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I agree with you. If that is the strategy you want to pursue (it is not a bad one) I just would have split it up and picked a stock or ETF from each of the major sectors (mining, financial, emerging markets, service, energy, etc...) and split up in to 10-20 parts. Apple does seem dominant right now but so did Blackberry and Nortel back in the day
I also have a bad feeling things are gonna go lower
Can you help answer these questions from other members on NexusFi?
Here's something you could do that might make a lot more sense than what you're doing right now, if you really want to buy and hold: Buy a basket of 20-30 stocks that (A) have cheap valuations with (B) improving financial ratios and (C) positive price momentum relative to the broader market.
In the Options on Futures thread you said you were done with futures. From my limited exposure to the thread, I would respectfully submit that you drew the wrong conclusion: you should be done with options, and, more broadly, highly leveraged products you're not completely 100% adept with.
A - TEV/EBITDA or EV/EBITDA has historically performed the best
B - Piotrowski F Score works well, there are slight improvements I've seen published on it that work better
C - Avg of 6 + 12 month price ROC relative to market
Edit - I know sufficiently little about options that I can get confused pretty easily, wrote the above before thinking sufficiently, possibly should've kept my mouth shut. Will leave the post up for now, but would be glad to delete if it's felt to detract from the discussion. My sincere apologies.
I couldn't get the price I wanted on my /ES positions on Monday. Bad timing on my part too as the market was turning around 12. I put an order in to buy a few SPY puts as a protective hedge and it was filled within 10 minutes. SPY is more liquid and days like yesterday easier to get in and out positions.
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
I have been trading AAPL for years 1 or 2 contracts at time. It is my favorite equity and bought some more last Friday. AAPL has had impressive run since the split last year, just kept that in mind. But I wouldn't suggest putting all the remaining funds into an AAPL position. Diversify if possible.
I posted this - Overall diversification- I have a total stock market international etf and bond and treasury fund. My allocation is more US equities 80%, 10% bonds and 5%international 5% treasury. I also have about 7 equities that I have positions in, either stock or options
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
I was also able to buy some SPY puts and will just hold these for now.
I might be rolling down for more losses but this is my view for now - What has fundamental changed about the US equities market since last week? nothing really, earnings are solid, unemployment low, recent housing numbers very strong, GDP growth. I could be wrong and definitely can't predict the future but the yuan devaluation, Shanghai index dropping to where it started 2015 at and a possible rate hike to .25 doesn't change my long term view of the market.
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
What are the headers to the columns on those positions? Also, do you follow a more mechanical system like chubbly or just do naked puts and roll as needed?
One of the biggest questions I have about your method of trading vs Ron is around leverage. Ron leverages a lot, yes but in the end so do you relative to most accounts. I think of the old adage "in for a penny in for a pound". Is it easier to roll in your positions? Do you find you have less overall margin requirements? Also, what determines your strikes and position size? I'm following up on chubbly's earlier recommendation of reading Al Sherbin's book and looking at a more mechanical process.
I look at strikes that are ~-.20 delta and around 2 months out. I run different scenarios at that strike to figure out what strike and size, I am comfortable selling. Also explore how different strikes and months react to volatility. I posted that the Nov 1650 option value had increase almost 5* while the Oct 1920 put was only 2.5*
I do not based the position size on initial margin but on what risk I am willing take when the option value increases. My advice would be to run a different scenarios on your platform to figure what you are comfortable risking.
A mechanical approach would be best for someone just starting out with options. Definitely look into Chubbly recommendation. My approach is discretionary, I reassess things as the market is moving and it is all predicated on my long term view. I ask myself, do I think it is worth rolling down in the current environment.
It really depends on your risk tolerance. Mine is significantly lower than the IM*3 4 5 crowd, there is huge difference between 2,000 contracts (can't even imagine the losses) and 40 contracts , even your 145 contracts is a big difference. Not only that controlling a high percentage of the contracts at strike is gonna have hell closing those positions (at a decent price) when the market is moving fast. I wouldn't focus on maximizing position size based on margin. The data and studies been touted were in 2 year period when IV was low. The results from the previous 6 years would have been much different. Plus ignoring all the risk involved: see post below
I'm not trying to be argumentative, so please don't it take it that way. Just trying to do a healthy exploration of the risks - can never be a bad thing. To that end, a couple of points:
1. Why should we assume that history is going to repeat …
A -21% move was considered unreasonable and impossible...until it happened. That's exactly the point - neither you or I can sit here and define what can reasonably happen. If you're saying that it's such a low probability that you're …
I would probably advocate being more conservative for new traders with smaller accounts. One of the trader mention on here having 20k, said he could sleep well at night using IMx3. Unless there is more in other …
So what if it is down 50%? Everybody is supposed to be trading money they can lose.
The worry would be if someone were to lose 100+%. And based on 99.9% of times they wouldn't. If you are selling puts in 2008 you shouldn't be trading at al …
You shouldn't be comparing the Sep 2015 1650 put to any option in August 2011. It's nonsensical. We live in 2015 in a much different environment (vix is now half of what it was). As we sit here today, you are still selling puts. The Sep 1650 …
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
I still have one /ES position still open that was opened approx 1.5 weeks ago. Not sure If I will keep using /ES since I noticed that all liquidity has disappeared even after the initial crash. Even up to last night there were no Bids, so if we had crashed again I would have been screwed
