They do teach money mgmt but if you check October all the indices tanked and so did the stocks. His way of diversification was to pick 10 different indices and stocks but they all tanked with the crash and the volitility set record highs so you couldn't really adjust in time to get out of them. the mistake that was made was we shouldn't have been trading credit spreads with volitility over 30 but they never told us to stay out of the mkt
You cannot lose most of your account when you understand how to manage money and risk. Sure you can lose, but your size was just too big for your account. I see nothing wrong with trading credit spreads with VIX over 30. It's going to be over 30 for awhile. Mark http://blog.mdwoptions.com/options_for_rookies/
BZZZZZZZZZZZZZZZZZZZ! WRONG! If you do not have an outperformance edge, you will lose most of your account
Why don't you go and check out the charts for NDX, RUT, SPX and POT, GOOG, FSLR, and any other stock for Sept, Oct, Nov. Imagine putting on put credit spread over 100-200 pts away on the indexs and still getting blown away. Also why don't you look back in history 10 years and see how many times the vix has been over 40.
My naive friend, selling out of the money credit spreads has been discussed on countless threads for many years on this board. The conclusion is always the same, we professionals always tell the inexperienced that the constant strategy of hoping a big move does not wipe you out is illogical and will not work in the long run. It is irrelevant how many times you win if you end up losing all or even a large part of your gains. The strategy you were using has never worked and will never work in the long run. Credit spreads along with most other option strategies are useful and profitable at certain times in the hands of a professional, knowledgeable trader; however options tend to be just overleveraged gambling instruments to the uninitiated. Justifying your loss by pointing out that the move in the final months of the year usually never happens is further proof of something an amateur says while the professional just shakes his head and is not surprised when the average trader ends up being unsuccessful. Worse yet it may lead you to start over and try again using the same strategy, with luck being your only friend. I write not to criticize, but in hopes you will rethink your approach.
interesting comment as it is that reason why i chose to learn from a so called expert to avoid what you have just said. remember this thread was about John Ondercin's options mentoring. So you just amplified my conclusion that his classes are not what people should be thinking. Since you sound like an expert enlighten me.
Why would a truly successful trader charge some small amount of money to teach you something? It is worth neither our time nor energy, so you are right to be skeptical of any mentoring program. However, there are a few traders out there who will give you pieces of good information and steer you in the right direction for free. Use the search function and many, many hours and you can find some on this site. The âenlightenmentâ I am guessing you desire, does not exist. Trading is a job and it is a difficult career. Can you become a surgeon, judge, lawyer, master electrician, professional athlete, etc. by taking a mentoring program? Or does it take years of a lot of hard work and dedication? You have begun your education by learning about credit spreads and how they can blow up. That is a good start, and there is much information on the web and in books but it will take a serious amount of time on your part with no guarantee of success no matter how long you try.
1. Chalk it up as experience, John. 2. As market conditions change, your strategies will (should) change too. 3. Hopefully you're still collecting tools for your tool box. Keep learning so you know which one to use next time.