When to get out of a failing option trade?

Discussion in 'Options' started by nxt7, Apr 18, 2016.

  1. OptionGuru

    OptionGuru


    US stocks and etf's (qqq, spy, dia, gld).


    :)
     
    #11     Apr 18, 2016
  2. Handle123

    Handle123

    There are very limited times I will buy an option outright as much testing shows me time decay eats away pretty quick, so most of time I will do Debit spreads when I want to be long something and usually for a hedge, like hedging open profits or protecting initial trade when counter-trend trading.

    I use weekly bar charts with couple indicators, most of my trades are entered fifteen to thirty minutes before last day of week is one signal and other are breakouts and thankfully it is now automated so I don't have to watch, plus selection is made by Prem/Discount and legged in.

    How much back testing of this method did you do? How many years back did you go? Like before putting on real money on my trades, I back tested 15-50 years based on the underlying then spent a ton buying one minute option data.
     
    #12     Apr 18, 2016
  3. nxt7

    nxt7

    You're probably doing far more advanced stuff than me. I don't have access to intraday data nor an automated trading system. I mainly backtest an instruments daily price data and manually enter the trades.
     
    #13     Apr 18, 2016
  4. You can't profitably trade that way. You're like a kid playing with matches.
     
    #14     Apr 18, 2016
  5. ironchef

    ironchef

    S&P is near its historical top, perhaps, if there is still some time left, let it plays out. A 4 to 5 points move in a week is within the volatility band.

    So, I vote with OptionGuru.

    The other option is to do a roll (perhaps a no cost if you still think you are right) if it is too close to expiry.
     
    #15     Apr 18, 2016
  6. lindq

    lindq

    I am forced here to interject one of the more valuable lessons I've learned over the years:

    NEVER SHORT A DULL MARKET

    Sorry to yell like that, but I needed to get your attention.
     
    #16     Apr 18, 2016
    ironchef likes this.
  7. Turveyd

    Turveyd

    Never use Options in a Dull Market, the Time Factor just wipes you out.

    ( okay for in the money maybe )
     
    #17     Apr 18, 2016
  8. Handle123

    Handle123

    If you think this lose is going to be bad, you not seen anything yet till you stop and do some heavy duty back testing.
     
    #18     Apr 18, 2016
  9. Translation: I just inserted my shlong inside a needle using, crack smoking whore with bleeding gums, a runny nose and blisters up and down her legs and just realized I forgot to put on the condom... how do I get out?

    If you don't know the answer then keep fucking hoping you don't die.
     
    #19     Apr 18, 2016
  10. ironchef

    ironchef

    Yes, you got my attention.:D

    And it is OK to yell at me. I won't short this market but he already did.
     
    Last edited: Apr 18, 2016
    #20     Apr 18, 2016