Related Posts
Enthusiast
Anonymous User
Coach
anyone gonna buy any calls before market close?
More Posts
how many of you get high before/during work?
🙋🏻♂️
When is the next FB networking event?
Chief
Bowl Leader
Additional Posts in Option Traders & Investing
Visual Storyteller
Somebody please explain me Elon’s tweets
Coach
Visual Storyteller
Mentor
Mentor
How serious is the investigation into LCA?? Do all SPACs typically go through these?
https://www.globenewswire.com/news-release/2020/09/17/2095218/0/en/SHAREHOLDER-ALERT-Kaskela-Law-LLC-Announces-Investigation-of-Landcadia-Holdings-II-Inc-LCA-and-Encourages-LCA-Stockholders-to-Contact-the-Firm.html
Mentor
WPF merging with Alight Solutions!
Subject Expert
New to Fishbowl?
Download the Fishbowl app to
unlock all discussions on Fishbowl.
unlock all discussions on Fishbowl.
I’ve traded for a decade now and haven’t found a single person who consistently made gains. Multiple so called experts and trading rooms, at the end of the day, they fall out the game. Stick to stocks and ETFs if you can’t even understand option concepts on your own.
I'm a diagonal investor. I use long duration options as an equity replacement. I buy ITM long duration calls or puts depending on fundamentals. I sell short duration calls or outs OTM against the long positions.
This is a high leverage investment strategy, not a "trading" set of strategies.
I've been doing this for almost 20 years. I'm retired again. It's higher risk and higher return. Volatility is much higher than equities, roughly 4X.
You can do this bullish and bearish at the same time on different tickers. For example I have bullish energy trades and bear trades on bond ETFs, and several high P/E tech stocks.
Most traders use options to hedge or trade volatility. As opposed to stocks where price is the output, options traders price options contracts in terms of volatility. Thus, the first step to truly understanding options is to understand volatility, which in itself is quite the mathematical endeavor. If you’re mathematically inclined (multivariable calc and linear algebra), “Volatility Trading” by Euan Sinclair is a book that explains vol in depth. I’ve also heard that “Trading Volatility” by Colin Bennett is a little more digestible with more practical examples, though I haven’t read it.
However, just understanding the theory behind vol doesn’t make you a good trader, though I think all good options traders certainly understand vol (theoretically or practically) amongst other things.
I would be remiss if I didn’t mention that Euan Sinclair’s vol hedge fund closed at some point in 2020.
You also need to learn options math. Beta weighting, delta, gamma, vega, IV, and theta are the basics. Vomma and Vanna if you are going to trade bonds options.
You should be able to draw the price / time / value curves for theta, gamma, delta and vega before buying or selling your first option.
The systems give you current values of everything. TDA Think or Swim tools give you simulators, but you need to have understanding I order to understand your risks and rewards.
Most people spend 40 hours and think they are going to beat market makers. If that is your attitude then don't start.
If you don't understand options, stay away.
Don't let FOMO and the promise of huge returns part you from your money.
Subject Expert
Most the people I trust use options as leverage in very asymmetric situations - like where the risk/reward ratio on the underlying is 5:1 or more. And then they only use 25-50bp of capital on the option position. They’re very active on stocks but may only do a couple options trades a month but with high win rates and good returns (they’re not looking for 10-baggers, tho).
Some people in this bowl have solid diagonal playbooks. Maybe they can chime in.
There a few good books. I'd suggest starting with the videos on the TDAmeritrade site. You need to understand basic and advanced technicals to understand trends and entries. You also need to study fundamental analysis.
If you can equal the market returns you can take more risk and beat the market. You MUST have enough capital to tolerate the volatility.
Personally I'd start with no more than 10% of your investment capital. You can also start with ETFs to remove single ticker risk.
I would suggest taking a look at https://www.sheridanmentoring.com/
He has free weekly webinars (in addition to his regular classes)
Yes he does. All the old TOS guys were (are) fun. I think only JJ Kinahan is still with TDA / Schwab.