Yip: Since an opinion was being expressed I do no think you should restate the mantra as though it is the true way or blatantly obvious that all other views become useless. When I am in a position I personally keep the amount of credit in mind and current P & L in front when debating on whether to close, adjust or hedge. For example, a $2.00 credit that can now be bought back for $0.35 is relevant to me in making a decision when analyzing the market outlook. even if I feel the market will keep moving in my direction I am more inclined to take the profit now and not worry about being wrong. I might think differently if I initially sold the spread for $0.50. If I feel the market is going to move in my direction then I would hold on. For me it IS relevant when analyzing the current market conditions because I could be wrong. Also, the amount of credit is very important to me when deciding whether to hedge or not. If I took in a nice size credit based on my own personal opinion, I am more likely to put on a partial hedge since I feel I can afford to give up some credit versus lower credit spreads (in % terms, not actual dollar value). My point is that there are times when I personally take into account the current P&L or credit received as ONE part of my analysis. I doubt the point was to say that everyone should forget about considering the initial credit or current P&L when making a decision since it was an opinion expressed. I want to make sure ideas are discussed as opposed to opinions being established as the only right way. Each person has to trade the way that matches their trading style and take into consideration whatever they feel is relevant in their decision making process. The only thing obvious to me is that we all have different approaches and right or wrong is a subjective matter based on personal style.
Really? Do you actually hear yourself? So whether i am running a positive or negative PnL should have no bearing on my adjustment as long as my forward prediction is in line with the trade potential? Are you trading real money? LOL We've heard mark's point already and it is well understood, let's leave it at that without further clarification.
Coach -- wondering if you could comment on this -- don't think I've heard your thoughts on this before. How do you view (philosophically and otherwise) rolling a position versus closing it, re-evaluating and putting on a new position? Why do it one way over the other? Rally -- would love to hear your thoughts too!
We are in agrement, but most people do not see it this way. Coach Phil is consistent. I noticed in his book that he approaches this situation just as he states in his reply to you. I see the world in black and white and feel my view is the only correct view. Most people are more fortunate and see the world in shades of grey. They can see the merit in many points of view. That allows them to select something suitable from among many options. I am limited to the one option that seems obvious to me. Until and unless I am convinced I am wrong. That will not happen in this case. As Phil said - a good discussion - but it's time to move on. Mark
RM, I didn't mean Mark's approach is the only right approach. I think there are many ways of making (or losing) money. I just find Mark's approach better for my trading style. I am trading real money. By extracting useful information from the helpful contributors in this thread, I have done pretty well. I posted my previous message in order to get Mark's confirmation. I didn't want to misunderstand an important trading concept that haven't appeared here for quite some time.
To me rolling is exactly the same as closing it and then deciding i want to own the new position at that exact moment. More often than not it is not true, hence i dont stay in losers by rolling them. I much rather use the risk somewhere more appropriate or at a better time.
I agree 100%. Rolling is not an adjustment. It's replacing a bad postiton with a good one. If I cannot find a new, good position, then I don't roll - I merely close and wait. Mark
yip, that's great. But when you make a post and imply that everyone who doesnt agree with Mark is illogical, expect people to react. There is more to trading than verticals and diagonals. You can't take a simple risk management rule and apply it out of context to the options world at large.
Just thought i'd add a 'Happy New Year' to the discussion. Our investment club is growing way to fast... too much work at the moment.... setting up accounts, educational info, etc. Hope everyone had a great '06.. looking forward to a greater '07 Love the discussion.... Chat Soon! M~