The leverage is the increased risk taken on selling premium where the loss can be greater than the reward. If you need to take on massive leverage to slightly do better than buy and hold than not sure it is worth it. If you choose to sell premium and be put heavy then it is not a great thing in 6 months to make money in a bullish market just like a buy and hold is not a genius either. Also not sure what hedge funds have to do with teaching someone here the risks of selling premium month to month on a regular basis and not be cocky about 6 months of returns. The person who he got the strategy from was found to have to hide losses just to show good returns. I wonder why? The lack of appreciation for the risk being undertaken here for these returns is appalling.
I agree. The retail trader mentality is to understate risk. Trading is hard, I think we all know that. But we don't all accept it. The main tool the retail trader has to overcome the mathematical and quantitative obstacles to successful trading is leverage. It's the only tool they have so they use it. And certainly there are no shortage of hedge funds with no meaningful edge who also turn to leverage. This will never change. There is nothing you can tell this guy to get him to change his set of beliefs. Just as you will never change an atheist's view on God or a Born Again. You will never convert a republican to a democrat or vice versa. People believe what they have to believe. It becomes a part of their identity. And changing their beliefs will force them to change who they are and that's pretty hard to do. What ultimately will stop Bobby is not a change in belief, but running out of capital. To this day I know many traders who have lost everything, every single dime and yet they still believe they were right. If only they could get their hands on some more money they would prove it to you. Just let this play out. There are 100 threads on ET just like this one. They all started the same way, they all ended the same way. This one will be no different.
Amazing that you guys still follow this thread? So, has the market been bullish or bearish over the last six months? Bullish, right? Yes I maintain negative delta and still made money? Am I put heavy? I maintain negative deltas because I know the market crashes down not up. I don't care where the market is or what it does. I'm perfectly content selling premium on both sides of the market. I appreciate your words of encouragement. Out of curiosity Maverick and Ocho, I would like to follow your threads where you outline your strategies and provide information on your trades in detail. Could you please provide me a link? I'm sure I could learn so much from you two! Out of curiosity, what is your delta/vega ratio on your portfolios? What is your current theta? That will provide me some guidance as to how you guys are managing your portfolios. You two are true gems!
Here's the thing, to be a pioneer and try to make something successful requires you to take criticism from others. Most of the criticisms and comments on this thread are very general in nature. Yes you guys did suggest that I utilize a couple of specific products that I don't fully understand. Other than that, very little has been proffered to help me improve this experiment. I would imagine that this site IS littered with threads of unsuccessful traders who have lost everything. For the life of me, I can't imagine why a successful trader would share his strategy and open himself up to such horseshit as is offered on this site. I'm beginning to question my motivations as well. If I followed a successful strategy I would do everything possible to learn and ask constructive questions. Clearly, some of you have no interest in learning anything from this thread. I think I might just take my spreadsheet down and say to hell with you all!
Dear Sir, your objection to the OP's strategy is duly noted. Now why don't you be kind and fuck off until he blows up and then you can come back and post a "see, I told you so" post, where we will give you a standing ovation. Maybe candy too. But in the main time, let Bobby trade in peace.... Please....
Penelope, folks like you are why I continue posting the results. Alabama won today, so I'm happy for now. And you're so right. The big correction is coming. It might not be this year, but it will come. If these naysayers are correct I will blow up and go home with my tail tucked between my legs. I welcome the correction and the increased volatility that comes with it. I believe in my strategy and I think it will perform just fine. Happy trading! Bobby
Bobby, you need to learn to use the search button. I've been actively posting on the longest and most active TA thread on ET that has over 12k posts and close to 1.6 million views. I've been actively posting on it, almost daily for over 7 years now. In fact Bobby there is so much info on that thread one of the users printed out enough posts to compile a 200 page online book. I'll let you practice using the search button to find it. Oh and regarding options big fella, yeah, I've done a little posting there as well. I probably have logged close to 10k posts on the option forums. Do you really need me to re-post all that or maybe use the valuable search button that Baron provided for you in upper right hand corner.
I don't think that's true. Retail traders have a whole collection of qualitative edges that are not accessible to the institutional traders/PMs (e.g. myself). The structural advantages of being in retail probably deserve a separate thread, but the main obstacle retail traders are facing is lack of education/knowledge and shortage of experience. The OP is probably right in using risk premia as the base of his strategy. Longer time frame and higher risk tolerance are good advantages to use. He might be carrying too much risk. I have not read enough of the thread to judge the details. If he's smart, he will figure these things before its too late. If he's not, well, he will learn from his own mistakes. I think I have asked these questions before, but OP was too enamored with his performance at the time. -- what is your whipeout/MT-loss matrix - that is, what combinations of delta and vol move will take you out of the strategy? -- what assumptions do you make in that calculation? E.g. do you only assume an overnight move etc. -- does your strategy employ any analysis of the vol you are selling? No need to detail, just a yes/no. -- what do you think is the reason why your strategy works? Again, no need to details, just explain who's lunch are your eating. PS. I do think the OP is on the right track and there is a pot of gold out there.
Let me re-phrase. Yes Sle, I absolutely agree there is a pot of gold out there and there are retail edges. However, I do NOT believe most retail traders are utilizing them because of what you stated above. Therefore, I believe most retail traders "rely" on leverage. There are tons of structural advantages retail guys have, they just don't understand the market enough to exploit them. I think we are in agreement.