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I would also like to hear from anyone actively trading option spreads, especially in the S&P. For
instance, what rules would such an option trader look at to establish a butterfly spread, or a credit
spread in the current S&P market. Is there anybody out there making such trades? Thanks...
Mark Scheier
Chris Jackson wrote:
> I am seeking assistance from real world options practitioners -traders,
> locals, brokers etc.
>
> Looking for views on recommended strategies that are applicable to today's markets and that can be
> practically and profitably employed by an off the floor trader paying
> reasonable brokerage. Just to clarify I am after strategies not specific trades.
>
> I live outside the USA and the time difference does not allow for the
> regular monitoring of markets during US trading hours.
>
> Possible candidates.
>
> Options strategies that result in small consistent profits regardless of
> market direction.
>
> Strategies that involve writing options without the exposure to unlimited
> risk e.g. vertical credit spreads.
>
> One purpose for this request is that I want to ramp up my options trading
> experience and frequency whilst limiting risk. If after say 6 months I am
> down a little after using these strategies then that will be okay because I
> am after more hands on experience with options as part of an overall plan to
> evolve into a more complete and professional trader.
>
> I have a pretty good understanding of option pricing factors and have read
> all the usual options trading books including the Options Volatility
> Handbook by Robert Krause of the CME and various magazine articles.
>
> I have been inclined to write naked options under the right circumstances
> but to date I have not because I know that they are not recommended by many
> who have been around the markets for a reasonably long time due the limited
> profit / unlimited risk factor.
>
> Naked Futures involves unlimited risk also, however, this is not usually
> stressed with the same emphasis as when naked option writing is being
> discussed. Option writers can exit or take offsetting positions after trade
> entry also. They can also apply money management rules etc.
>
> What I am saying is that the unlimited risk of option writing is emphasised
> by the industry and yet the I have the impression that it is professionals
> who write the vast majority of options.
>
> I have wanted to ask the following question of experienced non-biased people
> in the industry for a while.
>
> Given that exit strategies exist, do naked option writers blow out because
> they get so used to having winning trades that they get complacent and fail
> to exit losing trades / use stops ?
>
> Do naked option writers blow out because they get so used to having winning
> trades that they get complacent and overtrade and therefore take on too much
> risk relative to their account size ?
>
> After all both a straight futures contract and a naked written option carry
> unlimited risk - do nothing and you can get blown out.
>
> I would really appreciate any advise and assistance any of you are able to
> offer based on your option trading experience.
>
> Thanks,
>
> Chris
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