Plain Vanilla Options Trades.

[superfly]

Haven't been here for a while!

The only way to make money in options is:

1) Buy undervalued options
2) Sell overvalued options

Now how do you calculate value? That's the interesting question. Options trade away from their Black-Scholes theoretical price on a regular basis, does this mean the model is truly flawed? If so where is the flaw?

interesting

 

[charliechan]

interesting

theres good reason for this when you think about it....

 

[TWI]

The only way to make money in options is:

1) Buy undervalued options
2) Sell overvalued options

Exactly. The best way to find this is to take on structured options. They often move away because sombody does not want to manage the risk and so effectively pays you to do it. I have found it the best money there is in options market.

 

[jhaughey]

Exactly. The best way to find this is to take on structured options. They often move away because sombody does not want to manage the risk and so effectively pays you to do it. I have found it the best money there is in options market.

TWI, are you trading these with a retail or prime brokerage.... I've been studying a lot about exotics recently but see my only options ( ) are betonmarkets and maybe oanda... any experience and or comments on these? I've read mixed reviews about both....
thanks

 

[SOCRATES]

First of all you can all heave a sigh of relief because a black swan made a brief appearance but fortunately after hours, and was easily shooed away with folded copies of the Financial Times and other respectable newspapers.

The naughty creature was propelled in this direction by Splitlink, as he thinks this kind of prank is funny..... ....the consequence being one third of the whole internet being out of action between 4.30 pm and 6.45 pm, causing widespread outings. I do wish you wouldn't do these silly thngs, Splitlink. It is about time you grew up.....really.

No harm done, good. Just don't do it again.

I am worried about DC2000 and his persistence in shorting the Footsie. Will someone bring to his notice it closed + 23 today. It is better if you lot tell him rather than me in case he gets offended...


And to Glenn I will say I don't know what has happened to you since last year when you were jolly, optimistic and contented

And to super...you must not take any notice of Black Holes, Black Scholes or Black Swans. None of these are serious problems. All of them are cardboard cut out ideas developed just to frighten people...... .... You just stick with me kid, and you will be alright. Just follow my posts.


And to you mr Haughey, please, less chatter about Oanda and Betonmarkets and let us concentrate on the thread in hand, and when you have a moment, because you have been spotted lurking here,,,,,,, ,,,,,,,, since this thread was started, will you please let us have your vote, as to who has the edge, the Writer or the Buyer.

That is all. I Thank You.

And a goodnight to you all.

 

[Glenn]

I am asking questions and that is all. It appears that you are trying to defend your lack of answers to straightforward questions by attacking me personally. I don't stoop to such unprofessional depths.
If you are trying to employ the tactic that the best form of defense is to attack me, then you mislead yourself. Asking questions is not attacking.

You continue to invite questions by failing to answer them and I will persist ad nauseam. If that irritates you up then it is of your own making. You made this bed and you must lie in it (no pun intended).
The door is still open for you to provide the proof and so you can still come out of all this untainted, having convinced your audience as you intended.
Where there is doubt, then questions arise. Reasonable questions deserve reasonable answers.
Proof is proof, assertion is not.

Glenn

 

[superfly]

And to super...you must not take any notice of Black Holes, Black Scholes or Black Swans. None of these are serious problems. All of them are cardboard cut out ideas developed just to frighten people...... .... You just stick with me kid, and you will be alright. Just follow my posts.

Thanks for your kind words.

This is the daily qoute on the bloomberg:

"Resolve and thou art free" --Henry Wadsworth Longfellow (poet)--

 

[Profitaker]

Exactly. The best way to find this is to take on structured options. They often move away because sombody does not want to manage the risk and so effectively pays you to do it. I have found it the best money there is in options market.

May I enquire as to what you mean by "structured options" please ?

 

[dc2000]

Please yourself and do what you like whether it is the right thing or the wrong thing who cares, because if you are going to behave like that, I am certainly not going to. I am now indifferent to your outcome, whatever it is. I did not challenge you. I am not a kid. But you are obviously behaving like one and it does not interest me at all.

I am worried about DC2000 and his persistence in shorting the Footsie. Will someone bring to his notice it closed + 23 today. It is better if you lot tell him rather than me in case he gets offended...

Oh how the days have changed your position curve fitting your responses now my guess if we had been down 60+ you would have been as quiet as a mouse

But worry not my deluded friend for I have the edge

You would be better off addressing some of the genuine questions directed to you with regard to your current strategy or is it that you are not concerned with this anymore as you have not had the response you expected?

 

[jhaughey]

And to you mr Haughey, please, less chatter about Oanda and Betonmarkets and let us concentrate on the thread in hand, and when you have a moment, because you have been spotted lurking here,,,,,,, ,,,,,,,, since this thread was started, will you please let us have your vote, as to who has the edge, the Writer or the Buyer.


Ok you caught me....
there's no edge in writing over buying... the expectancy of an option (before it is bought or sold) is the same, therefore no edge.

by the way, what is considered edge here? retail punters like me don't have any edge in the markets. technical analysis is not an edge for example. only market makers, institutions, specialists, bank fx desks etc; have edge.

Since nobody in the "writers have the edge" camp wants to get into the nitty gritty of the dreaded Greeks etc; tell me how, in todays markets whereby arbitrageurs are eeking out every miniscule little inefficiency in option pricing, is there going to be a situation whereby one half of a market is favoured over the other.
If there was an "edge" there to start with, it would be arbed out of existence in no time.

Maybe back in the day when puts weren't invented, and pricing models were in their infancy, there was an edge in writing, because of the often massive inefficiencies in option pricing... Remember this is an area that LTCM exploited relentlessly, until the others caught on and the edge dwindled. But not today. Concepts such as put call parity and synthetic counterparts make what you believe impossible in todays markets.

 

[SOCRATES]

Oh how the days have changed your position curve fitting your responses now my guess if we had been down 60+ you would have been as quiet as a mouse

But worry not my deluded friend for I have the edge

You would be better off addressing some of the genuine questions directed to you with regard to your current strategy or is it that you are not concerned with this anymore as you have not had the response you expected?

First of all I am not your friend and I am not deluded.......

I don't know you from Adam and I have no wish to. To me you are just a nick on a BB and that is all. And I am not deluded because I know exactly what it is I am doing and it works, and what is more it works consistently not only in Options, but in Equities and in Futures, and in any market, in any exchange, in any instrument, under any conditions, at any time, anywhere in the world for that matter.

The problem for many of you is that you are not accustomed to witnessing consistent proficiency, and because you are not accustomed and it does not enter your own frames of reference........ .........you tend to try to contradict what is patently obvious, at least it is obvious to me if to no one else, and patently obvious but only to a handful.

And as I know exactly and can show it when and if it pleases me, this serves to stimulate "contradiction"...... ...from the naysarers and detractors. And I assure you all of it is like water on a duck's back.

Secondly, by now you ought to have realised that the verb "to guess" is not included in my vocabulary like it is included in yours. I am not interested in guesswork. I don't "do" guesswork........ .........I only do certainty and very near certainty which is a very different proposition to what you do.

A case in point.... is that to short an instrument that is going up and to take a short position in it before it goes up even further is guesswork..........I don;t do that.......... Out of sheer pity I recommended to you not to do it just for the sake of contradicting me................. Now you find out you are wrong again...OH Dear, Oh Dear.....

Finally, when you talk of strategy you are obviously the victim of muddled thinking. My strategy is plainly laid out for all to see. My strategy is to prove the Writer has the edge over the Buyer which I am doing as all the positions I have taken are in profit....

What you really want......and you don't know how to express properly....is an explanation of my methods.... .....but I am sorry to tell you again I am not willing to share them. I am only interested in laying out the facts as a result of making live calls, and not to make any effort or waste any of my valuable time teaching any of you....... ........sorry.

Have a good day.

 

[TWI]

And to super...you must not take any notice of Black Holes, Black Scholes or Black Swans. None of these are serious problems. All of them are cardboard cut out ideas developed just to frighten people...... .... You just stick with me kid, and you will be alright. Just follow my posts.

This gets better and better. I agree they are not problems, they are great solutions but you better take note of them or you will get taken to cleaners by those that do.

 

[TWI]

Jhaughty - I do these OTC through broker who sees the flow. Not based on exchange opt's.

Prof - I mean plays involving multiple strikes and expiries that pay an above market vol scew which can be managed in order to lock in that value.
I know some traders that like to get long vol as they like to be able to play the +ve gamma. Know others who are always short gamma. Personally I find the former a more comfortable situation but there are many times when -ve gamma is worthwhile but you have to have a disciplined way to manage it if you don't want to sp*nk your theta.

I only do short term naked. Most of the stuff I do is vega plays. Often however if you manage it right you find that the options will lead you into underlying positions which make money around the options position. Most important part is understanding what you actually have as a risk and knowing how to protect for the "what ifs" in the areas where the negative PnL exposure is. A lot of budding option traders do not actually undertand the associated risks when they have underlying position and have written an options book.

In my experience the short gamma book made more than the long but like I said earlier it is not a comfortable position which is why it does better when properly managed if not properly managed it can be a major disaster zone.

 

[stoic]

for goodness sake's dc2000, leave the man alone.

let me be clear on my position here, I am not on Socrates' side - far from it. But nearly all of you are behaving quite monstrously to him. He set himself out to prove something - and is on the way to succeeding, if that is a threat to you all have the decency to say so to his face, don't dress it all in petty jealousies, remarks, abuse. . .

 

[SOCRATES]

This gets better and better. I agree they are not problems, they are great solutions but you better take note of them or you will get taken to cleaners up by those that do.

Of course it gets better and better, and I am pleased you like it....:cheesy:

<TIC> what this lot here do not realise is that all of these crises are planned in advance, and they are left to deal with the effects, if possible without......... .........panickng.

The act of not panicking is difficult if not impossible for the great majority, and that is why the possibility of a panic has such a stranglehold grip on the vivid imagination of the majority............. .........and is firmly rooted in popular culture as well.

I assure you I personally am not subceptible to such inferences, as I only deal in facts, and then facts ahead of the event.....:cheesy:

The facts are one should always disregard the majority popular opinion as it is very nearly always proved wrong....:cheesy:

These bogeymen such as black holes and black swans keep on being unjustifiably speculated on here, and probably for two reasons, the first is the grip on popular culture that they have, liks some sort of morbid superstition and the second perhaps is the vain hope held by the detractors that one will suddenly appear ( and to their absolute delight... ..) serve to prove me wrong.

I assure all of you there are no black swans or black holes anywhere in sight and that my early warning system will give me ample warning to deal with either should they intend to appear round the corner....

 

[dc2000]

First of all I am not your friend and I am not deluded.......

I don't know you from Adam and I have no wish to. To me you are just a nick on a BB and that is all. And I am not deluded because I know exactly what it is I am doing and it works, and what is more it works consistently not only in Options, but in Equities and in Futures, and in any market, in any exchange, in any instrument, under any conditions, at any time, anywhere in the world for that matter.

The problem for many of you is that you are not accustomed to witnessing consistent proficiency, and because you are not accustomed and it does not enter your own frames of reference........ .........you tend to try to contradict what is patently obvious, at least it is obvious to me if to no one else, and patently obvious but only to a handful.

And as I know exactly and can show it when and if it pleases me, this serves to stimulate "contradiction"...... ...from the naysarers and detractors. And I assure you all of it is like water on a duck's back.

Secondly, by now you ought to have realised that the verb "to guess" is not included in my vocabulary like it is included in yours. I am not interested in guesswork. I don't "do" guesswork........ .........I only do certainty and very near certainty which is a very different proposition to what you do.

A case in point.... is that to short an instrument that is going up and to take a short position in it before it goes up even further is guesswork..........I don;t do that.......... Out of sheer pity I recommended to you not to do it just for the sake of contradicting me................. Now you find out you are wrong again...OH Dear, Oh Dear.....

Finally, when you talk of strategy you are obviously the victim of muddled thinking. My strategy is plainly laid out for all to see. My strategy is to prove the Writer has the edge over the Buyer which I am doing as all the positions I have taken are in profit....

What you really want......and you don't know how to express properly....is an explanation of my methods.... .....but I am sorry to tell you again I am not willing to share them. I am only interested in laying out the facts as a result of making live calls, and not to make any effort or waste any of my valuable time teaching any of you....... ........sorry.

Have a good day.

My dear Soc let me say once more I have no interest in you explaining your methods what so ever I am quite capable of working out the risk and capital required to place the trades you have purported to have placed
Now I can produce broker statements for the last 5 years can you produce them for the last 5 months I dont think so these are not your trades they are John C's
Furthermore you have not proved that the writer has the edge for you to do this you would have to present both sides of the trade which you are unwilling to do and please dont give us any of that Im tooo bizzi

 

[dc2000]

for goodness sake's dc2000, leave the man alone.

let me be clear on my position here, I am not on Socrates' side - far from it. But nearly all of you are behaving quite monstrously to him. He set himself out to prove something - and is on the way to succeeding, if that is a threat to you all have the decency to say so to his face, don't dress it all in petty jealousies, remarks, abuse. . .

what is wrong with asking Soc to post the other side of these trades inorder to prove that the writer has the edge so far he has made money in a rising market SO
Do you not find it a little strange that he is refusing to post full trade transparency many members who trade options regularly have asked pertinent questions so why have they not been answered???

 

[Profitaker]

TWI

I had initially thought maybe you refering to dispersion trading. Thanks for clarifying. Agree you're thoughts on Gamma, especially short gamma, near to expiry and ATM - can be nasty !

 

[SOCRATES]

Announcement:~

##############


The number crunch having been completed and an inverted trapdoor opportunity existing.... ( for those of you in the know and not for those of you who don't know )....:cheesy:


Trade number 17:~

Writing 6 lots Mar 6175 puts @ 40 or better.....waiting....

 

[TWI]

Of course it gets better and better, and I am pleased you like it....

Oh I do, it is a real expose. So much more than options here.