I am interested in learning safe scalable strategies. My goal is to be able to manage a large retirement portfolio and would be happy with 2 percent per month. I am aware that most courses out there are junk but these two seem to be taught by experienced traders and they are teaching what I want to learn – strategies that can be applied to a large portfolio as opposed to speculative plays with large drawdowns.
Does anyone have experience, insights, or recommendations about either of the above?
1. If you are a beginner and you have no idea about options or any option software, it doe's not matter if you take a course with Dan or with SJ. The official strategies are teached the same all over. More important for bigger portfolios is the Money Management. You may ask them some questions about that before choosing.
2. If you already have some knowledge and you want to spend all that money, you also could go for complete private lessons at home with a tutor which offers it. Joe Ross was one of the guys in the past which offered that.
3. If you like options on futures you have choices like John Summa or Paul Forchone. I know both of them and they are top in what they do.
Good questions and good answers from @Delta_Panther.
The main question is your knowledge of options trading, today.
My advice would be: educate yourself, at least to know the basics, reading books like this one and this one from G.Fontanills. I will also recommend this book, from G.Jabbour and P.Budwick, which is dealing about the most important thing in trading options: how to adjust your positions.
I will also recommend this one (but did not read it), when you are comfortable with the basics.
I really think that a good understanding options is mandatory before starting any courses. Most courses will let you think that trading options is easy, safe and very good for your wallet. It's very easy to show examples with very nice trades, but the reality is quite different. It's not easy, it's not safe (unless you know what you are doing and know how to manage your positions), and it can be very bad for your wallet.
Success requires no deodorant! (Sun Tzu)
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just chiming in. I feel more comfortable doing option spreads than trading futures at this moment. To me, most option trading is a losing gambit. So I like doing credit spreads, like iron condors. You need market volatility to jack the premiums, but lately the wide fast swings in the market, make trading iron condors rough. So, I've switched gears and just lately started doing a collared spread on weekly options and I trade equal shares against the call strike to keep my risk (P&L) intact. I have been playing with this the last few months and last week a source for an e book on the subject popped into my inbox.
May I ask you how you did your Iron Condor trading as you sound a bit frustrated? It's a bit an off topic here, but as the thread is about option education, I think Jodistrict also could be interested in it.
As you talk about swings and high vola, did you trade your Condors on a predefined range on a predefined time or how did you come to the conclusion to implement this strategy at a certain time?
As we can implement any option strategy in different ways, did you enter your Condors with for example a put credit spread and then finished it with a call credit spread or did you just implement it at once or..... ?
As you mention the option greeks and you mention credit spreads, where do the option greeks have the biggest impact on any credit spread ?
My experience: I have done dozens of Iron Condors (IC). Some with a half. Lost on a couple, but not much, because you manage the trade and should only lose on one half of the Condor plus you can book the loss and rewrite the losing side at higher strikes. Most of the ICs for me were stock indexes like RUT or SPX. Others were on GLD or stocks.
I can't find an example of an SPX IC. The bid/ask spreads suck. But I found an 16Feb12 Apple Iron Condor.
First, I always excuted an IC about 6 weeks (can be more) from the expiration date. For 1 IC, I always want better than $100, because my risk will be $1000. So for me anything between $115 and $135+.
Now our Greek. I will only establish each side at a Delta of about 10. That's .10 or a 10% chance of being exercised. So for the puts, I picked the 340 to sell and the 330 to buy. With Deltas of 7.5 and 5 for $58. A Delta of .10 means a .10 change in the option with a 1.00 change of the underlying.
For the calls, I picked the 475 to sell and the 485 to buy. With Deltas of 9.3 and 6.7 for $54.
The trade:
and the quote: To buy equals -1.13 ($113). my arrow is on the sell side (wrong side)
For a credit spread on an IC, you always buy a negative amount or receive the cash. Okay, when to close out a loser: when the delta of one side of the sold option hits 25 or that's .25, bail from that side of the IC. If you can get a good premium, re establish at higher strikes to lessen the loss. If you are in a strong market or you are a chart reader, then do one side and later do the other side. You have to push your short options out far enough not to be tagged with a delta of 25. Delta is the only Greek I concerned myself with on this credit spread.
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Most loose on the whole Condors as many do not recognize the two sides: Put spread and credit spread and to handle them as separate. Did not meet many people which are aware of that.
Did you ever try the following:
First defining the range on the price chart. Then defining the time which market uses for this range. Then defining the live time of the trade and the live of the option.
Now implementing the strategy with just one long leg and placing the second short leg with a limit order by the broker. If filled, then implementing the third long leg and if range is closed selling the fourth leg.
In a nut shell: First long call, then short call and long put and finally short put or vice versa if the strategy is done first with puts.
You say you use Ninja. I did not know, that Ninja can be used for Options or are this screen shots you show here from an other platform?
The main instructor and head of sjoptions was once a student and staff of Sheridan options. There are also discussions about Sheridan and sjoptions on elitetrader. It's probably a good idea to not be an absolute beginner and to know at least what a call and put option and a spread is like a covered call or IC. One can just watch all the free option education videos on cboe.com to get up to speed. But on sjoptions there is a 15 step intro set of videos that help a new member get used to trading their way. Just ask for a free demo tour of their website. One of their associates will guide via skype into how their training site is set up.
However, they have a very strict non-disclosure agreement of their methods and training which is reminded daily. Members who are caught leaking or sharing their material will have their lifetime access memberships revoked.
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That's interesting. So now we know, why there is so much talk about options on the net and why all this members of such paid places try to hide what ever they can.
I am wondering, how this company's could stop people talking with each others over forums what is shown in there courses and what not ?
@Delta_Panther, thanks for the suggestions. I use Interactive Brokers (IB). The screenshots are IB TWS. I use Ninja for charting and trading, but never used NT for stock (index) selection for an Iron Condor, only Delta and six weeks. I always use limit orders. I always executed trades in halves or wholes, mostly wholes. I quit doing Iron Condors and I am doing the collared option strategy as I described above. My only advice for option players is to do credit spreads. Maybe option traders have a higher burn rate than futures traders. While we have many successful futures traders here on futures.io (formerly BMT), I know not of option traders. Tiberius
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Below is my basic set-up for my IB TWS option window:
You can see the Greeks and my positions. I have a collared option startegy in place. I have had this strategy for many weeks. Because I have the puts and have been writing weekly calls for many weeks, I am at the point were I can't lose money. If I don't do any thing stupid, I can collect call premiums for many more weeks. During the first half of February, I will roll my puts out into the future, six months. Option premiums decay quicky during their last 30 days. And?
Today the Jan 6 '12 option series preview. The point of this post and my strategy is to close out my Dec 30 '11 calls and sell the Jan 6 calls. If nothing changes with SDS, I can buy back my Dec 30 20 calls for $1 Friday afternoon, like the 21s are listed now. And then sell the Jan 6s. My dilemma now is that I have to deal with the Delta. SDS is an inverse ETF and the market is rallying today, so SDS is drifting lower. In round numbers, if SDS declines $0.10 then the Dec 30 20 call will decline $0.01 but the Jan 6 20 call will decline $0.03. And?
In conclusion, I would like to net $25 per calendar spread. Market is at $15, bet I could get $16. Should I go for it or wait???
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From my above post I didn't go for the 6Jan12 20 call, weekly series. I sold the 20Jan12 20 call, monthly series. I wanted more premium. That was on Friday, the last trading day of 2011.
This is Tuesday, the first day of trading for 2012. So, what I did on Friday is worth much less today. I like to ding the weekly options, so I grabbed the profits for the 20Jan12 20 calls and sold the 20Jan6 19 calls. I hope I can make more total premiums jumping back to the weekly. I still have the puts overhead as a hedge, but I have to protect the 19 calls so not to be called away or my strategy breaks down. I will trade against the 19 strike.
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Found this new strat. Actually, someone gave it to me. If anyone wants to review it, test it or comment on it, please do. I did a tracking spreadsheet on it as I did the first trade for the option strategy.
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Interesting strategy. Will check the idea on my matrix to see the analyzing picture. Do not like to take trades witch I not at least once have visualized in advance.
What I wanted to ask you or any body else: Binary Options. Any comments on them ? Doe's any body here only trade with them ?
@Delta_Panther : I have two of these strategies going (IWM and SPY) And I read that @zsike has this strat for SPY in her journal. Guess we will see if they can produce over the next many weeks. I am in testing phase ............
Delta, My belief from my readings here at futures.io (formerly BMT) is that you are more knowledgeable in option strategies then myself. So keep you comments and ideas coming. I am always looking for new ideas .......................
And my latest STUUD excel template needs to be upgraded. I figured out the profit potential for STUUD that needs to be edited into the template.
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The edge the way I see it: If you initiate the original diagonals at intrinsic value for the long options. You keep the premiums from the weekly short options. At IB I can call then put 100 shares of stock for $1.00 and get my intrinsic value back. But one may have to adjust the short options during the week to stay profitable.
I do not have any results yet to back up my hypothesis.
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I did a rough analyzes from the idea. I do that to see and understand clearly with what I deal. In this case it is a combination of a diagonal put and a diagonal call . If I would implement that strategy, I would have to treat each side ( Diagonal call and diagonal put ) separately.
As the strategy deals with sold options, volatility is a very important point to watch. If the option volatility falls and we are not aware of that, we will get in troubles. Better would be if the option vola would rise. Following a few screen shots, which give a rough picture about the above comments and the Stuud strategy.
That is the main idea behind it:
That is the main analyze picture with that positions:
That is the same position after option volatility rised: ( We are far more above the zero line compare to the last picture. By the way: Being and coming over the zero line is the main target in any option strategy which is implemented )
Diagonal call, which is one part from the strategy:
Analyze picture from the diagonal call : ( You see, that the right foot has moved up and is more near the zero line compare to picture two and three. This happens because of the different risk profile from a pure diagonal call compare to the whole Studd idea ).
Yes, you are very right and thanks to mention it. In jargon, there is a diagonal call and there is a calendar call and we should not confuse them. I changed the names now in the mentioned post from you to diagonals, as we must be correct with names. There are so many names for option strategies and often the name changes when nearly nothing is changed in the strategy by it self..Here we only change the name because the long term options is itm and not atm like the short term options.
In jargon, for a diagonal call we use long term deep in the money calls ( which substitutes the share ) and sell short term higher strike calls. And this exactly is what is shown here:
( As I did a rough analyzes, I only recognized the short term and long term option and valued it as calendar spread with out thinking about the itm options and atm options. Sorry, my mistake )
Even than, it doe's not change any thing the way I look at the strategy. The different names of the spreads mean nothing to this view. It is like moving from blue to bluish and nothing more or less.
The risk profile in any strategy is one primary point and the way the strategy is implemented in the market is an other primary point.
Thanks @Delta_Panther. I am going to work with this aspect of IB TWS with your suggestions and drill down in the user guide. I am going to leave this window open during by trading day to adjust if I must. I am currently in Florida, USA. Thank you warm weather.
My other Stuud strategy.
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this is my collared XLU trade. utilitiy ETF yielding about 4% in distributions. so my game plan is to milk the calls and get the distributions and protect my downside with the puts. the risk profile has my greatest reward at 36. if it went to 36, sure; but I want the dividends and to write the March calls. protect 36. and we will see what happens.
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I am not sure if the original question is still alive. But I couldn't help posting a bit about Education.
One to check out is Optionpit.com - The educator's name is Mark Sebastian. Mark is into details. He is into Volatility. Nowadays, he is on Bloomberg from time to time. He will be publishing a book soon. So, you can check him out in the book to see if you like what you read. The book title is The Option Trader's Hedge Fund. Or look for e-magazine called "expiring monthly". He is one of contributes.
The other guy is "Charles Cottle" His book is called "Hidden Reality (Options: Perception and Deception & Coulda Wouldda Shoulda"". The book is not an easy read. But He is the one who opened my eyes - for example, the way to look at IC. It is basically a bunch of BFs. He will disect positions and reveal what's there. Well, I am not there yet. I am thinking about getting his webinars.
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If you want a great education in options without spending lots of money then register at the CBOE website. They have an entire syllabus from beginner to advanced. There are lots of videos there including ones by Dan Sheridan and Mark Sebastian which will give you a feeling for their methods should you want to engage them for training.
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This show on Tastytrade has good info on options and option spreads for beginners in options.
It's like a webinar everyday. 11AM to 11:30AM EST
Free if you already have a TOS/TdAmeritrade account then you can
watch the "tastytrade" channel. (one can get past the MTV styling of the promotional inbetweens; they try to be funny)
I can only find free tutorials on cboe, everything else looks like it costs money. Though its a bit of a messy site to navigate so perhaps the videos are hidden somewhere.
Thanks for all the other useful links posted to date, am new to options & reading books but welcome anymore free info/sites on options strategies.
You'll need to register for free first. Then get to their options "institute" section, webcasts subcategory. CBOE - Options Institute Webcast . Then click on "webcast center" tab. Then there are the archives by Dan Sheridan and the other gang. They're mostly former market makers on the CBOE.
So, jodistict, haven't seen any replies from you. Overwhelmed? I think the best suggestion for you right now is the CBOE idea. I've spent thousands learning about trading - most of it was a waste. Get some basics, register at CBOE, open a thinkorswim/TDAmeritade account and tap into their almost unlimited video library of knowledge.
I'm cheap and would rather save my money to trade with.
Sheridan is doing a free class on butterflies Monday, Sept 24th. yes, it's also the first part of a paid course, but Sheridan is a fun instructor and has many free archived videos on cboe.com :
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On Wednesday, October 10th @ 4:30 PM Eastern US, Carley Garner will be presenting a webinar on futures.io (formerly BMT) which covers Options Trading (specifically Futures, but it will be a broad overview). I've asked Carley to put together a multi-part webinar, so this is Part 1 and will just be "Basics - 101".
It is my pleasure to announce that Carley Garner will be joining us on Wednesday, October 10th @ 4:30 PM Eastern US to do a webinar presentation on Trading Options.
I've asked Carley to start us off with a very basic outline of options …
Nothing but a glorified platform to rip people off for thousands of $$$, to get you to learn useless strategies that maybe better learned for a lot less at Options Analysis/Random Walk Trading, who teach an invaluable covered call strategy in their Essentials book...for more complex strategies, check out the Fifty/50 book.
should you choose to go this route, try to work with them for a discount...it may also pay to short-term subscribe to some of their services, depending on your learning thirst...the most expensive package is the Premium or Elite...this way you may learn how to execute & use their strategies, by running some scans, in order to get a feel for how to trade the particular strategies.
I find their education to have been superior & more useful, without the nose-bleed pricing at SJ Options of $99 a month.
Are/were you an SJ Options student? They recently closed their service to retail traders. I was interested but couldn't find enough independent reviews of them online.
As for Random Walk, the guy who wrote their books now has his own service called Stratagem.
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