Good idea. But before you start a new thread visit "The first step - for the pros only" , your questions may have already been covered. Yes.
Thankyou for the link diaoptions. I read quite a few familiar names on there. I got the impression there was a 1000 ways to lose your money. I liked the part about different styles, particularly the sideways traders, vs directional traders. Made me think a bit. There was a comment about some friends of someone with big money trader friends. Of course, the only ones to me that matter really are people who are trading their own money, not other peoples money. There is a big difference between someone well capitilized, able to trade naked options for instance, than the small undercapitalized retail trader who is forced to use spreads ( margin limitations ) at an extra cost, to achieve the same results. I found the comments on IB and TOS account services interesting. I'm now officially two years into this. I would have to say Babu, Atticus and Don, have been the most helpful on the forums. I think I'm of the opinion as a small trader and not likely to get over $250,000 to trade, I want to concentrate on a niche type of trading. I'm certainly leaning toward Atticus style of sideways market trading, selling premium. I want to pass this stuff, if I can ever make regular money at it, on to my children and grandchildren. ( five children living ) and about 14 grandchildren, already young adults ), one grandchild. Teach them something they can be independent with. So far, no luck. But I am certainly having a lot of fun, and as a hobby it is not too expensive yet. I like making good friends, in a new field too. I'm the sort who keeps real friends for life. I've had sporadic short periods working for a salary in life, but mostly have been an entrepreneur. All my kids are millionaires in assets, if not in cash. So, something must be working right. Interestingly enough, I was startled the other day, when a Chinese friend here, was telling me his woes about developing some New York real estate for rentals. Apparently he already has some, but I think that stuff comes from a CLAN of some kind, sort of like my own extended family relationships. Anyway, he said there was lots of money in China within his own clan, for new things in the outside world. He was lamenting about the 65% tax they pay over there, which they are trying to beat. He was listening about option trading. At the moment we are just swapping small amounts of currencies privately, for family enterprises operational needs, in different countries. It is certainly an interesting world out there. Having fun is the name of the game though. I think I will start a new forum. For the next few months at least, I have my course of option trading action chosen. Now I need to see if I can improve that small account balance. That after all, is the bottom line and measure of success.
I'm still puzzling over the Vertical Spread straddling the index, or stock. What I keep wondering is, do you get assigned, if the vertical goes into the money with the sold side of the spread? I believe it does, but not too sure. Just a niggardly little point I'm not sure of as novice. Insufficient knowledge, or experience to know.
Gap down this morning. I think it has more to go. Anyway I was looking at my Vertical trade in Bidu done on Friday. bought the 110 and sold the 115. Now I probably did this wrong? Should have straddled the stock price. Is what I'm getting from ATTICUS examples. Even so, for learning purposes on Verticals for a novice, who knows nothing, it will have to do. I see with the market gap down, BIDU went up into the middle of the Vertical between the 110 and 115. Trying to get an idea if it maxes out in profit at the buy price I started with. I checked the value. The trade started with a premium in calls of $3.15, and right now that the stock has jumped into the middle of the vertical the premium is worth less right now. At +$2.34. I guess, won't know until it hits the buy price. In the meantime, THETA is taking effect as am in a WEEKLY. Just talking out loud here, as I'm a stupid novice who knows nothing about this. It is not at all instinctive knowledge yet. Got to figure it out in my bones.
Just doing some figuring. I had run a paper trading experiment in Long Straddles one time, and I have it in my mind, that it grossed 3% on the 3 strike move. Usually done with a bit of a volatility move thrown in. What I don't remember is; if that 3% was before or after commissions. Commissions are going to cost you $20, so I was re-figuring this out and you would have to get a 7% or better gross return. Most of the time when you close a long straddle, it is because there has been some kind of volatility move. I think that experiment would have to be repeated to find out what gross percentage return is possible on a long straddle trading. When you are in the position and just waiting for something to move the market enough.
Still cleaning up my leftover trades, doing Long Straddles. Losing more than I like. Account now down -32 %. Switched to the web based paper trading stuff. I am obviously out of sync with things. AGAIN! Been reading up on ATTICUS stuff. Very interesting. Going to give some of it a try, but in the TOS web based paper trading account. Found a web site teaching a lot of what ATTICUS has talked about. http://www.dailytheta.com/intermediate-courses.html I've really had trouble wrapping my head around debit spreads though. Which I prefer to credit spreads, as the losses are less, just what you spent. Whereas credit spread losses can go exponential. That said, I've had real trouble trying to understand the nuances of using the debit spread as a theta earning strategy.
A 40/50 call debit is the same as a 40/50 put credit spread. Buying one and selling the other results in an arbitrage on $10 notional (*100). So whaaaaat is this exponential nonsense? I haven't read any of the intro books on vol-trading, but you really need to learn basic arbitrage equivalence. Mebbe Baird's Option Mkt Making?
Tsk Tsk On the book no! My friend in Washington D.C. emailed me he is coming down the 26th. So if he has got the book, it is probable he will bring it then. He usually brings me assorted books to read.