Best option strategies to learn ....

taowave · Jan 15, 2020

You havent truly expeienced the "joy" of options until you lift a leg on a spread while the other decides to sprint away from you..Nothing quite like white knucle trading

Aquarians · Jan 21, 2020

Trade Theory said:
To start, learn vertical debit spreads. Its the backbone of almost any advanced spread such as butterflies, condors, and backratios. A good starting strategy that's directional is trading an at the money 2-5 point wide spread at around 30 days out. The key is to make sure your risk to reward is favorable. You want to make sure your risk is less than half the width of the spread.

For example, if your bullish on TSLA, you could place a 440/445 call spread at 1.70. Max risk is the debit you're paying for the spread, here it would be $170. The most you could lose is $170, and if your right and TSLA expires above 445, your max win will be $500. You want to make sure you're paying $250 or less, which is the max reward divided by 2. The thought process here is its a 50/50 chance TSLA goes up or down. So with that you want to make sure you're paying less than 50% of the reward if your right. If you place the trade 1000 times (and direction is actually a 50/50 chance), you have positive expectancy.
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This sounds right on a superficial view but then again, it's the 440 strike that's at 50% probability. The 445% one likely is two standard deviations away, thus 2%. Integrating (averaging), the whole strategy probably has far less than the 34% probability you're paying for it.

But don't take my words for granted. In a couple of months I'll release on GitHub the "Linux" of options trading strategy building. The rationale behind that, after almost 15 years in the field and still failing to make money is like Edison said: "I have not failed. I've just found 10,000 ways that won't work." In the primitive days of computing everyone had to make their "Linux" (operating system) and in the process, re-invent / re-discover all those 10,000 ways and more. That was around 1950 btw. Today's finance is 1970's computing: lots and lots of very expensive and wildly different (as in what set of 100-to-1000 of those 10,000 bugs you want) commercial solutions.

I tried (and failed, count it as my #10,001's) to make money getting a job doing what I do best but still I'd like to make a bit more money on my thing than Linus did on his thing when I'm gonna release it. But at this point I really don't give a fuck even if I don't.

In short: look forward, as in 1 to 6 months, for the 100% free and open source formal and practical proof that your strategy is bullshit. Or not!

Aquarians · Jan 21, 2020

Trade Theory · Jan 21, 2020

Aquarians said:
This sounds right on a superficial view but then again, it's the 440 strike that's at 50% probability. The 445% one likely is two standard deviations away, thus 2%. Integrating (averaging), the whole strategy probably has far less than the 34% probability you're paying for it.

But don't take my words for granted. In a couple of months I'll release on GitHub the "Linux" of options trading strategy building. The rationale behind that, after almost 15 years in the field and still failing to make money is like Edison said: "I have not failed. I've just found 10,000 ways that won't work." In the primitive days of computing everyone had to make their "Linux" (operating system) and in the process, re-invent / re-discover all those 10,000 ways and more. That was around 1950 btw. Today's finance is 1970's computing: lots and lots of very expensive and wildly different (as in what set of 100-to-1000 of those 10,000 bugs you want) commercial solutions.

I tried (and failed, count it as my #10,001's) to make money getting a job doing what I do best but still I'd like to make a bit more money on my thing than Linus did on his thing when I'm gonna release it. But at this point I really don't give a fuck even if I don't.

In short: look forward, as in 1 to 6 months, for the 100% free and open source formal and practical proof that your strategy is bullshit. Or not!
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You think a 5 pt move in Tesla is 2 standard deviations? Do you have any idea how volatile TSLA is? You’re not trading 5 point spreads on a $40 product with a beta of one... You trade according to the price and vol. Putting that aside, that’s why I kept saying you gotta be somewhat decent at picking direction. The point of that trade is if you are right 50% of the time at picking direction and all of your trades are favorably priced, you’ve got edge. The key is to not suck at picking direction.

ironchef · Jan 22, 2020

Aquarians said:
The rationale behind that, after almost 15 years in the field and still failing to make money is like Edison said: "I have not failed. I've just found 10,000 ways that won't work."
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I admire your persistence and perseverance. I would have given up a long time ago and find something else to make money.

Good luck, I am looking forward to test your system.

ironchef · Jan 22, 2020

Trade Theory said:
The key is to not suck at picking direction.
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Easier said than done.

taowave · Jan 22, 2020

ironchef said:
Easier said than done.
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But here is the problem..If you arent Delta Hedging,every position has an implied directional bet.If you absolutely suck,you are in medium to deep doo doo....

With that said,there are "seemingly" opportunistic trades that present itself which afford one the luxury of being somewhat clueless as to direction.IMHO,as a former "grinder",when you are right,you need to get richly reawarded. Which is why I am not a terribly big fan of tight verticals as a directional bet.Rather trade them as part of a fly/condor

Aquarians · Jan 22, 2020

ironchef said:
Good luck, I am looking forward to test your system.
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Thanks.

ironchef said:
I admire your persistence and perseverance. I would have given up a long time ago and find something else to make money.
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Well, I DO hold a job, that's still under the making money category

The "other" stuff I do on a side it's essentially a combination of hobby and playing the lottery. Odds of success are definitely similar to winning the lottery but if I stop doing this, what the heck am I gonna do else? I do it since so long that's become part of my identity I guess, so it's very likely I'll continue to do this all my life.

Right now I'm looking to unload some of the developer work in order to be able to allocate that time to more relevant stuff and by that I mean mathematics.

Aquarians · Jan 23, 2020

Sometimes, though, I wonder. I'm struggling with stochastic integrals and partial differential equations and see shit like this making it to billion dollar valuation: https://en.wikipedia.org/wiki/Dollar_Shave_Club

It doesn't make any sense.

If this current stint of mine into the fine art of making it rich through speculation doesn't pan out in the near to mid future, I'll take out a little of the ambition while keeping the essential and switch to plan B.

Plan A: Rich = free + powerful.
Plan B: Just free.

Plan B is known in today's world as an universal basic income (UBI) economy. I think of it more as a functioning unified centralized kindness yielding output universally (FUCK YOU) economy.

Aquarians · Jan 23, 2020

On another account, and speaking of it (the account), is it possible to nuke my account here?

I've said a lot of shit after downing some beers, which I would like to keep private. Anyone knows of past occurrences here, politely ask the admin (and perhaps for a small charge), have my account deleted along with all it's history?

Don't worry, I'll be back under the same name. Aquarians reloaded