Plain Vanilla Options Trades.

[PKFFW]

Well....as Pod G says " If you do not understand this.....you ought not to be trading.....you ought not to be trading at all....until you do understand it...it's obvious isn't it ? ....I mean to say...it is SCREAMING at you, it is......( )....and everyone in the room nodding...nodding.

And so, if you do not understand what you are letting yourself in for, you should not participate.

Simple innit ?

So again you sidestep the issue. As you have done with all other of your posts in this thread.

Cheers,
PKFFW

 

[SOCRATES]

So again you sidestep the issue. As you have done with all other of your posts in this thread.

Cheers,
PKFFW

No, I confront problems, I do not sidestep them.

You have to understand that in order to confront a problem you have to have the ability to do so.

You cannot put out an oil fire by squirting water at it,,,,you need foam, don't you ?

And so with trading of any sort you have to have knwoledge and know how to go about the task in order to solve the problem,

The problem is not to make losses.

The solution is to make consistent profits, which I am doing.

Cheers Big Ears.

 

[SOCRATES]

I forgot to mention.....

An Edge impliles the holder of the edge is able to make consistent profits and not losses, including sporadic losses. It implies the holder of an edge is able to make every trade profitable. This to a lot of people is unbelievable. But it is true. And I am proving it.

Consistent profits cannot be made if the odds are against the trader. The trader has to have the odds in his favour in order to be able to make consistent profits. Option buying contains risks that work to the disadvantage of the trader, because 85% of all options expire worthless, because a buyer has 1 chance in 3 of getting it right and because the odds in favour to fhe writer are 3 out of 4.

I cannot make it clearer than that.

 

[barjon]

I have cleared the thread of the overnight skirmishes in the interests of the topic

Socrates

I know next to nothing about options so excuse my innocent question. When you say the writer has the edge do you mean writing both put and call options?

jon

 

[SOCRATES]

I have cleared the thread of the overnight skirmishes in the interests of the topic

Socrates

I know next to nothing about options so excuse my innocent question. When you say the writer has the edge do you mean writing both put and call options?

jon

Yes.

It is a pity, barjon that you have deleted the overnight skirmishes because they serve to ullustrate the persistent opacity that pervades these boards, and, it serves to prove a seies of points that the very skilled and very knowledgeable members and visitors are interested in seeing in print, as me repeateadly telling them and pointing this out is not enough, but it is enough for them to verify these inabilities with their own eyes.

This not only applies to members of The Star Chamber and the Elite 34S Club but to learned and expert members of this website.

It is interesting to observe that these few really expert members who are able to make consistent profits in their daily operations are not included among the detractors and read the thread, but never or rarely post but provide a flood of positive comment out of earshot.

 

[CYOF]

I forgot to mention.....

An Edge impliles the holder of the edge is able to make consistent profits and not losses, including sporadic losses. It implies the holder of an edge is able to make every trade profitable. This to a lot of people is unbelievable. But it is true. And I am proving it.

Consistent profits cannot be made if the odds are against the trader. The trader has to have the odds in his favour in order to be able to make consistent profits. Option buying contains risks that work to the disadvantage of the trader, because 85% of all options expire worthless, because a buyer has 1 chance in 3 of getting it right and because the odds in favour to fhe writer are 3 out of 4.

I cannot make it clearer than that.

Socrates, I agree fully with closing after the next 5 trades - for we have indeed better things to be doing, and the facts have been presented for all to see.

No matter what, the usual defractors will post, and this is good, not bad, for it shows the few how they must not think - like all succesful businesses, you must think differently to your competitors to gain the Edge over them.

Your above post sums it up, and you need not expand any further.

My proposal is that we finish the trades and not engage in any more tit for tat, even though my Irish streak likes it :cheesy: , and then, we will continue to concentrate on what matters most, and you know what that is, and so do everyone else for that matter :idea:

I am also getting fed up putting my views on Fundamental Truths forward, but I know, you did warn me, many times, so I have made my last post over in the sand pit to Pkww - no more.

Regards,

 

[new_trader]

I forgot to mention.....

An Edge impliles the holder of the edge is able to make consistent profits and not losses, including sporadic losses. It implies the holder of an edge is able to make every trade profitable. This to a lot of people is unbelievable. But it is true. And I am proving it.

Consistent profits cannot be made if the odds are against the trader. The trader has to have the odds in his favour in order to be able to make consistent profits. Option buying contains risks that work to the disadvantage of the trader, because 85% of all options expire worthless, because a buyer has 1 chance in 3 of getting it right and because the odds in favour to fhe writer are 3 out of 4.

I cannot make it clearer than that.

Socrates,

Excellent point. There is a big difference between gambling with fixed odds, like a coin toss as some here use as an example, and Bayesian inference, which I suspect applies more to your trading methodology?


One of the primary roles of a Bayesian model is to allow the model creator to use commonsense and real-world knowledge to eliminate needless complexity in the model. For example, a model builder would be likely to know that the time of day would not normally directly influence a car's oil leak. Any such influence would be based on other, more direct factors, such as temperature and driving conditions.

The method used to remove meaningless relationships in a Bayesian model is to explicitly declare the meaningful ones. After establishing all the variables in a model, you must deliberately associate variables that cause changes in the system to those variables that they influence. Only those influences are considered.

 

[SOCRATES]

Socrates, I agree fully with closing after the next 5 trades - for we have indeed better things to be doing, and the facts have been presented for all to see.

No matter what, the usual defractors will post, and this is good, not bad, for it shows the few how they must not think - like all succesful businesses, you must think differently to your competitors to gain the Edge over them.

Your above post sums it up, and you need not expand any further.

My proposal is that we finish the trades and not engage in any more tit for tat, even though my Irish streak likes it :cheesy: , and then, we will continue to concentrate on what matters most, and you know what that is, and so do everyone else for that matter :idea:

I am also getting fed up putting my views on Fundamental Truths forward, but I know, you did warn me, many times, so I have made my last post over in the sand pit to Pkww - no more.

Regards,

On several other occasions and when an opportunity existed, I mentioned the word realisation, but never fully explained it.

It means you may either at a conscious or subsonscious level (and it does not matter which) you may actaully know something. In other words, you may actually posess knowledge of something or about something.
But having knowledge is not enough.

Knowledge only becomes powerful if and when you have a realisation. A realisation causes the knowledge you have to take its proper place in your thnking armoury. For this to happen, you have to consciously put your attention on your knowledge and then, and only thne, can a realisation take place, and suddenly, the knowledge springs up at you and suddenly, it develops meaning. Knowledge without meaning is useless.
A realisation is very powerful because it enhances that meaning to you personally. it causes your knowledge to become real, and your own intellectual property in a proactive manner.

I am very pleased to see that at last you have been able to have a realisation about that which you know, but had not realised. It has now become patently obvious to you.

No amount of me telling anybody anything is going to progress anyone until a realisation lands. I am very pleased in your case it has happened sooner rather than later..

 

[A Dashing Blade]

Hmmmmmmmmm

All this talk of not being concerned about hedges, Greeks etc is all very well, but goes against what Bulldozer/CYOF is currently saying on this thread . . .
http://www.fxstreet.com/forum/showthread.php?t=57

"I think the members here need to know where your stops are at point of entry so they can monitor your trades. If your as good as you seem to make out? why not show FULL details of trade? ie stops, trailing stops,OCO, limit orders etc... "

"If you are not prepared to be FULLY open with your trades? i think it was a big mistake to open your journal. People are not stupid they need to see all things out in the open."

"d. You need to know Risk/Reward of trade before its opened and how much margin will be to hold positions open for a few days or weeks.
e. You need to know which TWO GREEKS formulas are best for the trade."
(my emphasis)


"You can buy a PUT/CALL option ITM/OTM 3 months out and you can use that as hedge over 50 to over 300 times during those 3 months period [the life of the option contract]. You can also get a combination of OTM and ATM to reduce the costs. I hope this info is helpful to you?"
(implication is the the basic stratagy here is scalping via calandar spreads)

Personally, I'm now far from sure we're getting the full story on the trades reported on this page (which I do believe are real trades btw) ie that there are some hedges out there.

 

[Profitaker]

New Trader

Care to explain how Bayes theorm applies to flogging a few OTM Puts ?

DB

I don't think that's Bulldozer - far too advanced for him.

You can see him in the active users below (Atlantic ghost) it must kill him that he can't post here and rightfully claim his trades LOL

 

[SOCRATES]

Hmmmmmmmmm

All this talk of not being concerned about hedges, Greeks etc is all very well, but goes against what Bulldozer/CYOF is currently saying on this thread . . .
http://www.fxstreet.com/forum/showthread.php?t=57

"I think the members here need to know where your stops are at point of entry so they can monitor your trades. If your as good as you seem to make out? why not show FULL details of trade? ie stops, trailing stops,OCO, limit orders etc... "

"If you are not prepared to be FULLY open with your trades? i think it was a big mistake to open your journal. People are not stupid they need to see all things out in the open."

"d. You need to know Risk/Reward of trade before its opened and how much margin will be to hold positions open for a few days or weeks.
e. You need to know which TWO GREEKS formulas are best for the trade."
(my emphasis)


"You can buy a PUT/CALL option ITM/OTM 3 months out and you can use that as hedge over 50 to over 300 times during those 3 months period [the life of the option contract]. You can also get a combination of OTM and ATM to reduce the costs. I hope this info is helpful to you?"
(implication is the the basic stratagy here is scalping via calandar spreads)

Personally, I'm now far from sure we're getting the full story on the trades reported on this page (which I do believe are real trades btw) ie that there are some hedges out there.

Everything you mention is at a mechanical level. I am not interested in trading at mechanical levels. I only trade at intuitive levels. All this mechaninical stuff does not apply to me.

You may, if you wish, follow the progress of the trades at a mechanical level if you wish, expressing your opinions as to where you yourself would place stops and other curbs, but I do not work like that, sorry.

None of these are calendar spreads, they are all plain vanilla, and the entry and exit points are easily verifiable as they are done in real time and the trades recorded live for everyone to see, and from time to time, when it is futurologically possible, announced ahead of the event.

 

[new_trader]

New Trader

Care to explain how Bayes theorm applies to flogging a few OTM Puts ?

DB

I don't think that's Bulldozer - far too advanced for him.

You can see him in the active users below (Atlantic ghost) it must kill him that he can't post here and rightfully claim his trades LOL

I don't want to take this thread too far off topic, but I thought it was obvious.

"Bayesian inference is used to calculate probabilities for decision making under uncertainty"

"Probabilities represent the chance or belief of being wrong"

Whatever you do it's because you think the chances of being wrong are low.

 

[SOCRATES]

Socrates,

Excellent point. There is a big difference between gambling with fixed odds, like a coin toss as some here use as an example, and Bayesian inference, which I suspect applies more to your trading methodology?


One of the primary roles of a Bayesian model is to allow the model creator to use commonsense and real-world knowledge to eliminate needless complexity in the model. For example, a model builder would be likely to know that the time of day would not normally directly influence a car's oil leak. Any such influence would be based on other, more direct factors, such as temperature and driving conditions.

The method used to remove meaningless relationships in a Bayesian model is to explicitly declare the meaningful ones. After establishing all the variables in a model, you must deliberately associate variables that cause changes in the system to those variables that they influence. Only those influences are considered.

Yes, interesting post. But you see how in the post above, I explain briefly that I do not trade mechanically, I trade exclusively intuitively.

The mindmap, mindset, mindstate and mindway required to trade intuitively is light years ahead of mechanical trading methodologies, and as a cluster of faculties and with regard to their interaction and relationship with each other is to put it mildly....complex.

Therefore this is neither a suitable time or place to discuss such differences in approach, except to briefly say the mechanincal approach is to analyse a scenario in bits, whereas the intuitive is to absorb the whole lot in one go, instantaneously........ holistically, and to act immediately and unerringly on it.

 

[new_trader]

Yes, interesting post. But you see how in the post above, I explain briefly that I do not trade mechanically, I trade exclusively intuitively.

The mindmap, mindset and mindstate required to trade intuitively is light years ahead of mechanical trading methodologies, and as a cluster of faculties and with regard to their interaction and relationship with each other is to put it mildly....complex.

Therefore this is neither a suitable time or place to discuss such differences in approach, except to briefly say the mechanincal approach is to analyse a scenario in bits, whereas the intuitive is to absorb the whole lot in one go, instantaneously........ holistically, and to act immediately on it.

I Understand. I think "needless complexity" is ambiguous and applies to the ability to determine the difference between important and unimportant information. I have no doubt that the your trade decisions are a proprietary complex process derived from years of real trading experience. The "needless complexity" could apply to the trading books that you burned, I suppose?

 

[CYOF]

I don't want to take this thread too far off topic, but I thought it was obvious.

Yes - I agree 100%, and it is very obvious to a few, but not to the majority :idea:

Whatever you do it's because you think the chances of being wrong are low.

I partially agree - "whatever you do it's because you think", that much is a Fact, but to say that a specific action is as a result of you just thinking "the chances of being wrong are low," may not be correct, at all. As Socrates says, when you come to a realisation, you will see that all of what you think will affect your actions, so it is indeed complex, very complex, and to overcome this complexity, Full Control is required - not for discussing further here, as the trades must go on and be completed, and this particular discussion is for another thread, not for this one. This thread will present the trades, some in advance when possible, then state the fills, then give the updates, and finally give the conclusion. It is really very simple, but some try and make it very complicated, as you now see.

Regards,

 

[A Dashing Blade]

None of these are calendar spreads, they are all plain vanilla, and the entry and exit points are easily verifiable as they are done in real time and the trades recorded live for everyone to see, and from time to time, when it is futurologically possible, announced ahead of the event.

Totally, absolutely and unconditionally accept that Socrates.

 

[Splitlink]

Everything you mention is at a mechanical level. I am not interested in trading at mechanical levels. I only trade at intuitive levels. All this mechaninical stuff does not apply to me.

You may, if you wish, follow the progress of the trades at a mechanical level if you wish, expressing your opinions as to where you yourself would place stops and other curbs, but I do not work like that, sorry.

None of these are calendar spreads, they are all plain vanilla, and the entry and exit points are easily verifiable as they are done in real time and the trades recorded live for everyone to see, and from time to time, when it is futurologically possible, announced ahead of the event.

If you are trading naked puts at an intuitive level. then you have an instinctive sense of whether the Black Whatever is around the corner, or not. Your trading is very interesting and, because of its apparant success, very tempting, but not to be recommended to all and sundry.

Your Irish ally's name, in real life. would not be called Murphy, by any chance, would he?

Split

 

[A Dashing Blade]

New Trader

Care to explain how Bayes theorm applies to flogging a few OTM Puts ?

An underlying assumption of the normal probability curve is that results are uncorrelated.
This is not true of market moves. Actualy, large moves are "often" (in a statistical sense) followed by large moves.
iirc, Bayes theorum is all about conditional probability ie where there is a correlation between event a and event b.

So I see where New Trader is coming from.

Tho' it's not mentioned in (my copy) of Hull, I've bumped into it a few times wrt algo trading routines

 

[PKFFW]

No, I confront problems, I do not sidestep them.

You have to understand that in order to confront a problem you have to have the ability to do so.

You cannot put out an oil fire by squirting water at it,,,,you need foam, don't you ?

And so with trading of any sort you have to have knwoledge and know how to go about the task in order to solve the problem,

The problem is not to make losses.

The solution is to make consistent profits, which I am doing.

Cheers Big Ears.

All very well and good but tell me again how making these trades proves your hypothesis. Oh wait, I mean tell me just once how it does. Or you can just choose to sidestep the issue again.

Every single time you try to define edge everthing you come up with is not inherent to nor specific to the writing of options.

Further to that you claim that because you make X number of profitable trades in a row proves your hypothesis would be no different to me saying if I made X number of profitable trades going long the EUR/USD that proves going long has an inherent edge. Now that is obviously not correct, just as your claim is obviously not correct. You know this, CYOF knows this too so I will let it go now.

Cheers,
PKFFW

 

[CYOF]

I have cleared the thread of the overnight skirmishes in the interests of the topic

Socrates

I know next to nothing about options so excuse my innocent question. When you say the writer has the edge do you mean writing both put and call options?

jon

Hi Jon,

I posted these previously, and they are very relative to understanding this thread:

http://www.trade2win.com/knowledge/articles/general_articles/the-cash-cow/

http://www.investment-tools.com/options_reports_1.htm

http://www.investopedia.com/articles/optioninvestor/03/100103.asp

And I have added this one especially for you:

Introduction to Put writing -

http://www.investopedia.com/articles/optioninvestor/02/030102.asp

But remember my post about what the Budda said, for you must read all material and take what value from it that pertains to your desired outcome - not to the desired outcome of the author - there is a Big difference here - what this article does not tell you is that each and every day, the Theta - or time value of the premium - is decaying, like an apple that is left on the kitchen work top, slowly getting browner and browner as each day passes :idea: so, Time is your friend, and as Time is your friend you must respect Time, not disrespect her, and if you respect Time, she will also show you when to Sell, and when you know when to Sell, you will see the best opportunities for What to Sell.

I will continue some more, as many will find this interesting and very relative to the trades that are been posted - some no doubt will resort to the usual detracting.

Many will have you believe, if you let them, that we are trying to say is that you just go and Sell Puts, and you will make money. We have never said this - they have :idea:

We are not stupid, nor do we think that people are stupid, they are just fed with the wrong information, and the majority of this information is not Factual, far from it actually.

So, as per my dedicated post to you, you can now clearly see that Selling Puts for consistent profits is indeed an Art, and will not be achieved from any Inspirational Trading.

It is up to each and evey individual to make up their own mind what they do, always has been, and always will be, and all we are doing is showing what is possible to do if one has it within them to see the difference between the Art oF Trading, and what is termed, Inspirational Trading, for therein lies the Key to consistent profits in the markets :idea:

Regards,