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> I believe the ODDS system, assumes stock/option price behavior is in
> statistical terms normally distributed.
>This is not the case in real life. A lot of the buying/selling option
>decision depends on your bias in the future direction of the stock/index. I
>do not believe the ODDS system can account for that bias. In fact, I'm not
>sure that it's possible to model that kind of stock/index behavior in the
>first place. I think that once the trade is on, subsequent follow-up action
>is just as important (i.e take/lock-up profits or repair/unwind a bad
>trade). I think that using implied volatility, historical volatility, time
>decay to your advantage and having a clear plan are your best tools. My 2
>cents worth.
After recently attending one of the ODDS seminars, I found that Don only
uses the high probability method on stock indexes like the OEX and SPX. He
even showed us a chart of the actual distribution of the index verses the
theoretical distribution. The actual distrubution makes the high
probability trades work better than theoretical. He also doesn't sell any
naked options. Nor would I. He always stays protected using credit spreads
as the primary high probability strategy.
You are right about stocks not following the normal distribution. He uses a
totally different strategy for stocks.
All in all, I also believe he is one of the good guys.
If you figure that you can lose alot more than the price of his seminar real
fast in the option market, I think it is a good value. I lost half my
account right off the bat when I started trading options. Don spends about
half the time talking about what not to do.
My 2 cents,
Michael
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