@poopy I don't really expect you to answer though... I consider myself a successful stock investor. I could clarify and expand on that but it is not pertinent to what I am asking/seeking. My study and analysis of options has been poor. I expect/feel that my foray into them has maybe been net positive, but maybe not. I own no options at present. In the past, for companies I follow, I've bought some small LEAPS, as far out as I can, in the money, maybe paying 20% premium. Since this might not be option specific language I'll clarify that if a stock is trading for $1, I'll pay $1.20 for the call. a couple years out. In 2013 this helped me with a 757% year with TSLA LEAPs. A few years ago there was a guy on a Tesla forum (not here) that seemed to be hitting TSLA options out of the park. He advocated purchasing specific calls, claiming TSLA was a special situation. He regularly posted screen shots of his accounts, seemed to make millions. I expect he was employed in the financial industry and was doing some things online that he should not have been doing, ending up shutting down his forum membership and changing his twitter handle. We engaged in some discussions privately, I was trying to learn from him rather than blindly follow. I wanted to know why TSLA was special at that time and why certain options were good. He made it seem like it took years to understand what he understood, did not really offer specific learning advice, and kept trying to change what platforms to dialogue on. In other words, he seemed scammy, FOS. He wanted me and others to just fish, not learn how to fish... I think that I could maybe become more successful with options with a better understanding of them. Step one is likely reading the McMillan on options book that I bought and only thumbed through. I do not know what step two should be. Ways in which I think I can add options to my investing successfully: 1. Selling covered calls against long term positions at times of them being extended. I expect that there is risk of thinking the market to be rational and the stock continues to rocket. I think this is a lower reward lower risk kind of play. 2. Buying more ITM LEAPS for companies I follow. Define in advance points where I would buy such things, likely during market panics or during or just after consolidation points. Best would be after long time frame price break outs (Ex PLTR this year, TSLA a few months ago). I'd think of this as defined modest risk with higher reward. 3. Buying OTM short or long term calls for similar defined points as above. I'd think of this as higher risk highest reward. I'd also consider other strategies. But I do not know them. I am not likely to enter short term trades requiring closely monitored market. I hate sitting at the computer sweating things out hoping/praying while my back hurts and my clicker arm goes numb. I want to understand risk management and position sizing as it comes down to options. I've started positions in stocks with some form of turtle like ATR/percent of portfolio type method but add to positions more so based upon gut/success/experience, adding to winners over months. Are options analyzed on their own or does one do such analysis based just upon the stock. I have ZERO understanding of the greeks at present. Anything dest/poopy writes is way over my head... years ago I tried to understand him better asking questions or challenging him and he helped me join the block party. What path do I need to take as a stay at home retail investor to up my game in options and maybe to better understand the above my head code someone like poopy writes from time to time? And for those that respond, I'll give more weight to your answers if you characterize your success or background. Why should I pay attention to what you write? Thank you for helping me learn to fish!
I don't want to rain on your parade but if I was you (an already successful stock investor), I would do more of what works for me and stay away from things I have a hard time with. I wouldn't say that most options people understand these instruments from the get go, but most of them just had a knack for them and it clicked a couple of months down the road. There is not a single asset class that has a bigger knowledge gap between professionals and retail than nonlinear instruments. Even in the vanilla form you're dealing with 4 dimensions of risk: volatility, the forward, time, direction. And that is only if you don't even look at greeks or handle complex options portfolios. (if you do, you'll have to add skew, kurtosis and gamma to the mix). I suggest two ways from here. The most obvious is to stay away from options and to scale and improve your investing game. If you can't and have a morbid desire for suffering and self destruction, visit: https://www.pierinoursone.com/blog Looks especially at the riddles and try to figure out the solutions for yourself. They are way over your head for now but they guide you towards asking the right questions from the beginning. Try to stay away from the hockey stick graphs of positions at expiration, that's not how they behave when they are live. If you stick to it for a year, trade small and track your progress you might be in a position to add them to your portfolio permanently. I put emphasis on correct tracking because options positions are path dependent and you might lose although you are right on direction and vol. Some might say "but Muppet, I'm trading options for years and the only thing I know about vega is that he's an unsuccessful German rapper from Frankfurt" Once and for all: 1.Theta/selling options is not an edge 2. If you use options for directional plays, you would do better if you just stayed with stocks or futures and you most likely bleed money through options. I'm definitely not charactarizing my background. If you want to know if my 2cts are worth anything, look up my profile.
Good Morning Poopy, Can you please help me with providing me an option trading strategy in QQQ or SPY to make $2 million within the next 2 years? Thank you so much sir.
chatgpt advanced version can solve options problems. Tell it what you expect to happen and ask it to structure a options combo for you
What could be an example of a question that you would ask chatGPT? When you refer to "solve option problems", what do you mean exactly? Would you care to post an example?
First and foremost,you should have read MacMillan cover to cover,assuming you purchased it more than 3 months ago...Options arent for everyone,but the good news if you are decent at direction,you are way ahead of the game.. I would ask why are you trading options as it appears you are buying long dated super DITM options.Basically stock replication at a 20 percent premium, i.e paying 1.20 on a 1 dollar call.Sounds like alot for the imbedded put..(long stock + long put = Long call) I like what you have asked and my recomendation would be to keep it relatively simple,understand Implied vol levels(IV percentile/ IV rank),Historic Vol, Implied vs Historic.. Assuming you understand the above,ask yourself what "perceived" edge you are getting from your option position. It could be leverage,could be limited downside vs big upside, or acquiring shares at a lower price. As you are a directional trader,I would make sure that if you are right,you make multiples vs when wrong(not including short puts,unless being short a put to finance a call or call spread). Good question on ATR risk and position sizing...You should definetly compare your stock risk/size i.e Percent of capital per position/ATR and see if you can find an option position with the equivalant dollar risk that you would rather take down..As an example,you may opt to go long 3 verticals as opposed to buying 100 shares of stock..Compare risk vs reward and find an option program that can simulate the option position over time with varying volatility scenarios. I use Orats,but I think it may be a bit over your head right now. For now,look at a simple visual program like OptionStrat.
And if you are serious, buy the workbook and work through them for each chapter. I did. Options are derivatives, a zero sum game. There is no edge buying or selling as most are fairly priced. Our counterparties are mostly MM and to win (>buy & hold), we have to be right and they wrong.
this is a paradox. if options were fairly priced then you would never sell one. Expected value is zero with the chance of making infinite dollars. That would cause the options to get bid up to the point they are not longer expected value zero.