OK so much for opinions. I notice that although there are some experienced people expressing opinions, none of them are backed up with any testing. A quick survey of science history tells even an unsophisticated reader that sometimes an approach that doesn't fit concensus models "works". Comments about the value of quantum mechanics early on sounded similar (dismissive) yet any third year physics student knows it produces accurate results. So for the person who solicits these opinions, maybe you should ask yourself "what added value is being provided here, that I can't match or beat simply by getting up off my butt and doing some testing"? I guess it depends on how important the question is to you.
A big part of Gallacher's technique involves writing near the money strangles. I don't agree with his decisions regarding the placement of sold calls/puts and even by his best backtestings, he admits that the strategy should return about 12% a year if done as he did it. Needless to say, 12% a year can be had a for a lot less risk than writing near the money index strangles. The concepts are good, but others areas need to be worked out to get something workable IMO. His defense of his positions was a regular process, and was necessary nearly every month. Enough has changed since the book was published to warrant some work on top of his writing to bring a system into a good workable model. As Steve mentioned, I worked hard on my model. Nobody here handed me anything. It's there for you if you want to go get it. Good Luck.
Thank you all for the good response. Steve and ktm pretty much summed it up I guess. I'll add a couple of quotes here from Gallacher that I found interesting - - then this thread can die if it wants. Page 46 ........ (Re: Black Scholes and the interest rate component ) "the volatility component in an options pricing formula contains an intrinsic inaccuracy of such a magnitude as to make any interest rate discount inconsequential." Page 111......Equality of Expectations. "What does equality of expectations tell option buyers that they may not have known before? Most palpably this: The strategy of buying options to establish a fundamental position in a futures market now compares rather more favorably with the strategy of taking an outright futures position. Not that the expectations of the two strategies are necessarily any different - both are still 50 - 50 propositions. The option position does however have the feature of built-in stop-loss protection, or staying power, that the futures position lacks - a feature that now looks considerably more attractive". Certainly would compare favorably to a Long Future on Cattle lately !
===== We could start another thread on the staying power of atm & or real near the money index options, especially atm. CNBC got another one right also; organic or mostly grass fed cattle are doing fine, especially those not deep in debt- that is battle tested also.
Any option market maker can tell you that rho is about the last Greek he cares about for normal equity options.
Staying Power is "the" topic of most interest to me. If you or anyone else would care to hold forth on it ( I'm all ears - but am mute for lack of knowledge ). How do you quantify it ?.....
My reading of Gallacher is that position management is THE option sellers edge; otherwise expect to breakeven (before commissions and spreads) all else equal. While I am by no means a knowledgeable person in the context of these boards I will offer my working rule: survive to trade another month. Thus I always establish hedged positions (usually calendars). Then, I set my "roll points" in advance and execute against them mercilessly if and when the market reaches them. This results in hitting doubles and singles for decent average (plenty of outs) and it'll take a long time to get seriously rich, but hey, it pays the bills and I sleep well at night.
No need to apologize for that sound approach. The stresses, together with the big drawdowns and wide equity swings, that are part and parcel of large concentrated negative gamma positions, will force one to find another occupation eventually. I nearly learned that the hard way in my time and continue to fight the lure of "easy" money from selling premium to this day. But I'm on step 3 of the 12 step program, so there's hope. As for Gallacher, I found it to be an interesting read but of little actual value.