I am primarily a swing trader and I always try to buy calls on a down day. That is the only way to get cheap calls. If you jump on an uptrend with calls like you would with the stock you will be paying too much. If you buy on a friday afternoon you are giving away time premium. If the underlying moves against you on top of those other two factors then you are screwed. If you don't understand the first two factors I mentioned then don't trade options anymore until you do. A good example would be the action of friday and today. Those who bought calls on friday afternoon and held to today got triple whammied. Whammy #1 was they paid too much for the contracts. Whammy #2 was loss of time over the weekend. Whammy #3 is the underlying moved against them this morning.
Could you please explain how you trade that allows you to be neutral and not care whether the market goes up or down? The only method I know of for doing this is a straddle of some sort. Even then you are either bullish or bearish on volatility.
We enter long or short stock trades dozens of times per day, who cares where the market goes. If I make 20 cents 10 times a day on 2000 shares, I'm pretty happy....We start with the opening only plays, move into the various strategies during the day that are working these days, end with a Market on Close play and go home happy. Trying the guess the market is not a probability play, as you are finding out. If a trader only "buys first" then he is eliminating a full 50% of his chances for profit...since the market goes up AND down everyday. We "did our time" on the options trading floors (10 years straight) back when there was an edge, and moved on...there really has never been an edge "off floor" - and even the exchange market makers are having a tough time. "Trading is a simple as you'll let it be, or as difficult as you want to make it" Don
Have you ever heard of swing trading? Scalping has it's merits, but it's not for everyone. And even scalping is no longer a 'market neutral' game. The spreads are tight, so you still have to be bullish or bearish for those few seconds you are trying to exit your position. Correct me if I'm wrong, but it seems that you are just playing in the smaller time frames. I don't think that makes you neutral. Its just that your opinion changes more times in a day than someone like me. It also means your profit objectives are smaller, your stops are smaller, and your commissions are bigger. I guess teaching your traders to trade like that would be good for the shop. If you use a chart to assist in the decision making of your trades, then they can be replicated in bigger time frames. If you only use the bid and ask / level 2, I can see your argument for scalping as the only way you can make money.
Lundy, Don calls swing trading buying and praying. You can't proselytize Don Bright on swing trading.
You're right about teaching the traders to make money being good for the "shop." Even though you meant it in a negative way, we pride ourselves on the profitability of our traders. Our people trade in all time frames, seconds, minutes, hours, days, and yes, even weeks (more for M&A). I have no problems with anyone's type of trading, it is just that we always look for an edge, and try to help our people find it. Charting shows prior movement, and tape reading shows the "here and now"...we prefer tape reading when trading at this level. Don't get me wrong, I am not trying to argue any particular point here. The only thing I feel strongly about is not having opinions on the market (for trading, not in general). Over the last decade, we have seen hundreds (maybe more) lose a lot of money by having opinions on direction. That is a real curse in this business. Again, I wish you the best in your "swing" trading and prognostications. It takes all kinds of people to make a market in the first place. Don