i have been doing what you are doing for going on 13 years. i ramped up slower than you (first year 10k profit...then slowly up), evolving constantly. what i do now is all spreads(future options), then ratio's (ie:legging in longs when cheap enough imo to protect all shorts while maintaining sufficient credits. you can learn from some of the following people: i owe major shout outs to optioncoach, mainly for the emphasis on management. to successfully option trade you must alway's be adjusting , protecting, etc. get your credits, then protect your account and your credits. it is work, and kinda artistic. another one to watch is atticus. he will advise and help even with his own fund to run taking up his time. very rarely will you ever have access to knowledge like his. segv and rallymode are some others who i have gained much from. use the search function to study their posts, just don't make a pain in the ass of yourself; because they will blame me! i still look to picking their brains.... for me, option trading works,and provides a great income, just gotta work hard.
I've worked with crude somewhat as well. skew on the call side and the potential for huge gaps. I still think it is highly viable with nice liquidity.
You are BOTH selling a call and a put, right? i.e. you areselling a strangle? With this strategy you make money as long as the oil price don't go beyond the strike prices. Stop orders are the key in this strategy, remember oil/futures trade 24 hours a day.
Hey rcanfield, thanks a lot for your message.You sound like a very experienced trader, because you have traded for more than 13 years. Just wondering how do you mantain sufficient credits after buying a long position to protect short positions? I thought a long option at a closer strike price is always more expensive than the short side? Perhaps for every long position you enter, you have 2-3 more contracts on short position to cover the cost? Please enlighten me, many thanks
I sell call and put at the same time. I usually put a stop order based on futures price rather than option price itself. For anyone who do a short strangle at crude oil, what method of hedging do you prefer to use? Buying options or enter a futures position? Please share your experience, thanks a lot!
If that is the way to consistency why not simply trade that "2x premium" signal instead of using it on stop losses.
By implied volatility chart and experience, I can tell whether the premium is relatively expensive or cheap. Of course this is not 100 percent accurate, thats why I have a defensive strategy when thing does not go as planned.