True, but I hold for very short moves/times only and besides, how many people have $80 grand to throw around? I'm all about escaping the rat race as soon as possible with as little risk as possile plus I've only ever seen tears and despair for long term option traders.
True, but I hold for very short moves/times only and besides, how many people have $80 grand to throw around? I'm all about escaping the rat race as soon as possible with as little risk as possile plus I've only ever seen tears and despair for long term option traders.
It is a dumb way to daytrade ASX stocks, with small daily ranges, high brokerage, large spread, and no protection with auto stops because they are so illiquid the price could move 4-5 ticks without a trade.Buying options is utilizing leverage, margin doesn't come into it. It's a valid and common strategy used by short term speculators. Sure, an option position has different profit and loss characteristics to the physical underlying; that's how they were designed as a hedging vehicle. It's also why they are attractive to short term traders willing to accept the added risk that comes with the potential for leveraged profits. Saying its a dumb way to trade is just ignorant. My most profitable trades have been with bought options, risking a know maximum dollar amount for over 500% return on many occasions. Sure beats a 1:2 R/R....
What worries me about Bill's approach is the ability to contain loses to predefined % levels. My experience is with index and currency options, but id imagine ASX equity options have wider spreads and gap more. Maybe ATM it isn't an issue? What I can say though is that you need to have reflex's like a cat and it can be bloody stressful when things don't go to plan. You better love screen time and you better be able to execute without second guessing. Certainly not something I'd want to teach anyone but the most risk tolerant of experienced traders.
It is a dumb way to daytrade ASX stocks, with small daily ranges, high brokerage, large spread, and no protection with auto stops because they are so illiquid the price could move 4-5 ticks without a trade.
Not to mention the utter utter BS of having a $5,000 account and taking position sizes that risk 10-20 % or more of capital on each trade.
Bang on TH.
Folks this man is the real deal in daytrader land.
I will be adding to this when i get back to my cave.
If your customers are making their guaranteed $2,000 per week trading off a base of $20,000 they would very soon have a capital base in excess of $80,000 particularly if they were turning their profits back into subsequent "successful" trades.
In my opinion, the problems with trading theories promoted/spammed on forums are basically as follows:
1. If it sounds too good to be true, it generally is;
2. Those that can, do. Those that can't, teach; and
3. The market is full of "successful" traders making more out of "$5,000 courses" and news letters than they ever did trading.
If your clients, having googled your name and read the posts on this thread, think your posts on this thread enhance your credibility and then still want to sign on for your courses, then they deserve everything they get. Or more likely what they don't get.
It is a dumb way to daytrade ASX stocks, with small daily ranges, high brokerage, large spread, and no protection with auto stops because they are so illiquid the price could move 4-5 ticks without a trade.
Not to mention the utter utter BS of having a $5,000 account and taking position sizes that risk 10-20 % or more of capital on each trade.
Bang on TH.
Folks this man is the real deal in daytrader land.
I will be adding to this when i get back to my cave.
Yes to add to this check out one of TH's old threads where he documented every trade, on an instrument that he doesnt use full time.
I (and other mods) have verified this statistics as a moderator and have seen the account logs etc for anyone who wants to question that
LOL at people who think when trading a derivative you have no exposure to the underlying.
If you are trading stock options, you have exposure to the underlying stock. End of story.
LOL at people who think when trading a derivative you have no exposure to the underlying.
If you are trading stock options, you have exposure to the underlying stock. End of story.
Hi Prawn,
I'm probably one of the people that you're referring to so correct me if I'm wrong just in case there's something I don't understand.
When I buy an Option I get that it derives it's price from the underlying stock (that's obvious so I'm sure you're not trying to argue that point across here). Ultimately though what happens to that option by the expiry date is up to me, whether the underlying stock goes to $0 or $1000. If I choose to not do anything with that Option, then it expires worthless and I lose what I paid for it. I never intend to exercise my Options.
As far as I'm aware, I have no further exposure.
Am I missing something?
lol. When I buy a derivative I buy a derivative. I don't buy the underlying stock. Sure (as anyone who has even flicked through the ASX options booklet knows) the option will get it's move from what the underlying stock does but how is that even remotely relevant to my purchase? Are you saying that if I buy a call for $5,000 I am suddenly exposed to hundreds of thousands of dollars of stock? lol, you might want to go back and read the intro to options book dude.
If I buy something for 80c and it moves to 100c in one day and I sell it for a 20c I have made a profit of 20c on an 80c investment. That is ALL I care about.
lol to anyone who doesn't understand that. I have NO exposure to anything other than the option I bought. My maximum loss is the investment I made in the option. Nothing at all to do with how much the stock is worth - AT ALL!! The only interest I have in the stock is to what it move and make my plays according to that move but I always trade JUST THE OPTION. I'm not making any promises to the market when I BUY an option. Wow, is that really so difficult to understand? Maybe a basic course in options is what some of you need to do before replying here again. That and get new batteries for your calculator...lol
To give you a little benefit of the doubt; I think maybe you're getting all confused. Slow down, take a deep breath and read a little more on how options work and you might understand what buying an option exposes you to. It's...umm, the option. Nothing else.
Are you then agreeing that that playing with $3k of options has very similar risk characteristics with trading with $80k of stock? (ie a 4% move in the underlying will roughly have the same effect on stock and option position?)
Gee, being so condescending won't do you any favours, though the irony is most delicious. Care to answer my point on the top of this page?
Nope, a 4% move in the underlying would obviously have a far greater effect on the option price. If I bought an option and the stock moved 4% it would have a massive effect on the value of the option. If it went my way I would be having an exceptional day! If it went against me I would have exited long ago.
%wise obviously large difference, but in terms of absolute P/L both positions would make/lose the same amount. Roughly $3k. Agree?
How can you exit long ago when 2~3% gaps are common enough even on the large cap stuff, and you can't get out in the first hr due to marketmaker shenanigans.
True, which is why I day trade, not overnight trade. Most of the people who lose too much on options leave them overnight. I use 10 minute candles which give me plenty of warning (as long as I obey them).
....large spread, and no protection with auto stops because they are so illiquid the price could move 4-5 ticks without a trade.
BillMr Ker
The fact is I have been doing this for over 7 years and teaching it for over 4 years. I have thousands of hours of experience. I have developed my own layouts and my own tools for making the right decisions at the right time at the right speed and there is NOTHING you can do or say to erase that FACT. Your hysterical arguments are bolstering my position and adding to my google strength. Stick to what you know and stop attacking new things just because they are new to you and you don't understand them.
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