The video about that specific rising star was quite interesting. Do note that he incurred a 40% drawdown in September 2013 on the Syria debacle. If one can stomach this, the system might be palatable for you....
Tom Sosnoff, Tony Battista and our Math wiz, Jacob Perlman, discuss the math behind risk and probability of profit in options trading. Jacob walks the guys through theoretical costs and how they relate to defined risk trading. In other words, the video below includes a mathematician explaining why it works to sell far OTM options.
Last edited by Cogito ergo sum; May 16th, 2014 at 05:32 AM.
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Regarding the recent posts I have been looking at this more closely and here is a chart demonstrating the rate of change over the 90DTE to expiry for an OTM CLM4 90P. I agree with a comment made by Kevin. CL has for a few years been in a controlled range. Go back in history and look. Taking a result does not mean it will apply into the future. Trade and market awareness is required.
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I have small capital with OptionsXpress Inc (OX).
I just started my first live crude oil future options trade by selling 5 contracts of CLN488P at premium 0.11 on May-12 (about 40 DTE) with initial margin requirement USD2716.15 and PITM about 5%.
But my friend sold 2 weeks earlier than me at premium 0.15. It looks like it is rich in premium around 60 DTE.
By looking at the IV 20%, I do not favor with the PITM of about 10%. I prefer PITM about 5%.
My friend also advise me to:
a. You only can trade 1/3 of your total capital. But I prefer 1/5 as my principal money management.
b. Leg in for collecting much higher premium (using Bollinger Band) between 45-60 DTE, until you form the strangle.
c. If the PITM is about 15%, then roll the position to the next strike price equivalent to PITM 8% and double the contract size (to breakeven excluded the commission charge)
But I have no idea about delta on this video.
Thanks for those on giving me the idea of leg in too.
I tried to negotiate lower commission charge with OX live help but they refused and maintained at USD6.99 per contract.
They want to me to fund more capital up to USD30K. It is also ridiculous with their crazy requirement of trading at least average 50-100 contracts weekly.
The real fact is that I cannot afford to trade large number of contracts due to my small capital account.
But high commission charge really does not encourage the trader to be with them in long term relationship.
I am using the thinkorswim platform to monitor and see all the necessary parameters for my live trading in OX.
The platform is really comprehensive and they offer the commission as low as USD3.50 per contract.
Is thinkorswim is a better choice at all?
I tried but not sure which file that you are looking for.
You may click on the "Thread Tools", choose the "Show Attachment" to find the file.
Anyway may you share the file out?
I think it is a good way to set up our plan for a trade.
Referring to TOS platform, the /CL 94P JUL PTIM=7.5% and 105C JUL PITM=25%
The premiums are extremely rich at call options but risky.
May I know how do judge the trade position and what is your strategy for recovery/rolling if required?
Mind to share?