Your problem is not with your options, but with the underlying. What is your strategy for the underlying? You don't appear to have one. Rule number One (thru 150)...do not trade options until and unless you are first successful in trading equities. Otherwise, you will simply accelerate your losses, complicate what is already a difficult task, and put yourself quickly out of business. This is doubly true for selling naked, especially with your lack of experience. You're setting yourself up for getting seriously wacked.
All of these are spreads of some sort, I MUST "sell to open" somewhere to reduce cost. I don't short options. (I know this is not the best formatt to post so many different trades).
6/1/2006 Action Qunity Symbol Type Price Delta Theta Vol Prob BTO 3 VIXFW Jun 17.5C .53 .51 -.04 88% 92.3 STO 6 VIXFD Jun 20 C .23 .27 -.03 88% 47.7 BTO 3 VIXFX Jun 22.5 C .18 .09 -.01 88% 15.5 Short term butterfly Max profit: $690.00 Max risk: $119.85 Indicators: modified Elliott wave theory, probability calculator This trade was entered as planned, I had about $300 profit at one point and ordered a sell order but I was unable to get out. It ended up expiring worthless. I tried to sell about 1 week prior to expiry. Thoughts?
You used modified elliott wave theory to bet on a vix fly? No offense but this has got to be the strangest trade i've seen on this board. I wont even start with the issues with vix options, flies wont gain much until the last couple of days of the exp cycle. There are much better ways to play a spike in vix than to use an OTM fly unless the MM who took the other side is your friend and its his bday. As far as your other trades, no way you will get any constructive criticism unless you post more details as steve suggested. Also, understanding that all options strategies that you use have negative expectancy over the long haul will be a good start. Having said that, losing money is not all that uncommon infact its the norm. Sorry for the depressing news.
Just a small correction - You are shorting options by "selling to open", I think you might have shorting options mixed up with "naked options".
That's odd - steve46 had posted then deleted a similiar message in the last 10 minutes. I wonder if steve46 and rallymode are the same poster?
Hardly, there were just too many things wrong with the trade. I didnt want to open a can of worms. Now I am sure you have some jewel of information you want to offer. Go right ahead Steve Edit: What the hell, I can sleep when I'm dead right? alright then, first lose the Elliot Wave crap. That stuff is a net loser. Do not trade using Elliot Wave. Second, go to Ivolatility.com (www.ivolatility.com) and sign up for a basic (free) membership. Use that resource to check out the historical volatility of the issues you want to trade. Third, review Chapter 10 of McMillan's "Options as a Strategic Investment". Its worth your time to get this right so you don't ever make this mistake (these mistakes) again. Fourth, you need to get familiar with order types and how to close out a position. I checked open interest and the VIX has enough action to accomodate you providing you know WHEN AND HOW to put on the position and WHEN & HOW TO EXIT. Finally, I note that you put on this position early in June. If you had looked at the historical vol for this tradeable you would see that this is the time when it is likely to hit its 52 week high. That is exactly what it did about mid June, holding that high until mid July. If you wanted to trade this one, I can think of several strategies that would have worked better. I think thats a good start. Steve
.... um .... I'll get back to you after you've had some time to grow up. the post wasn't a request for a list of your failed trades. You would have been better off explaining your reasoning for one or two. definitely a member of 95% club.
Steve46 writes: "alright then, first lose the Elliot Wave crap. That stuff is a net loser. Do not trade using Elliot Wave." Sorry to differ on this point Steve, but you've got to use something to get you into a trade and EW is as good as any other t.a. (it's all pretty subjective anyway and by far the least important part of a trade), what else would you use to pull the trigger - a coin flip? daddy's boy