Sunday, October 18, 2009

RE: [TheOptionClub.com] rules for adjustment

 

Been out of town for a bit and just catching up. appreciate your comments but I'm not sure I'd have anything rigorous enough to say (or if there can ever really be anything systematic to say at all) regarding how to read market structure.  Mostly I just trade my positions and take little gambles (i.e. basically random trades that address delta and/or vega needs) based on whatever happens to

be available. if there really was some way to present this systematically I'd give it a go.  Until then, I can keep responding to any questions you have with whatever two cents worth of opinions I can muster.

 

From: OptionClub@yahoogroups.com [mailto:OptionClub@yahoogroups.com] On Behalf Of Sid Sastry
Sent: Wednesday, October 07, 2009 5:12 PM
To: OptionClub@yahoogroups.com
Subject: RE: [TheOptionClub.com] rules for adjusting

 




Mike,

Always love to read your comments. My feelings about trading is just exactly is the same as yours except the fact that I am not well equipped(lack of deep understanding of option dynamics-- of course I am trying my level best to glean some pearls of wisdom in this group).

Is there any chance or hope in the near future that you will give us a webinar as to how to go about reading the market structure and then selecting the appropriate strategy to put on and then more importantly which I feel is your greatest stength is Managing the position.

Thanks Mike

sid

--- On Thu, 10/1/09, mcatolico <mcatolico@mindspring.com> wrote:


From: mcatolico <mcatolico@mindspring.com>
Subject: RE: [TheOptionClub.com] rules for adjusting
To: OptionClub@yahoogroups.com
Date: Thursday, October 1, 2009, 6:47 PM

 

Frankly, given the odds, ANY profit is remarkable. And the key is how leveraged you are (i.e. position size) to get the returns you seek.  If you can achieve say a modest 0.1% per month return by risking just 5% of your trading capital you can start a hedge fund.  A hedge fund is by definition designed for leverage and they might risk 100% or 200% or 300% of trading capital. at that leverage ratio the  0.1% per month becomes 2% to 6% return per month which gets you to the trading stratosphere.

 

What am I happy with? 15%-25% annually if I never risk more than 30%-50% of my trading capital at any time. Normally I never even focus on percent returns. It's all about slogging out some net positive income month after month. The percent returns are for somebody with a scorecard to boast about.

 

From: OptionClub@yahoogro ups.com [mailto:OptionClub@ yahoogroups. com] On Behalf Of Mojo
Sent: Thursday, October 01, 2009 7:36 AM
To: OptionClub@yahoogro ups.com
Subject: Re: [TheOptionClub. com] rules for adjusting

 



I never really thought about looking at my trades from the other side (when that person has the potential for a risk free lock).  Great point! 

At the end you mentioned 'winning the game'.  I started my option career thinking that a good rate of return for winning the game would be 100%+ a year.  Each year that's been going down (currently at 30%+).  What would you say is a decent rate of return for winning the game? 


Thanks,
Mojo

 

 

 

 

From: mcatolico <mcatolico@mindsprin g.com>
To: OptionClub@yahoogro ups.com
Sent: Wednesday, September 30, 2009 10:39:04 PM
Subject: RE: [TheOptionClub. com] rules for adjusting

 

To me it's all about trading your position and seeing what the market offers. The rule is basically "no rules." 

 

My little pdf file on vertical adjustments (in files section) was intended to show a battery of potential defensive and opportunistic adjustment strategies based on what the underlying and of course the relative options are all doing.  In a nutshell, if you can ever get a locked risk-free position that offers more upside potential, it never hurts to pounce on that opportunity.

 

Conversely, if you can maintain a "funhouse mirror" mindset and you flipflop your position to see where someone holding the completely opposite trade would have the opportunity to enjoy a locked in winner, then that is usually the time you need to make a defensive adjustment.

 

To me that's all there really is to understanding "market timing." Whatever position you have, there will come a time where an adjustment can be made that will turn it into a sure winner or where someone holding the opposite side of your trade would have that same type of opportunity. That's when you have to decide to act. Combine this with a solid grasp of position sizing and a dose of phenomenal option strategy fundamentals and the game is easily won.

 

From: OptionClub@yahoogro ups.com [mailto:OptionClub@ yahoogroups. com] On Behalf Of David Steele
Sent: Wednesday, September 30, 2009 4:03 PM
To: Option club
Subject: [TheOptionClub. com] rules for adjusting

 

 

Did anybody make a list of rules for adjustments for different spread trades. like when to adjust and why. like on moving average crosses, standard deviations, or between your breakeven and short,  when a trendline breaks , or when your short goes in the money by a certain percentage, or adjusting when your greeks are showing certain percentages. who in the group have been doing adjustments base on these factors for calendar spreads, bull puts, bull calls, bear puts, bear calls, diagonals, and iron condors.









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