Non direction is an implied market call... You are betting that you are as fast as the market... At this vol,ill bet that the market is faster than you With that said,I think you are hoping to understand options well enough to choose "optimal" positions for the given vol environment..
Looking into my results more seriously, I now realize that I could have made the same profit just buying the ES future in the beginning of the year at 2450. I would have made (3240-2450)×50=39500 almost the same. The leverage in that case in a 49k account would be 2450×50=122500/49000=2.5/1 which is far far less than the leverage I used... That means something...
If you sell a put and VIX goes through the roof, why does that make u blow up? because of margin requirements? As long as you don't close the position, won't you just be negative the amount you got assigned for?
Yes, but even with trend trading, money/ risk management is key to survival. I'm currently reading Market Wizards and Ed Sakota says don't bet more than 1%, win rates of 30 to 40% (but "one good trend pays for it all"). We (you and I) have decided to pick up nickels in front of the steam roller, trend traders are death by 1000 cuts
Yes it's the margin call. In high volatility the T-0 line collapses. You can adjust and pick up the T-0 line using long options
Funny, I thought of it as arbitrage. I've oft-times referred to myself here, as a non-directional trader. ... but because of you, I asked myself. Self, if you were going to trade again, (and that will never happen) what would you do? So I thought for a moment, and then I answered... Self, I think I would play the term structure. That was always my favorite place to play. Seems no one likes that stuff, as in seven months, I have yet to see it discussed here. Not arbitrage in its truest sense, but non-directional and close to risk neutral.
Thank you for your suggestions. Short answer is been there done that on straddle and calendar. Long straddle prior to earning did not work for me. Essentially I paid twice for the move: Long a call and a put. Most of the time the outcome was already priced in. On the other hand, guessing the direction and long call or long put did work for me, sometimes, when my guesses of the directions were correct. As for calendar, I bought Terry's book and visited his website (Terry's Tips). Tried that, didn't work either. For me, the only thing that worked since 2013 was a simple directional bet based on my opinion of the directional of the equities I own. Regards,
Your problem is you are too smart,and it appears you were never a knucklehead like the rest of us In the embryonic stages of development,guys love to sell those wings...thei idea of adjusting isnt delta hedging,its roll down in larger quantity or maybe if they are cagey,down and out.. I wouldnt call that arbitarge,i.e implied vol vs realized vol...More like playing in traffic and leaping the F%^k out of the way when the cars are about to pancake you..
My worst trade after 5 years full time? -watching short puts go to 300. I could have closed them out for 3 the previous week. I must have paid somebody's college fees for 3 years. That's a lot of 3s!
No surprise. I actually was starting to get the calendars, but I got tired of managing a large watch list. And while at work it's kinda a pain to watch and trade positions