Plain Vanilla Options Trades.

[PKFFW]

if i may say some of the attitude has been deplorable

quite a while back i posted a few trades that i was in, and got a barrage of negativity 'how can you short in a rising market' or 'you should not do that'

'thats irresponsible' type of comments, i thought to myself good grief!!

anyway on those trades which at the time i was short gold, eur/usd and bonds,

all three were winners against 'public opinion'

the irony is that those that criticised my style of trading had nothing to say,

and certainly nothing to add. but im sure if i had fallen flat on my face the comments would have conveniently trickled in.

let me make this clear as some of you find it amusing when soccy says everything is known in advance

fellas you are taking it literally and though you mock, the joke is on you

i posted a chart of the S&P cash that would hit 1455/1460 over 4 month ago

i knew the high was in with high probability, one can say it was known in advance what i have difficulty in substantiating is magnitude of moves,

i did not anticipate this move down so quick, so naturally one has to adjust due to cycles and timing,

the point is the man is trading whether he is still holding or not or has hedged is immaterial, these trades do not define him as a trader, it may from your point of view but its his view that counts.

i can hear some of you say well he should have known in advanced that the high was in, well maybe but also i suspect he may have been looking at a topping action which would have taken some time for it to go down,and strategically the puts would have expired worthless.

my point is to those that genuinely know what trading is about, those that have sweat tears to be the traders they are may appreciate what im saying and those that think they do its just a good laugh

i wish everyone success in their endeavours

andycan,

I think you should know my thoughts on this matter of futurology. *You seem to be saying that you can forecast with a high degree of accuracy the highs and lows. *You admit you sometimes get the timing and quickness of the move slightly wrong. *This is entirely different to saying "Everything is known in advance. *Every possible outcome is known in advance. *I see the chart off to the right of my screen, projecting into the future.". *As has been pointed out, if one really could know absolutely everything in advance, see the chart off to the right of the screen, why would one choose to take the course of action Socrates has? *There would be far better ways to profit from the situation.

Soc has claimed perfect foresight of the future. If one is going to set oneself up on*a pedestal and claim to be infallible, one must at least suspect there will be some negativity if this proves to be false.

well, as i said before. i will give the benefit of the doubt. he did say 80%ish of options would expire worthless, so i guess we have to wait. not that the margin requirement is not an issue.

He set out to prove writers have the edge by doing 20 profitable trades in a row. *He only brought up the 80% part later. *That is immaterial anyway as the 80% idea has never really been in debate.

My thoughts on the falacy of believing doing 20 profitable trades in a row proves writers have the edge are already previously stated.

Cheers,
PKFFW

 

[Splitlink]

While I said a few posts back it was in my personal experience a mistake to over estimate people, I feel that Socco is an exception.

His bedside manner may not be to everybody's taste but with respect to this thread I feel he will have the last word and the last laugh.

Revelling in his humiliation and downfall before the full outcome and facts are presented may be as they say in common parlance, 'a bit previous.'

IMO the philosophy and character of our absent friend is such that I assure you he will have been sleeping very soundly these last few nights.

I'm sorry to disagree. Anyone, who has naked put options open this weekend should be very worried. That is not to say that he will not turn out to be correct, but he won't have proved anything to any of his critics because there is no way of knowing how Monday morning will transpire. In any case, the fact that he may be able to afford the margin, or not, does not make what he is doing a prudent way to trade options. Certainly, I for one, am glad not to be in his shoes. Also, if he can forecast so well, he should be thinking of writing puts any time now, instead of having written them last week.

Split

 

[dc2000]

if i may say some of the attitude has been deplorable
quite a while back i posted a few trades that i was in, and got a barrage of negativity 'how can you short in a rising market' or 'you should not do that'
'thats irresponsible' type of comments, i thought to myself good grief!!
anyway on those trades which at the time i was short gold, eur/usd and bonds,
all three were winners against 'public opinion'
the irony is that those that criticised my style of trading had nothing to say,
and certainly nothing to add. but im sure if i had fallen flat on my face the comments would have conveniently trickled in.
let me make this clear as some of you find it amusing when soccy says everything is known in advance
fellas you are taking it literally and though you mock, the joke is on you
i posted a chart of the S&P cash that would hit 1455/1460 over 4 month ago
i knew the high was in with high probability, one can say it was known in advance what i have difficulty in substantiating is magnitude of moves,
i did not anticipate this move down so quick, so naturally one has to adjust due to cycles and timing,
the point is the man is trading whether he is still holding or not or has hedged is immaterial, these trades do not define him as a trader, it may from your point of view but its his view that counts.
i can hear some of you say well he should have known in advanced that the high was in, well maybe but also i suspect he may have been looking at a topping action which would have taken some time for it to go down,and strategically the puts would have expired worthless.
my point is to those that genuinely know what trading is about, those that have sweat tears to be the traders they are may appreciate what im saying and those that think they do its just a good laugh
i wish everyone success in their endeavours

Are we forgetting here that Soc has also been guilty of the same, It wasn't five minutes ago he was pointing out to me how I was somehow intellectually inferior because I held a losing position for more than a day, but now the shoe is on the other foot we are supposed to say nothing for weeks members, many with a greater understanding of options than Soc, have been pointing out that with naked writing of options a profit over a long period of time can quickly turn into a huge loss if nothing else this thread has proven this to be the case.
Inherently the writer may have the edge over the buyer in terms of expiry but the buyer has the edge over the writer in terms of capital exposed.
At this rate Soc would have been better putting available margin in a building society and taking the interest.

 

[ian]

I think there are two issues here.

Firstly, the stated aim of this thread was to somehow "prove" that option sellers have some sort of intrinsic edge over option buyers. Regardless of the final outcome, that aim has failed miserably.

Secondly, given the outstanding rudeness, arrogance and options ignorance of the individual concerned, it is perhaps understandable that some are delighted that he is now a laughing stock. On this issue he may, possibly, have the last laugh. But the first issue is done, dusted, finished.

Good post.

There is also the Third issue....

 

[ian]

You will not see real traders posting when there is big money to be made :idea:

Might be back next week

I would argue that real teaders are sitting on there hands watching and waiting or benefiting from watching their short position accumulate. On the other hand losing traders may well be occupied with staring at the screen in horror - 'hoping'.

 

[Crap Buddist]

It only "mentally locks you in" if you fear being seen to be wrong. I humbly submit that this mental 'limitation' is one of the biggest barriers of all to trading success, whether on options or elsewhere.

It is no shame to be wrong occasionally. The shame is in fearing to be seen to be wrong.

As for Socs, he has publicly said that he is holding his positions open. I once remember reading about a trading master (in one of the Market Wizards stories). He was asked the following question by Schwager [I'm paraphrasing]: "Are you saying that as long as you think the fundamentals, as you perceive them, are unchanged, you will hang tough no matter how much the position goes against you?"

The Wizard answered: "Right. Of course, if it is triple horrible, I might trade around the position to take the pressure down a little bit. I would say, OK, this looks awful; I see nothing but buyers. Why don't I join the buyers and see if I can make some money.....I try to separate [my belief in market direction] from the short term fervor and intensity I may see in the market." He ended by saying "In my judgement, all great traders are seekers of truth."

So, there you have it. It just isn't right to pass judgement on Socs whilst his positions are still open.

Notwithstanding this, I enjoyed your commentary on the Maxwell episode.

Good trading,

starspacer

Please remember, honesty and morality above expediency. It's the easiest thing to do to knock someone when they're down, but this subtly, but surely eats away the moral character of the person doing this. The first nibble leads to more. The more becomes a feast. The feast becomes gluttony. The moral glutton becomes degraded in the eyes of The Wise.

Good luck Socky, you will pull through this and enjoy the last laugh.

Good post..... I think it is a good exercise for some to actually post their trades live and work through the mental internals knowing a public audience might be judging. What is there to worry about? The ha ha, you went long and its already 30 against , markets change and thats where a good trader needs to be able to act on, that change, the markets changed, so must the trader, shed his attachment to being long, if the market now signals "Look to get short" .

People will manage the original long differently maybe, tight stop for some, let it go against then look to sell strength ,which may even result in a profit from long..

Its interesting to see how different people manage the/any required rotation.

With the Ftse direction, I dont follow it, but it might just be the signal to look trade it now from the short side or a fake out to fuel the next leg up....

The nasty one, is the move that just keep going, I think a trader , as suggested in new market wizards, needs a cut point for those? And probably would also indicate a misreading of the market from the trader in the first place to be in that position ,unless its shock news related or something, but some say all this known or maybe when it first hits ,you will get an out or one will be created.. ?

perhaps a ftse expert, can say whether a markup to the top is in, and its all south from here on, or whether the markup, is on its way, if a top is forming at these levels?

 

[Splitlink]

Good post..... I think it is a good exercise for some to actually post their trades live and work through the mental internals knowing a public audience might be judging. What is there to worry about? The ha ha, you went long and its already 30 against , markets change and thats where a good trader needs to be able to act on, that change, the markets changed, so must the trader, shed his attachment to being long, if the market now signals "Look to get short" .

People will manage the original long differently maybe, tight stop for some, let it go against then look to sell strength ,which may even result in a profit from long..

Its interesting to see how different people manage the/any required rotation.

With the Ftse direction, I dont follow it, but it might just be the signal to look trade it now from the short side or a fake out to fuel the next leg up....

The nasty one, is the move that just keep going, I think a trader , as suggested in new market wizards, needs a cut point for those? And probably would also indicate a misreading of the market from the trader in the first place to be in that position ,unless its shock news related or something, but some say all this known or maybe when it first hits ,you will get an out or one will be created.. ?

perhaps a ftse expert, can say whether a markup to the top is in, and its all south from here on, or whether the markup, is on its way, if a top is forming at these levels?

You might help to get Barjon's thread off the ground.. He's started one on FTSE but it has gone unanswered, so far. I was going to support him but discovered that I had nothing useful to say

Split

 

[dc2000]

perhaps a ftse expert, can say whether a markup to the top is in, and its all south from here on, or whether the markup, is on its way, if a top is forming at these levels?

will ans on Barjons thread

 

[SOCRATES]

It only "mentally locks you in" if you fear being seen to be wrong. I humbly submit that this mental 'limitation' is one of the biggest barriers of all to trading success, whether on options or elsewhere.

It is no shame to be wrong occasionally. The shame is in fearing to be seen to be wrong.

As for Socs, he has publicly said that he is holding his positions open. I once remember reading about a trading master (in one of the Market Wizards stories). He was asked the following question by Schwager [I'm paraphrasing]: "Are you saying that as long as you think the fundamentals, as you perceive them, are unchanged, you will hang tough no matter how much the position goes against you?"

The Wizard answered: "Right. Of course, if it is triple horrible, I might trade around the position to take the pressure down a little bit. I would say, OK, this looks awful; I see nothing but buyers. Why don't I join the buyers and see if I can make some money.....I try to separate [my belief in market direction] from the short term fervor and intensity I may see in the market." He ended by saying "In my judgement, all great traders are seekers of truth."

So, there you have it. It just isn't right to pass judgement on Socs whilst his positions are still open.

Notwithstanding this, I enjoyed your commentary on the Maxwell episode.

Good trading,

starspacer

Please remember, honesty and morality above expediency. It's the easiest thing to do to knock someone when they're down, but this subtly, but surely eats away the moral character of the person doing this. The first nibble leads to more. The more becomes a feast. The feast becomes gluttony. The moral glutton becomes degraded in the eyes of The Wise.

Good luck Socky, you will pull through this and enjoy the last laugh.

How perceptive of you Starspacer. What this lot here do not understand is that I am able to hold my positions for as long as is necessary, which is in direct contradiction to their individual and collective viewpoint. This is another reason why naked put writing is exclusitvely professional whereas put buying or call buying may or may not be.

Additionally they are unaware that this provides an unrepeatable opportunity to experience closely mob behaviour at its worst and for this behaviour to be closely monitored and noted, and recorded in detail for future reference, and for the additonal benefit of being able to point out very clearly, who's who in the zoo, so to speak.

Thank you for your good wishes.

 

[SOCRATES]

While I said a few posts back it was in my personal experience a mistake to over estimate people, I feel that Socco is an exception.

His bedside manner may not be to everybody's taste but with respect to this thread I feel he will have the last word and the last laugh.

Revelling in his humiliation and downfall before the full outcome and facts are presented may be as they say in common parlance, 'a bit previous.'

IMO the philosophy and character of our absent friend is such that I assure you he will have been sleeping very soundly these last few nights.

How perceptive of you as well, rols.

You must always disregard the majority popular opinion, because it is nearly always wrong and so far, totally wrong.

Thank you for your good wishes and stay tuned.

 

[dc2000]

What this lot here do not understand is that I am able to hold my positions for as long as is necessary,

So Soc a serious question then what is the maximum amout of margin you have available to hold these positions £500k £1mill £1.5??

 

[dc2000]

I am not in any hole. But you would be in a very serious hole if you onle tried to do what I easily can, that is the difference...

So Soc a serious question then what is the maximum amout of margin you have available to hold these positions £500k £1mill £1.5??

 

[SOCRATES]

So Soc a serious question then what is the maximum amout of margin you have available to hold these positions £500k £1mill £1.5??

Your question is not a serious question, it is an impertinent question and the answer is for you to mind your own business, simple. This is not a game of tiddlywinks anyone can play because they have a computer, an account, some software, and some books, or for spreadbetters playing a £2 a point for that matter.

 

[dc2000]

it may be impertinent but it is highly relevant

This is not a game of tiddlywinks anyone can play because they have a computer, an account, some software, and some books

So what makes you think you can do it

 

[stoic]

Good, excellent, noted, thank you.

Thank goodness I took the precautions I took, and thank goodness I am safe and out of your reach...:cheesy: ...it only goes to show none of you can be trusted....with anything...

It was suppose to be my last but I have to add, as regards this thread:

1) you have lost all credibility

2) you have lost all integrity

3) nobody really wants to know now

the rest have stayed away because they know to argue with someone who thinks he's right ALL of the time is useless and an exercise in utter futility

to make a medical analogy what you have done is provide a drug that cures an uncurable disease but it has the terrible side effect of killing the patient

to make matters worse you do not tell us your sample data and your lab records and what other experiments you did to lead up to it

for us to conjecture about the above is futile, and a total waste of time

 

[dc2000]

and for what its worth £2pp or 700 contracts do it consistantly and with total transparency and I will call you a trader

 

[Profitaker]

Not wishing to rub your nose in it Socrates, but would you like to comment on the above factual analysis ?

 

[charliechan]

socrates,

there is one thing (of a few) we have both agreed on in the past. that is to keep stops tight. holding a loser under these circumstances just seems to contradict this.

we all know that you are currently facing the fact that you must stump up, or at least utilise a chunk of money to keep these positions open. that is your prerogative.

we both also know however that the return on capital that you are putting up in margin if/when these positions expire in your favour isn't that great. (ok, ok, return on margin and speculation dont go hand in hand as much as rom and investing)


why not take the loss on the chin, close out the positions, and put your capital to better work elsewhere - making up for the realised loss? you seem to have the skills to do this.

alternatively, if you want to keep these options, why not roll out other options across different strikes to reduce the gamma/margin requirement drastically, and close them out when satisfied. the profit gained from these additional positions would have lessened the impact of the losses from the puts. it will also reduce the amount of capital at work - to put to better uses as stated previously.

reducing the gamma exposure would also show everyone what a deft options master you really are. you could have perhaps done this by still writing calls at higher strikes (my options knowledge is a bit rusty), thus keeping the thread on course regarding writing options.



ho hum!!

 

[Glenn]

"Some idiot has bought from Bulldozer 1000 Apr 5925 FTSE 100 INDEX Puts, he has just written @ 45...."

Current situation: -
Let's say the buyer paid a typical 5p spread i.e. 50p

Current Prices from Liffe: - Bid 86p, Offer 90p

The Buyers current position - Sell for 86 = 36p profit = 1000 x 36 x10 = £360,000 PROFIT

Bulldozers current position - Buy for 90 = 45p loss = 1000 x 45 x 10 = £450,000 LOSS

Maximum possible profit for Bulldozer is if puts expire worthless i.e. 45p profit = £450,000
Buyer could have exited Friday for a guaranteed profit of £360,000 and have the extra capital to re-invest or use for margin.
Bulldozer has to wait and hope for another month and a half (20th April), and take the risk of further losses, with his capital tied up in margin for an unknown part of that time

Glenn

 

[Glenn]

What exactly is this thread about anyway ?

This is how it starts: -
"I am interested to have your votes as to who has the edge, the writers or the buyers ?"
"Please can I have your votes ASAP as to whether the writer has the edge or the buyer"

Then a change of emphasis: -
"This is a thread to show the skilled writer has the edge over the buyer, always."
"t..he writer, the skilled writer that is, always has the edge."

Then a change back: -
"All those in favour of the writers having the edge please post W."
."...which is that writers have the edge over the buyers."

Any guesses where the goalposts might end up ?

Glenn