Dear all I'm a student in my final year of my B&F-bachelor-studies and now starting to think about a possible bachelor-thesis. I would really like to write my thesis about option strategies but i'm unsteady about a specific subject (one idea is about how those strategies are working out in practice). So I would really appreciate if you could give me some ideas or hints! Thank you very much! best, Mike
hi Mike...just an idea but on "tastytrade" each day they do a segment called best practices in which trading strategies are back tested. They generally only use stocks with higher volatility and volume and/or etfs. They archive their shows so you can go back and check out quite a number of studies. Its interesting and might at least give you a few ideas oh and one problem is that any one strategy can work fine if you manage your winner/loser well vs set it and forget it so its very difficult to really validate any strategy over time in "practice", its just too subjective and dependent on the trader.
Hi Richard Thx for your support - I really appreciate it! Wow, didn't know tastytrade - but looks really interesting! yeah, i see what you're meaning and i think that's the problem cause as long as you are right in your investing-decision, you will win anyways - but are the chances with a specific option-strategy in comparison with the possible profit higher than with a normal call or put? Mike
no..a call or put is a straight directional bet so all option strats do is set parameters around your bet. options strats also use volatility as a guide. Strategies just help define your risk. Do I want a high probability -high risk or low probability-low risk trade? Options are a way to leverage, so you may have a $100K account but with options you can trade 10X that amount. Thats why they carry a higher risk of losing all + your account if you don't understand the risks and define your risk and trade with a great deal of discipline and patience. A very big mistake option traders make (and I made often) is not managing winners...in almost all your trading you can have winners which because of greed or ignorance you don't take off and end up turning them into losers. I guess thats a risk with any kind of trading....not unique to options.