Sam ... there is no easy path to becoming a competent options trader .... and I admire the hard work you are putting in .... I am reminded of a quote from Gary Player, the great golfer, who when asked why he was so good, modestly replied "the harder I work, the luckier I seem to get" .... I hope you get all the luck your efforts deserve ... cheers, James
--- In OptionClub@yahoogroups.com, "speedsam21" <SpeedySam21@...> wrote:
>
> James,
> Thank you so much for sharing your info.
> This is very helpful.
>
>
> To those who are new to this group -
> Prior to my joining this group,
> I subscribed to an advisory service which employed multi-calendar strategy.
> In a market hiccup, the result was disastrous.
>
> I had a good understanding in option theory, but in practice,
> there were many nuances.
> Consistency in result eluded me.
>
> There are different ways to trade options.
> I had heard good comments about Dan Sheridan.
> Dan Kaufman of ThinkorSwim,
> John Summa of OptionsNerd,
> Mark Sebastian of Options911 provide good training.
>
> I had followed Michael's paper trade for 5 times.
> With different market environments, Michael was generous to provide
> commentary while providing tips to watch out for.
> Very quickly, I realized the gap in my knowledge.
> When Michael used the term 'scalp', I had to look for background info
> how it was done.
> I was usually 4-5 steps behind Michael.
>
> It was like attempting to cross a road where there was no traffic light,
> how do I judge the speed of the incoming traffic? 'market feel'
> Michael would be adjusting trades, questions from other group members
> come fast and I would be using TOS trying to understand the thinking behind them.
>
> Michael once said that the key is to 'learn to trade'.
> I found it to be true.
> As I followed the paper trades, and I re-studied the options strategies,
> I have a better understanding how options behaved in real time.
>
> For members' benefit, Michael used only end-of-day adjustments.
> Even in difficult market environments, Michael managed to come on top.
> I recalled only one incident that the trades resulted in a small loss.
>
> Please note that Michael mentioned that his trading profit is about $0.05 per contract.
> Check out his past comment about negative expectancy too.
>
> So, I followed Michael 5 paper trades,
> I re-read Charles Cottle's book,
> I watched John Summa and Mark Sebastian webinars,
> I began to find similarity in approach to risk and trade management.
> This could be because of their experience and success as market makers.
>
> It was hard work but, for me, it was a turning point toward 'consistency'.
>
> When Michael showed us GS trade, I ran my own paper trade to see how I fare.
> We all know how volatile the market was in May.
> Michael trade ended in profit, my trade ended with $500 in loss.
> I dug in Michael's past option gymnastics and ended up breaking even.
> So, it was 'consistency'.
>
> Michael has his own account to trade.
> But, we have been fortunate to have him assisted us on the side.
>
> So, for some of us who knows Michael, his comments are worth noting.
>
> Best regards,
> Sam
>
> - - - -
>
> --- In OptionClub@yahoogroups.com, "JP" <jamesbparker999@> wrote:
> >
> > Sam .. the positive experience is an ability to dissect complex positions into simpler alternative equivalent positions ... that reveal embedded risks / opportunities .... that naturally lead to more logical position management / adjustments ... ultimately you have to do what works for you ... and this works for me .. Cheers, James
> >
> > --- In OptionClub@yahoogroups.com, "speedsam21" <SpeedySam21@> wrote:
> > >
> > > Thank you Ricky for the 'Algorithm for Flattening Expiration Graphs'.
> > > I am looking at it.
> > >
> > >
> > > Thank you James for your comments.
> > > Previously, a poster mentioned that he went through Cottle's book a couple of times to soak in his method.
> > > I found it heavy-going too but I continued because what I learned from it helped me a lot.
> > >
> > > You seem to be familiar with his book and style.
> > > What was your positive experience that helped you understand his book better?
> > >
> > > Thanks,
> > > Sam
> > >
> > >
> > > - - -
> > >
> > > --- In OptionClub@yahoogroups.com, Ricky Jimenez <rickyjim@> wrote:
> > > >
> > > > On Fri, 21 May 2010 15:31:12 -0000, "JP" <jamesbparker999@>
> > > > wrote:
> > > >
> > > > >Ricky
> > > > >
> > > > >Please don't take this as being in any way critical, but I disagree completely with you regarding Cottle's book [Options Trading: The Hidden Reallity] as it contains many examples of dissections and synthetically equivalent positions.
> > > > >
> > > > >Michael's positions frequently end up with 'guts' options that can easily be plotted on a risk graph, but not easily understood from the raw data unless you apply some form of dissction.
> > > > >
> > > > >For example in the preface to Cottle's book he asks: what amount of money is the most one can lose with the following position:
> > > > >
> > > > >QQQQ trading at 37.30
> > > > >36 strike call at $1.70
> > > > >39 strike put at $1.90
> > > > >
> > > > >A trader buys 10 lots of the 36c / 39p strangle for $3.60 ea.
> > > > >
> > > > >Have a go at answering without using a risk graph ..
> > > > >
> > > > >Cheers
> > > > >James
> > > > >
> > > > I agree, James that there are plenty of examples in the book but not
> > > > enough information how to go about using dissections to make money.
> > > > Buying or selling a box can simplify a position, but I need guidelines
> > > > on where to look for such opportunities and how they lead to profits.
> > > > I don't see why it is a virtue, not to draw a risk graph. Using the
> > > > mechanical table method I have shown before:
> > > >
> > > > 10*39p
> > > > 10*36c
> > > > Slope: -10 0 10
> > > > Payoff: 30 30
> > > > Profit: -6 -6
> > > > BE: 35.40 39.60
> > > >
> > > > so the minimum result is -6 in the interval [36,39].
> > > >
> > > > I did try to find use for one of Charles' ideas, decomposition in
> > > > terms of "baby butterflies". After staring at his description for a
> > > > while, I saw that any position, in s region where strikes are at equal
> > > > distances, can be decomposed into a positive or negative whole number
> > > > of baby all put or all call flies. This becomes obvious if you
> > > > realize that a baby fly has the property that its expiration payoff is
> > > > the distance between strikes at its center and zero at its wings. I
> > > > thought that maybe I could buy a wide fly, say, and then sell off most
> > > > of the ATM babies as the underlying hit various strikes in between the
> > > > wings of the wide fly. But I soon found out that even with well
> > > > traded stocks like Google, ATM baby flies have very large bid/ask
> > > > spreads so I was not accumulating much credit by selling them.
> > > >
> > > > But if you can give me a hint as to where to look for the really
> > > > useful stuff in the book, I will try again. :-)
> > > >
> > >
> >
>
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