Howard My compliments, very nice presentation. Clean and sweet. Good luck! Out of curiousity in the mini black swan, how much out of your cash account balance did you lose? I just got my ass wupped today in an experimental funny money, scalp trade. - $480 after just talking about it with others on here. My first loss, which I took because I believe tomorrow and the next few days is going to be an up market. Will see in the morning. I bought PUTS and bombed.
That DD is actually pretty low relative to average month returns. Not bad. Check out this hedgy: http://ljmpartners.com/english/history.php
AS I understand your charts, your mini black swan cost you three months profits thereabouts? Whatever else was involved. I wondered if your loss included commissions?
Sep 11, 2001 and the days that followed was a Swan. What bottomed on wednesday March 16, 2011 was a hummingbird. Luckily for HoCo's account the market bounced 50% ish of the drop by friday March 18 expiration.
I agree Howard has been lucky. I do not smell insincerity in his posts, and so I do believe that he believes in his dashboard. But this method of selling cheap gamma has been tried before, and shown that there is really no positive expected outcome over the long course of events. I believe this strategy is the most dangerous of them all because it builds a false integrity into the prefrontal lobe of cerebral cortex. The area that is in charge of judgment is bewildered with a constant seemingly predictable series of wins. This reminds me of a Bugs Bunny and Road Runner cartoon I witnessed years ago where the Coyote runs along a conveyer belt chasing the Road Runner while a large hammer strikes at the targets in simple harmonic motion. Most of the time the Coyote was fine, and continued to chase after what he so desired. But the cartoon as did the others in kind, always ended with the same horrific results for the Coyote. He never learned... but at least millions of little children gained some humor over the incident. But can I and other experienced traders merely sit back and watch with amusement as ridiculous sites like monthlycashflowthroughoptions.com and others peddle easy and safe returns through selling DOTM options where the risk reward is 20 to 1? I cannot because this game is not a cartoon. Please be very careful with this strategy. I believe Howard is trying in his heart to help others and I feel he is an affable fellow. But his trading history I feel is far too short. I have been in the premium selling business for a far longer period of time. Can you make money? Yes. But can you keep it over a long period of time? It is like playing Russian Roulette albeit with a much larger number of empty chambers. As you survive as you hear the blank click against your temple, you may feel that tomorrow will never come. But you will be wrong, and will eventually get a headache that allow your brain to breathe...
Thoreau Very well explained. Congratulations on your ability to express things. I fear that winning in credit spreads puts the eventual victim into a mental state of denial too. On the other hand, clearing your account of accumulated profits every 4 months might make it work and stick the money in real estate ( laugh ) I have decided to scrap the scalping the SPY trading. Not that it didn´t work, but because it took $14,000 to make a $1000, an obvious catastrophe in the making. The actual trade I took a loss on, was a bit unnerving. It should not have happened but it did. Though loss was limited to 3 to 1. Still not very good. So SAYANORA to SCALPING. Trying some longer term two week OEX option trading now in second month out options.
I think your post is an eloquent, accurate and respectful assesment of both the method and HoCo. Kudos.
Thank you for this post. Perhaps you could address a few questions that will help me understand things more completely. Before my questions, I would like to make clear that the Dashboard is not magic, it is merely a decision support tool for the management of existing spreads. Therefore it cannot make an unworthy strategy worthy. It can only help the trader to obtain whatever is inherent in the strategy itself. 1) You refer to trading credit spreads as selling cheap gamma. Why the emphasis on gamma rather than theta? 2) You refer to the idea that there is no positive expected outcome for selling cheap gamma. I have frequently heard the same comment with respect to trading credit spreads. As this is the key premise of the rest of the comments regarding my strategy, I would like to understand this idea. Without that understanding I'm left to accept this premise on faith. The conclusions may be correct, but without understanding and belief in the premises, it is hard to become comfortable with the conclusions. Please make the case for there being no positive expected outcome. I presume the website you referred to was meant to relate to the class of web sites promoting trading credit spreads. I must admit I did fall for trying to find that specific one. Judging trading history is a tough question. One that I have frequently asked myself. I have stated my concerns about my brief trading history and have asked those who mention it what they would consider sufficient. The answers have always been unsatisfying, not because it was much longer than mine, but because the answers lacked any justification. What would your answer be?
Well Howard April was tough for me too. My first month in CASH and had hopes of a second trade, but it did not work out as to velocity and pressure. So could not make it. Though I diddled around with some paper money trading and did okay. But in REAL CASH, the first month of April only ended up with a 5% account gain. I´m comparison testing now, to see if I could have traded the SPY instead of the OEX with the slow velocity. Helluva a thing to predict a trend and be proven right, but cannot benefit, because the moves are too shallow to cover costs in market maker spread. I´ve come to the conclusion my trading at current is basically a play against the market makers, or their computer software algorythms.