@Seeking Truth I do my entries and exits around the open of the market so I stay up late. I trade daily and weekly time frames.How do Australian options traders manage the US market open times? Do you stay up late or get up early?
I beat the sparrows up in the morning.How do Australian options traders manage the US market open times? Do you stay up late or get up early?
I've had some experience trading futures years ago and stopped trading when my broker went into liquidation. I've come back to trading but this time I decided to learn options for the same reason as you, the ability to safely manage risk, I've learnt enough to trade with options but still have more to learn. I'm not familiar with a strategy called 'wheel' but I am learning the many ways that options can be traded and I'm very glad that I decided to go down this path. With options there are so many ways to take money out of the markets with your risk fully controlled. One thing that I like about trading the open is that I have all day after the close in the morning to look at my positions and decide what I need to do. All the best mate on your options journey.Thanks Dave. How long have you been trading? I’ve been trading crypt for about 3 years but recently I’m been reading up on options and I really like the sounds what what can be done with them with regards to risk management. I have a reasonable size bank so I was thinking of starting with the wheel strategy and then maybe add in some credit spreads.
If any option trader wants a huge epiphany, study synthetics..I'm not familiar with a strategy called 'wheel'
I googled the wheel strategy to get the detailed description and I have heard about this method of trading but I didn't know it had a name. It looks like a good trading method if you get the key element right, that being stock selection. I'm not quite ready to go down this path, maybe something I will look at in the future.If any option trader wants a huge epiphany, study synthetics.
"The Wheel" is simply being in a short put position, or the synthetic version thereof, ie covered call.
The wheel invents a whole trade management protocol surrounding the selection of strikes etc, which may or may not optimise returns (mostly not, but subject to randomness). However, there is no getting away from the fact that you're trading short puts at all times.
IME if premium collection is the goal, there are better ways to go about this.
It should be compared to buying and holding stock. As mentioned above there is an element of randomness as to which will be more profitable in the final analysis, but the strategy will reduce volatility.
The elephant in the room is taxation as you will be creating many taxable events which may reduce your after tax profit in the final analysis.
By synthetics do you mean synthetic cover calls?If any option trader wants a huge epiphany, study synthetics.
"The Wheel" is simply being in a short put position, or the synthetic version thereof, ie covered call.
The wheel invents a whole trade management protocol surrounding the selection of strikes etc, which may or may not optimise returns (mostly not, but subject to randomness). However, there is no getting away from the fact that you're trading short puts at all times.
IME if premium collection is the goal, there are better ways to go about this.
It should be compared to buying and holding stock. As mentioned above there is an element of randomness as to which will be more profitable in the final analysis, but the strategy will reduce volatility.
The elephant in the room is taxation as you will be creating many taxable events which may reduce your after tax profit in the final analysis.
As will any strategy picking the right stocks is critical. The wheel strategy is great for those with larger accounts that are happy to take ownership of the stock that is being optioned. It will likely cap your upside in strong markets as calls do, but would give a much better return on flat or falling markets.I googled the wheel strategy to get the detailed description and I have heard about this method of trading but I didn't know it had a name. It looks like a good trading method if you get the key element right, that being stock selection. I'm not quite ready to go down this path, maybe something I will look at in the future.
The covered call is the synthetic, the short put being the natural.By synthetics do you mean synthetic cover calls?
As will any strategy picking the right stocks is critical. The wheel strategy is great for those with larger accounts that are happy to take ownership of the stock that is being optioned. It will likely cap your upside in strong markets as calls do, but would give a much better return on flat or falling markets.
Unpopular opinion in the optionosphere... If picking the right stock is critical and you are good at picking the right stock you will get better results by just buying and holding, or trend trading.
Option pricing at its basis is akin to insurance; it assumes (correctly) that we actually don't know what the fark is going to happen next, so reshapes risks in a nonlinear fashion which is not apparent to novices.
The answer here resides in understanding the Greeks. Trading stocks or futures will deliver you a Delta 1 or -1.
Options introduces different aspects of risk, the first order of which includes Delta, but also Gamma, Vega, Theta and (increasingly) Rho.
Canned strategies such as offered by so-called option education operations, such as systematic covered calls, credit spreads etc will never work in the long-term... Not over and above simple buy-and-hold.
What options do do, is to afford us the opportunity to reshape our risk according to how we see that risk unfolding in the term that we are looking at, or at least insuring against those fat tails that appear annoyingly often.
The best book that I can recommend if you can still get hold of it is Charles Cottle's "Options - Perceptions and Deceptions".
Wayne I think that I can clarify what I meant and @Seeking Truth meant by 'picking the right stock', I meant the right stock for that particular strategy.If picking the right stock is critical and you are good at picking the right stock you will get better results by just buying and holding, or trend trading.
Cool, won't bother casting pearls before swine then.Wayne I think that I can clarify what I meant and @Seeking Truth meant by 'picking the right stock', I meant the right stock for that particular strategy.
The rest of your post comes across as someone trying to sound like an expert on a subject without actually saying anything about it's application and finishing by recommending a book.
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