Controversial Option Discussion Of The Day - Calls and Puts

[mazzatelli]

LOL,

Looks like we've all been pretty busy lately, question i ask myself is whether to increase the downside bias to take advantage of any correction, problem is i'm normally incorrect trying to time the market.

Or maybe i should play it with the opposite bias of what i think i should be putting on.

That's going to be a personal decision
It MIGHT even be a good thing to become flat if you feel uncertain about reading the market

 

[Grinder]

LOL,

Looks like we've all been pretty busy lately, question i ask myself is whether to increase the downside bias to take advantage of any correction, problem is i'm normally incorrect trying to time the market.

Or maybe i should play it with the opposite bias of what i think i should be putting on.

gave up on trying to time the market or pick direction, just sittin on the fence where I'm comfortable & adding weight to either side to manage risk.

I wonder how Dan Sheridan students are doing?
If I recall correctly short strikes with a delta of < 10 were advocated

Lol to em. Am picturing running of the bulls in Spain.

 

[wayneL]

Am picturing running of the bulls in Spain.

LMAO

Dan ain't no dumb@ss though. I imagine they'll be right...ish.

It would be interesting to see how they handle this though.

 

[cutz]

even be a good thing to become flat if you feel uncertain about reading the market

Thanks mazza good advice, managed to get sorta flat before ( potentially ) getting flattened, can't shake that hunch.

Now i can enjoy the weekend.

 

[mazzatelli]

Lol to em. Am picturing running of the bulls in Spain.

Ahh Pamplona, good memories

LMAO

Dan ain't no dumb@ss though. I imagine they'll be right...ish.

It would be interesting to see how they handle this though.

DS seems pretty genuine, no BS spruiker type promises to riches
I, like you guys, would be interested to see how they defend that type of condor. It would be extremely tough!!

I read an interview with DS, where he advised all his students to stay out for ~ month after Oct 08 last year. So they may not be in a trade.

Thanks mazza good advice, managed to get sorta flat before ( potentially ) getting flattened, can't shake that hunch.

Now i can enjoy the weekend.

Awesome!! I found that if I was hoping too much for the opposite move [dependent on how much was at risk], I was wrong and it was time to get out.

Controversial topic for the day:

"Firstly, here is the reason biggest reason anyone losses money [in options trading]: EGO!

With options traders it is exacerbated by the fact that options trader’s think they are so smart.

When other traders are wrong they get out and move on.

When options traders are wrong they try to brain their way out of it or convince themselves that there is a better way --- a repair strategy"

 

[Grinder]

Ahh Pamplona, good memories

Controversial topic for the day:

"Firstly, here is the reason biggest reason anyone losses money [in options trading]: EGO!

With options traders it is exacerbated by the fact that options trader’s think they are so smart.

When other traders are wrong they get out and move on.

When options traders are wrong they try to brain their way out of it or convince themselves that there is a better way --- a repair strategy"

I agree to a certain extent but don't think i'ts as much about ego as it is about opportunity denial. Think all traders go through the same emotions, however option traders due to the nature of options have the fortunate or misfortunate opportunity to be able to deny any loss by making a repair/adjustment or whatever one wants to call it.

 

[wayneL]

Controversial topic for the day:

"Firstly, here is the reason biggest reason anyone losses money [in options trading]: EGO!

With options traders it is exacerbated by the fact that options trader’s think they are so smart.

When other traders are wrong they get out and move on.

When options traders are wrong they try to brain their way out of it or convince themselves that there is a better way --- a repair strategy"

Hmmmmmm

I witnessed a guy (who runs another forum) morph himself deeper and deeper into the schtook on a TLS trade some time ago...ended up a massive loss. But, he was cranking up the risk each time too; the same logic as doubling down. (Subsequently decided that option trading doesn't add to society )

One the other hand, a successful morph/adjustment can rescue a trade going wrong.

The question option traders should ask themselves is: Do I really want the new position? Would I initiate the new position from scratch? If the answer is no, then just bail and move on.

This is part of the reason I have never liked WTFOTM credit spreads (apart from specific circumstances). They are just about impossible to morph/adjust into something that make sense.

This is the same reason I like close to money condors. You have to adjust/morph sooner, but you end up with something that still makes sense. We've had one hell of a unidirectional month, yet I still have a position I like with max theta @ 980 on the SP500.

 

[cutz]

When options traders are wrong they try to brain their way out of it or convince themselves that there is a better way --- a repair strategy"

Yeah,

That's why i luv em, don't ever have to admit i'm wrong, just keep tweeking/adjusting/rolling till i get proven right,

( never mind the fact that each major adjustment normally cost money )

 

[mazzatelli]

The original quote was from Charles Cottle.

Too many adjustments could be comparable to overtrading.

The question option traders should ask themselves is: Do I really want the new position? Would I initiate the new position from scratch? If the answer is no, then just bail and move on.

Completely agree!! Especially for me who as a Perceiving function in their personality these questions kept me in check.

We've had one hell of a unidirectional month, yet I still have a position I like with max theta @ 980 on the SP500.

Noice!!

 

[mazzatelli]

An extremely skilled and experienced guru/member of ASF is attributable to the controversial topic of the day.

Do you indeed need a knowledge of locks[p/c parity], Greeks and dissection to trade options?
The suggestion is that only strategies need to be learnt, and knowledge of strategies that "made money" in the past are retained.

 

[Grinder]

Don't think you need to know about greeks and dissection to trade options but it sure helps if you want to trade em profitably

 

[mazzatelli]

I was being a bit facetious, but Tom Preston of ToS dicussed once that you can ignore the Greeks for simple strategies like Iron Condors.

For example, an IC with the spot below the mid point will have a positive delta. Hardly surprising news and definitely no need to refer to delta to come to this conclusion.

Maybe there is more to this....

 

[wayneL]

I was being a bit facetious, but Tom Preston of ToS dicussed once that you can ignore the Greeks for simple strategies like Iron Condors.

For example, an IC with the spot below the mid point will have a positive delta. Hardly surprising news and definitely no need to refer to delta to come to this conclusion.

Maybe there is more to this....

A trader can ignore the Greeks, but it doesn't mean the Greeks will ignore the trader.

I'm a bit surprised Preston said that TBH. Unless you put the IC on and look away until expiry, I'd want to know my Greeks for defence purposes.

 

[Grinder]

Had a lot of good times laying down IC trades without even knowing the names of the greeks. It caught up with me though, so now i get to know their personalities first then go for the trade

I was being a bit facetious, but Tom Preston of ToS dicussed once that you can ignore the Greeks for simple strategies like Iron Condors.

For example, an IC with the spot below the mid point will have a positive delta. Hardly surprising news and definitely no need to refer to delta to come to this conclusion.

Maybe there is more to this....

I read that piece by Tom, kinda know what he means but have been converted so they now dictate how I'm going to position myself. That example above mazza may seem elementry but holds alot of weight.

 

[mazzatelli]

A trader can ignore the Greeks, but it doesn't mean the Greeks will ignore the trader.

I'm a bit surprised Preston said that TBH. Unless you put the IC on and look away until expiry, I'd want to know my Greeks for defence purposes.

More experienced traders often state that they already implicitly understand the structure of Greeks inherent in simple strategies. I know some [for certain trades] who compute nothing but implied vols and do not look at risk profiles. Maybe TP was referring to individual strategies [my quotation may be out of context, he is no dummy].

But on a portfolio basis, they observe net Greeks for variety of sigma intervals for risk mgmt purposes.

w.r.t high level dissection, I have seen some authorities advocate IC's and overlaying a variety of spreads over the top to negate risk expoures, without observing how convexity is altered.
E.g. trader[x] had initiated a bull put spread. To hedge [x] shorted the shares. After a pullback [x] bought calls, rationale being to profit on rally. Effectively though the purchase of the calls converted a portion of the short shares to atm puts. [This was without observing Greeks and dissection]

 

[mazzatelli]

Nothing you all didn't know btw
LOL

 

[wayneL]

he is no dummy

Indeed. I like TP, he's a sensible guy.

Is there a link to this anywhere?

 

[mazzatelli]

Ah. I have read the full transcript. Sorry TP!!
The suggestion is to rely less on the Greeks once there is full understanding of the position.

This is different to ersatz [thanks Wayne ] experts who know jack about the Greeks and head into a position straight away.

When to ignore the Greeks

Yeah Wayne, I like him and the "sos"

 

[wayneL]

Ah. I have read the full transcript. Sorry TP!!
The suggestion is to rely less on the Greeks once there is full understanding of the position.

This is different to ersatz [thanks Wayne ] experts who know jack about the Greeks and head into a position straight away.

When to ignore the Greeks

Yeah Wayne, I like him and the "sos"

Great, thanks for the link.

I guess what he is talking about there is being subconsciously competent. Trade options for a while and you don't really look at the numbers, but you know what's happening Greek-wise because of the "rich mental map" we all develop with time and experience.

I only look at the number if I want to hedge it... how many deltas to get me back to zero, or how many vegas do I want to get rid of if I think a volatility change is going to hurt me etc.

I think that's what he is saying... that's what I'm getting from it anyway.

 

[mazzatelli]

This is the grail I have been seeking all these years
State of the art training. Soon you too can purchase your own PC!