3:30pm on Monday & Wednesday and you will see I often look to take a short term directional trade. Besides that... almost all directional trades are spreads or part of a bigger trade as I find picking the direction more challenging and would prefer to have some help from my friend theta. I think you are trying to find a way to burn some theta in your trades. I'd suggest finding a strategy where you can pick a direction but also burn some theta along the way. Maybe a butterfly or the broken wing kind. Give burning theta a chance!