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Realistic Option Trades
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Realistic Option Trades

  #21 (permalink)
Elite Member
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Looks like he is at it again. Everytime he implodes his account he invents a new strategy to sell exorbitant amounts of premium. This strategy always ends in disaster see Karen SuperTrader and Ron99.

He imploded in Aug. 2015 and came up with his new "spread strategy" and now he is changing again and try fool his followers by his faulty backtesting. I have no idea what he gains from lying on here, Don't be fooled by this guy.





Ron99 "The ES spread strategy I have been trading made it through this extreme test. I did not exit any positions. As I write this I have made back 90% of what I lost yesterday.

I will be adding more cash excess because this was too close for comfort. I'm going from 4xIM to 5xIM. 80% cash instead of 75% cash."


Ron99 "Feb 5, 2018 was the 4th largest price drop (midnight to midnight) percentage wise since 2005."

This VIX spiked higher in Aug 2015 and option premiums skyrocketed even higher than the last couple days

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp
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  #22 (permalink)
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rajab View Post
On Jan 22 i put on EWK3K8 P(-2)2230 and EWK3K8 P(+3)1940 x10 IM. Since I have never experience the drop we realised recently I notice at the very bottom the premium on my position was 2.5 times the maintance margin(MM) requirment. Maybe some one can explain how that is possible please? I thought the idea was to get out before losses mount.

THANKS
BABAK


Because of volatility, that is priced into the value of the option.

Don't let Ron99 fool you, back a couple years ago in Aug 2015 margins increase even more when the VIX spike higher than recently and you would have had more than likely had a margin call even though you were 10x initial margin

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp
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  #23 (permalink)
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Any update on your Options Trading results? Here's Mine ...


I am trying to assess my options trading results and determine whether to continue defined risk (DR) options trading or just do undefined risk (UR) trades.

After an 18 month focus on selling premium in DR trades (verticals, iron condors and a few calendars and butterflies) plus some undefined risk (UR) trades, I have reached the conclusion that, at least in this low VIX environment, it is very hard to make money in DR trades (stocks with high IV, premium = 1/3 the width of the strikes, 45 DTE, and trying to take profits around 50% of max profit). I have a net loss on DR trades of several thousands.

While DR trading seems to be a futile effort, my past UR (all naked puts) trades (usually .20 delta strike price with 60 - 90 DTE) in Google, Amazon, Apple, Tesla and Priceline were all successful. I also look to sell during higher volatility periods or spikes and then buy to close before the next earnings release. I have a net profit on UR trades of several thousands.

I occasionally look for attractive SPX, SPY, and similar trades, but the IV is usually so low that, for me, the risk is simply too high for the reward offered.

I am concerned that a big correction could destroy my account so I only trade 1 contract each in Google, Amazon, or Priceline or 2 - 5 contracts in lower price stocks. I am taking some heat on a few naked put trades now and am looking at a stop loss target of twice the credit received in lieu of the assignment risk.

Any feedback would be appreciated.

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  #24 (permalink)
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mscholder View Post
I am trying to assess my options trading results and determine whether to continue defined risk (DR) options trading or just do undefined risk (UR) trades.

After an 18 month focus on selling premium in DR trades (verticals, iron condors and a few calendars and butterflies) plus some undefined risk (UR) trades, I have reached the conclusion that, at least in this low VIX environment, it is very hard to make money in DR trades (stocks with high IV, premium = 1/3 the width of the strikes, 45 DTE, and trying to take profits around 50% of max profit). I have a net loss on DR trades of several thousands.

While DR trading seems to be a futile effort, my past UR (all naked puts) trades (usually .20 delta strike price with 60 - 90 DTE) in Google, Amazon, Apple, Tesla and Priceline were all successful. I also look to sell during higher volatility periods or spikes and then buy to close before the next earnings release. I have a net profit on UR trades of several thousands.

I occasionally look for attractive SPX, SPY, and similar trades, but the IV is usually so low that, for me, the risk is simply too high for the reward offered.

I am concerned that a big correction could destroy my account so I only trade 1 contract each in Google, Amazon, or Priceline or 2 - 5 contracts in lower price stocks. I am taking some heat on a few naked put trades now and am looking at a stop loss target of twice the credit received in lieu of the assignment risk.


Any feedback would be appreciated.


When did you sell these? The market has been sideways. Rolling down is an option, definitely would wait for an IV pop

Try shorter term puts 45-60 days out at 1.5-2SD moves, FB and AAPL have been my main plays the last couple years.

FB a few months ago during the aynatilca scandal, I sold as many as I could. I posted when I sold them in another thread. Some people thought I was crazy, superficial bad news on these strong companies are the best times to sell


I agree in low IV periods the indices are not the most attractive options.

I have tried every option strategy also, non have been as profitable as puts. Your strategy is sound

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp
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  #25 (permalink)
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Also, don't be afraid of assignment. I had many contracts that I wished would been assigned only to have the price move the last week. I have priced into many AAPL shares over the years this way, with the rise in price, splits and dividends it has been a blessing.

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp
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  #26 (permalink)
Mike The Greek
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mscholder View Post
I am trying to assess my options trading results and determine whether to continue defined risk (DR) options trading or just do undefined risk (UR) trades.

After an 18 month focus on selling premium in DR trades (verticals, iron condors and a few calendars and butterflies) plus some undefined risk (UR) trades, I have reached the conclusion that, at least in this low VIX environment, it is very hard to make money in DR trades (stocks with high IV, premium = 1/3 the width of the strikes, 45 DTE, and trying to take profits around 50% of max profit). I have a net loss on DR trades of several thousands.

While DR trading seems to be a futile effort, my past UR (all naked puts) trades (usually .20 delta strike price with 60 - 90 DTE) in Google, Amazon, Apple, Tesla and Priceline were all successful. I also look to sell during higher volatility periods or spikes and then buy to close before the next earnings release. I have a net profit on UR trades of several thousands.

I occasionally look for attractive SPX, SPY, and similar trades, but the IV is usually so low that, for me, the risk is simply too high for the reward offered.

I am concerned that a big correction could destroy my account so I only trade 1 contract each in Google, Amazon, or Priceline or 2 - 5 contracts in lower price stocks. I am taking some heat on a few naked put trades now and am looking at a stop loss target of twice the credit received in lieu of the assignment risk.

Any feedback would be appreciated.

why don't you check this service out <https://optionalpha.com/> their good people and releasable and I have good results with them.

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  #27 (permalink)
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Thanks for the feedback. Since all my UR trades worked, I have gradually increased the number of UR trades. I had seen a few posts that selling .20 delta naked puts (roughly 1.5 SDs) could be profitable, so over the past 2 years I was profitable just doing Google puts. Gradually I added a few other stocks that I would be comfortable owning if assigned at a price net of the premium received.

Obviously, loading up on naked puts can be a very risky strategy, so I wanted to have a balanced portfolio with DR trades and UR trades. While DR trades have limited loss potential, those were net losers in aggregate for me, so I am reducing those trades until I can find a DR approach that is net profitable.

My trades were placed over the last 60 days and I sometimes "bent" my rules on DTE to get a decent premium. I would prefer to have shorter term puts, 45-60 days out at 1.5-2 SD moves, but to me there is usually not enough reward for the risk. Extending expirations to 60, 90 or even 120 days, past the next earnings report, but closing the trade before the next earnings report has been profitable.

Also, i have staggered expirations for some diversification in the event of substantial short term corrections, e.g., a summertime meltdown. I am somewhat trusting the historical precedent that corrections happen (stock market down 10%) but not bear markets (stock market down 20%) unless a recession is imminent.

Would you share your profit targets and your stop loss or rolling parameters for your UR trades?

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  #28 (permalink)
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Thanks Mike The Greek

I actually am using the Options Alpha stop loss criteria for my naked puts. I do like their educational material. Fortunately, I have not hit those stop loss targets yet in any of those naked put trades but am getting close in a few now. I need to take a few stop losses to reinforce my discipline to close losing trades or perhaps just roll one or two trade to get the experience.

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  #29 (permalink)
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mscholder View Post
Thanks for the feedback. Since all my UR trades worked, I have gradually increased the number of UR trades. I had seen a few posts that selling .20 delta naked puts (roughly 1.5 SDs) could be profitable, so over the past 2 years I was profitable just doing Google puts. Gradually I added a few other stocks that I would be comfortable owning if assigned at a price net of the premium received.

Obviously, loading up on naked puts can be a very risky strategy, so I wanted to have a balanced portfolio with DR trades and UR trades. While DR trades have limited loss potential, those were net losers in aggregate for me, so I am reducing those trades until I can find a DR approach that is net profitable.

My trades were placed over the last 60 days and I sometimes "bent" my rules on DTE to get a decent premium. I would prefer to have shorter term puts, 45-60 days out at 1.5-2 SD moves, but to me there is usually not enough reward for the risk. Extending expirations to 60, 90 or even 120 days, past the next earnings report, but closing the trade before the next earnings report has been profitable.

Also, i have staggered expirations for some diversification in the event of substantial short term corrections, e.g., a summertime meltdown. I am somewhat trusting the historical precedent that corrections happen (stock market down 10%) but not bear markets (stock market down 20%) unless a recession is imminent.

Would you share your profit targets and your stop loss or rolling parameters for your UR trades?

Essentially I have the capital to cover most positions, there are special opportunities such as FB scandal that are prime opportunities to push the leverage button. But I shy away from selling “naked” premium.

I have traded since 2004 and I have been put through the ringer more than once with naked positions, 2008, SP down grade. I learned to leverage less and only sell puts on equities I want to own. I always encourage less leverage because no can predict the future, Ron99 can, but it is only matter time before “black swan” event will happen

Selling naked you have to be more structure, If I have a contract that has eroded more than 50% Especially in short timeframe I will close. Sometimes it will happen in less than a week. The key is to sell only on when VIX is inceasing and capture Vega. It is waiting game for me sometimes.

Opening after a earnings especially after a missed earnings is good in low vol times, but the best are by far the market corrections or bad company news like FB recently

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp
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  #30 (permalink)
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Thanks: 552 given, 175 received


Try rolling to back month and down when there is a down day. It can be a little nerve racking but will be second nature with time.

I have long term approach so I roll very few contracts. It took me several years to break even on some positions and shares I had during 2008. Viewing options as way to acquire shares or sell shares on solid companies is best way to trade IMO.

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp

Last edited by blb014; July 6th, 2018 at 11:30 AM.
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