I've been trading options on equities for a while and I want to expand into futures. I noticed that Larry McMillan runs a daily advisor service that trades options on both futures and equities. I've read his books and he seems to know what he's doing. Does any one have any experience or opinions about McMillan's Daily Strategist service? Thanks.
Adamoptions: I subscribed to Larry McMillan's site for quite a while. Read his books (the best one is his classic "Options As A Strategic Investment"), and subscribed to his newsletter for almost 2 years. If you are serious and you work at it, you can develop some effective strategies. Be advised that he strongly advocates buying straddles. This works when volatility is low and then moves up. Problem is that volatility can stay low for quite a while, and if it does, theta (time decay) will eat you up. In the end you need to go past this level to the point where you understand Black/Scholz and can manage both buying and selling premium. Good luck, Steve46.
Steve, Excellent points. I agree with you completely. In fact, I've already reached the point of limitations in straddles and I've begun to do work in selling premium. That's what's lead me to indexes and futures. Can you suggest a guru for when volatility is high? Right now, I'm reading Charles Kottle's book (thinkorswim), but it's tough to follow. Adam
Adamoptions: I'm not big on gurus. I'm pretty sure the only way to learn to make money is to do the homework, read the books, learn the concepts and try them out in the market. I suggest you make sure you understand everything in Chapter 38 in McMillan's book (Advanced Concepts). Risk Management with options is very important. Before you try selling premium, you need to (really) understand 1.) what your various exposures are (position delta, gamma, etc) 2.) how to hedge each exposure 3.) how/when to unwind the positions so that you keep some profit. You can begin to do this with simple vertical & horizontal spreads. Then when you have a feel for controlling risk, you can try to sell premium "naked". Best thing I can offer by way of advice, is dont sell premium naked until you are sure you have a real understanding of the risks. It is the quickest way to blow up your account. Once you have mastered McMillan's book, then you can try Sheldon Natenberg's book, or O'Connell's (Business of Options). One more thing, this part of the game is played by people who have a lot of education and experience, and they are able to "value" options quickly, and they know how and when to put on and take off positions. Its kind of like sitting down to play poker for the first time. The old saying is if you cant identify the worst player at the table, then you are (probably) "it".
I've been through both Natenberg's and most of McMillan's book and I'm keeping clear of selling naked. Sounds like you have already been down the path that I would like to travel. Cottle also suggested I start with the verticals. Sounds like you know your stuff. Thanks for the good advice. I'll be sure to follow it.