The problem with your GOOG IC trade is that you don’t have an edge, despite 8 pages of conversation. All we know from what you have said is that ‘IMHO GOOG will not swing 20%’ is your entry edge, and all we know about your exit edge is that you ‘will not hold trade until expiry’. Without an edge your trade doesn’t have a positive expectancy, and that’s what some people here have been trying to tell you. Your edge could be many things, Technical – eg my analysis of the recent trading pattern shows the stock is likely to range trade…, Fundamental – eg my DCF model tells me the stock is accurately priced by the market now…, Flow – eg my research into holidays flows shows that buys & sells are very well balanced at year end…, Earnings – eg my analysis into the 4Q results says there will be little to surprise the market… …and therefore I think the stock will be more range-bound than expected and therefore GOOG IV is mispriced. Or any other analysis you could do, I don’t care, I just made these up. The point is you need to be convinced the market is mispricing IV. Otherwise, you are randomly doing GOOG IC trades where its likely that IV is fairly priced, and therefore overtime your strategy will lose money after trading costs and occasional large cash move. For sure the people on ET have to have thick skin, because at times the remarks can be impolite. But its my hope that they are usually intended to be taken lightly and are funny for everyone. There’s really no need to be insulting. Especially to a guy like Kim Klaiman. He’s offering good stuff here; it pays to listen to him and many people do. If what he’s written here isn’t enough, then read his other posts, check out his website, follow his trades, and look at his track. Really, enough said. Being insulting also drives away other people who may want to contribute and help the thread. If a thread gets too nasty then some people won’t bother and that’s a big loss. Robert Morse participates in most options threads and it sticks out that he hasn’t been on this thread. He was an options market maker for many years, and knows this stuff inside out. For example, he could explain to you why your suggestion of ‘taking the other side’ of your GOOG IC is not of interest to most people on ET.
Many dish it out but can't take it. Kim is full of BS and so are you if you think goog will swing 20% in either direction. Rational can be applied to anything, even your (and Kim's) analysis but also mine. By all means, post your better trade. I had a response who says an OHare trade is better. LOL Don't expect profitable traders to handout their personal trading edge on here. Posting my trade is more than enough, look at all the naysayers. I am not here to prove my trade is better than some else's. Sometimes a simple trade is all it takes, read between the lines for details. I am being called names, then I respond accordingly. Everyone has an opinion and so do i. IMO Kim is a hack and a con selling his snake oil, demanding respect. hahaha
I'm always enjoying to have a productive discussion even if my opponent disagrees with me. it is perfectly fine to have different opinions. This is why markets exist. Any good discussion helps all of us to become better traders. However, once it becomes a personal attack instead of valid argument, I simply quit the discussion. Some people are just not worth the effort and the energy to argue with. From this point, I just refrain from participating in any topic started by that person and stop responding to his posts. To repeat what I and others already said about this trade: GOOG does not have to swing 20% in order for the trade to become a loser. Why? Because there is always a stop loss, and it will take much smaller move than 20% to get to the stop loss. If it moves short time after the trade starts, and IV jumps, all it takes is 5-7% move. Which is nothing for a stock like GOOG.
I would like to say you're confused, but you need to know more than 1 thing to be confused. You're like a back seat driver...
I don't have a dog in this fight so I am not taking sides. To be fair to OP, how do you know OP does not have an edge? Maybe OP did the analysis you mentioned, maybe OP is a GOOG insider, maybe OP has a superior trade management strategy that can produce profits prior to expiry.... I did a quick back of the envelop look at this going back 5 years and indeed GOOG made >15% move within 3 months ~10 times, >20% ~4-5 times. So OP's strategy has a high probability of success if OP trade this once a month to expiry, the success rate would be > 92%. If OP has a trade management method, perhaps the success rate could be much higher. I have not calculated risk/reward and total expectancy since I don't have OP's trading method. I think one can make money going long IC or going short IC, it is all in entry and exit selection and in trade management. Anyway, I appreciate both sides' argument and learn something from everyone. We are close to Thanksgiving, so best wishes to all.
Add to the Ironchief's post above, It is 5 contracts with 30 points wing. From his posts he looks like well capitalized. For all you know he might be diversifying from all his long vol. trade or trying to squeeze more juice from his GOOGL stock. I wouldn't do this trade myself, doesn't mean it is not suitable for him. It is not like shorting VIX calls and prey till expiry. This trade might be end of the world for $10k customers of snake oil, but from his previous posts he should be okay.
Excellent points. Since I occasionally trade GOOGL options, this is something for me to chew on. Thanks.
Stop loss is no longer mainstream but amature traders and authors still write and promote them for lack knowledge and misunderstanding of how the markets work. Exchanges have been doing away with stop loss for years. More snake oil, buyer beware. https://www.marketwatch.com/story/nyse-joining-nasdaq-in-eliminating-stop-orders-2015-11-18