where is the edge in options trading?

Discussion in 'Options' started by daddy'sboy, Feb 24, 2007.

  1. How does one know, or can prove, when one has an edge?
    db
     
    #11     Feb 24, 2007
  2. Surely this can work both ways, i.e. against you or for you.
    db
     
    #12     Feb 24, 2007
  3. MTE

    MTE

    Consistently profitable trading record.
     
    #13     Feb 25, 2007
  4. I'm afraid that's what I thought. The question is in regards to 'consistently'. 'Consistently' for some is a few months, others a year, still others forever.
    There appear to be plenty who are consistently profitable until they're not. I was consistently profitable last year, now I'm not. So maybe I had an edge and now I don't. Or maybe I was just lucky for the year and now I've run out of luck.
    It appears to be related to time. How long a track record does one need to claim to have an edge?
    As I said earlier, it's just philosophical musings with probably no practical implications, but I'm curious :) and the kind members of this forum always provide interesting feedback.
    db
     
    #14     Feb 25, 2007
  5. MTE

    MTE

    I agree it's not an easy question to answer cause markets constantly change which means that things that worked last year may no longer work this year. I don't think there's a set period of time after which you can claim to have an edge. You maz be profitable for years, even decades and then stop being profitable. In any case, I think the key is to make as much money as possible during the time you have an edge/luck and then lose as little of that money as possible when you don't have an edge/luck.
     
    #15     Feb 25, 2007
  6. Makes sense.
    Thanks MTE.
    db
     
    #16     Feb 25, 2007
  7. It would seem to me that the "edge" is knowing when your current edge no longer works and it's time to find a new one. Ego will stand in your way. Hence, the only constant edge would be trading without ego...forever. Damn tough to pull off, especially when one has enjoyed some extended periods of profitable trading. The "Edge" is not in your technical system, or fundemantal methodology, it's in your psychology.
     
    #17     Feb 25, 2007
  8. rosy2

    rosy2

    its called put-call parity
     
    #18     Feb 25, 2007

  9. Can you give an example of a trade in a high volume underlying?
     
    #19     Feb 25, 2007