Well I guess my main point was that I somehow thought I was a "better trader" when I moved from naked options to spreads, that I was using more advanced trading techniques etc... Yet, if the goal of trading is to make $ and the ones making the most are the better traders, then I would have been a better trader just sticking with the smaller naked positions because I left more$ on the table with my spreads than I ever made from them. Now this is different than someone wanting to collect small premiums from time decay or decreasing IV etc...
To beat this horse to death, I have found that if I am long a naked ITM call a month or two out, there will be days when the stock or ETf goes down and I can make $ shorting the underlying without just taking a loss on the call. Whereas if I am long a spread, I tend to sit on my arse with that position as I don't do well when I try to keep adjusting the spread.
You are taking advantage of positive gamma, without worrying about being neutral. That's a strong reason to own naked options, rather than spreads. Mark
As long as I'm b s ing here, I think that when traders are long a spread, they think they are being conservative and level headed in their trading. There was a thread in this forum about what the poster called "a conservative option strategy". The poster was selling bull credit spreads on DITM options. Unfortunately with the market collapse he wiped out most of his $200, 000 account. I think if one is long naked calls or puts, you are more apt to agressively try to trade out of the position if it starts going against you. Anyway, nice chatting with you Mark.
Hi Mark, The 247 does not refer to the elementary school I attended; however, the irony is that I indeed attended public school in Brooklyn many many moons ago. It was PS 181. The 247 represents a reminder of how much time and effort I may need to excel in the trading game... 24hrs a day & 7days a week. It's just a recognition of total committment to this endeavor. thanks, Walt
Chris, My BS is that it doesn't matter what your position is. If you have gains, take them or lock them in. If you have losses, try to trade out of the position when it's going against you. Capital preservation is paramount. Complacence is a killer.
"Capital preservation is paramount. Complacence is a killer." Tell me about it. After years of scalping on the Q's and OEX, last April I decided to become a more conservative investor and hold my positions for the long term. The only options I bought were bull LEAP spreads. Talk about getting reamed.
LOL. In the 2nd half of '06 I started picking up income stocks because the downturn had bumped the yield up. I thought that it was a good time to add to my income side. It wasn't. I was daytrading like crazy, trying to defend positions I wanted to hold. The daytrading provided consistent gains of varying sizes. The buy and hold provided ups and downs of various sizes but more down than up since it was the early part of the downturn and just a net loss for a coupla months. The light bulb went on in the last week of Dec '06 when I realized that I was swimming upstream. I dumped all investment positions and just traded for all of '07, more often than not from the short side. Some times ya gotta use some electricity and adapt
Correction: He was buying DITM bull call vertical spreads (debit). http://www.elitetrader.com/vb/showthread.php?s=&threadid=126947 "I use almost exclusively Deep in the money Bull Call Vertical spreads."