Plain Vanilla Options Trades.

[RIDICK]

Mr Profitaker

I thought you were going to keep us updated with socrates postions.

What do you think of his prediction that more than 85% will expire worthless in his favour.


RIDICK

 

[Profitaker]

Ridick

I didn't think anybody was interested anymore. But just for you:-

At the close last night.

 

[watercooled]

Watching this thread

Hi Profitaker,

You'd probably be surprised how many people are watching this thread. There are many lessons being learned here. The next week could see the the make or break of this strategy. The argument, about real risk, and perceived risk and exposure to loss, may become clearer. Not many people would have the experience of being short this many puts (and naked), so we all may gain something. IMHO.

WC

 

[Splitlink]

Hi Profitaker,

You'd probably be surprised how many people are watching this thread. There are many lessons being learned here. The next week could see the the make or break of this strategy. The argument, about real risk, and perceived risk and exposure to loss, may become clearer. Not many people would have the experience of being short this many puts (and naked), so we all may gain something. IMHO.

WC

An "I told you so" attitude on the expiry of these options will cut no ice with me, I'm afraid.
They can expire worthless, but anyone who has traded them alongside Socrates must, or should, realise the angst that must have been experienced over the last week. It may not be over, yet. Who can tell? If that is the way those people like to trade, so be it, but whatever the outcome, nothing has been proved.

One of the unanswered questions asked by others is "If you could forecast the way the market would move, why did you not write calls, instead of puts?" The answer is that he did not know.

Split

 

[A Dashing Blade]

. . . The next week could see the the make or break of this strategy.

Don't you think it's already broken?

The argument, about real risk, and perceived risk and exposure to loss, may become clearer.

How could it get any clearer than it already is?

Not many people would have the experience of being short this many puts (and naked), . . .

The size is irrelvant, the point always has been that it's a "finite profit vs potentially big money tied up for a long time if it goes wrong" stratagy.

 

[watercooled]

Options debate.

Hi Split and DB,

Thank you for your input in this debate. I agree totally, from your perspective you're are right. Furthermore, the realities of the strategy will unfold with time, IMHO.

Regards,
WC

 

[Profitaker]

WC

This thread was started with the stated aim of proving some sort of inherent edge to selling rather than buying options. That aim, if it ever could be achieved, has failed miserably. At one point the losses had mounted to -£ 53,000 which needed margin capital of £ 173,000 to keep them open. If that couldn't be funded the broker would most probably have closed him out "at market" causing even bigger losses. There was no demonstration of risk management, just a "stick your head in sand" approach.

As you can see, the market has turned and the losses are down to - £ 2,500, although the margin is still £ 103,000 which is massive in relation to the P/L. Personally I'm bullish on the market from these levels, so I wouldn't be suprised if a final profit was made.

But, that is not the point.

 

[dc2000]

Will Soc be lookin for an exit strategy early doors or still holdin hoping for some foldin?

IV an idea the update won't come this weekend either

and still no response most professional traders would have been looking to limit exposure but then most professionals wouldnt have this position in the first place. roll on 5855

 

[dc2000]

Anyone remember the old Culture Club song

Gamma Gamma Gamma Gamma Gamma Chameleon
You come and go
You come and go
Trading would be easy
If your colours were like my dream
Red, gold and green
Red, gold and green

 

[watercooled]

WC

This thread was started with the stated aim of proving some sort of inherent edge to selling rather than buying options. That aim, if it ever could be achieved, has failed miserably. At one point the losses had mounted to -£ 53,000 which needed margin capital of £ 173,000 to keep them open. If that couldn't be funded the broker would most probably have closed him out "at market" causing even bigger losses. There was no demonstration of risk management, just a "stick your head in sand" approach.

As you can see, the market has turned and the losses are down to - £ 2,500, although the margin is still £ 103,000 which is massive in relation to the P/L. Personally I'm bullish on the market from these levels, so I wouldn't be suprised if a final profit was made.

But, that is not the point.

Hi Profitaker,

After many years of trading options and other instruments, I understand your points fully and a demonstration of exposure to loss management could have been displayed more overtly. Perhaps the mathematical risk of loss was calculated, and accepted or dismissed, who knows. However, I am completely sure the proof of the strategy will unfold with time.

Regards,
WC

 

[Profitaker]

WC

But the proof of the strategy has already unfolded. Regardless of expiry profit/loss, no edge has been proven, on the contrary. What has been demonstrated, quite clearly, is just how short Puts can go badly wrong, and how margin can quickly spiral out of control.

 

[watercooled]

WC

But the proof of the strategy has already unfolded. Regardless of expiry profit/loss, no edge has been proven, on the contrary. What has been demonstrated, quite clearly, is just how short Puts can go badly wrong, and how margin can quickly spiral out of control.

Agreed, from your perspective you are right and I also agree with all of your points. Furthermore, mathematically the data series is not complete yet. Until then the proof will be difficult to assert.
Maybe Soc knows something you don't, who knows..... Only time will tell.

All the very best,
WC

 

[Splitlink]

WC

But the proof of the strategy has already unfolded. Regardless of expiry profit/loss, no edge has been proven, on the contrary. What has been demonstrated, quite clearly, is just how short Puts can go badly wrong, and how margin can quickly spiral out of control.

I think that the two main put writers have come to the same conclusion. Their silence speaks louder than words but they haven't the guts to concede the point. That doesn't matter much to me, we can all be wrong at some stage. It was the rudeness that decided me to put him on "ignore". I don't think that I am going to miss much.

Split

 

[Glenn]

Agreed, from your perspective you are right and I also agree with all of your points. Furthermore, mathematically the data series is not complete yet. Until then the proof will be difficult to assert.
Maybe Soc knows something you don't, who knows..... Only time will tell.

All the very best,
WC

WC
1. When will the data series be complete ? Do you mean Expiry of the remaining positions ?
2. What do you believe can be 'proven' from the data series ?
3. Have you compared what happened to the Puts which were Bought ?

All soc knows is that he has been fooled into believing that this strategy is a good one. Mathematically it is a bad one. It's the same with a Slot Machine. They are rigged to keep 20% of your money. No matter how many wins you might get in a row, over time you will Lose !

Glenn

 

[Profitaker]

It was the rudeness that decided me to put him on "ignore". I don't think that I am going to miss much.

Oh I don't know, what about having a laugh ? It's as good as going to a comedy show, and it's free. I took him off of ignore for that very reason.

He'll be back, and when he does he won't dissapoint

 

[Splitlink]

Oh I don't know, what about having a laugh ? It's as good as going to a comedy show, and it's free. I took him off of ignore for that very reason.

He'll be back, and when he does he won't dissapoint

He's repetitive. I've seen his show so many times

Split

 

[watercooled]

WC
1. When will the data series be complete ? Do you mean Expiry of the remaining positions ?
2. What do you believe can be 'proven' from the data series ?
3. Have you compared what happened to the Puts which were Bought ?

All soc knows is that he has been fooled into believing that this strategy is a good one. Mathematically it is a bad one. It's the same with a Slot Machine. They are rigged to keep 20% of your money. No matter how many wins you might get in a row, over time you will Lose !

Glenn

Hi Glenn,

In the early 90s, for 18 months I was part of a project analysing data in the markets. We disproved many myths and amazed ourselves how different data series (bullish, bearish or flat) made to the results. Basically, the data series and/or the analysis, can skew the result. Obviously, not rocket science is it. I know, I've done rocket science!

Reference you questions, No the data series completion is not at expiry, to prove the hypothesis either way a very long data series is required. May I suggest a lot more that one month or even 12 months. My suggestion would be 1000 months+ Otherwise a bullish year would give an edge to the writers. In spite of the risk, this data series would make a profit. This would also be purely a mechanical method of trading, without any form of cognition.

IMHO, from the given data series a result will be achieved, the longer the time series the more finite the result. However, a trend may develop early, but would only be a skew. Personally, I have many strategies, and trade various instruments, I like to sell options when the volatility in the price is very high and to buy either put or calls directionally when the volatility is low. I'm happy with my delusion that there is an edge to this strategy. If I win I enjoy the profits, If I loose, I try again. That is what a game of chance is about, IMHO.

I don't know Soc or what he knows, never met the guy. Personally, I believe he is free to trade however he likes. This is a public forum and others will no doubt want to agree or disagree. There is a rumour the world is an eclectic place after all. Feel free to disagree or agree.

Regards and have good weekend,

WC

 

[Profitaker]

Personally, I have many strategies, and trade various instruments, I like to sell options when the volatility in the price is very high and to buy either put or calls directionally when the volatility is low.

I would humbly suggest that this is not a bad strategy.

We could see some volatility today @ 13:30

Have a good weekend.

 

[Glenn]

Hi Glenn,

In the early 90s, for 18 months I was part of a project analysing data in the markets. We disproved many myths and amazed ourselves how different data series (bullish, bearish or flat) made to the results. Basically, the data series and/or the analysis, can skew the result. Obviously, not rocket science is it. I know, I've done rocket science!

Reference you questions, No the data series completion is not at expiry, to prove the hypothesis either way a very long data series is required. May I suggest a lot more that one month or even 12 months. My suggestion would be 1000 months+ Otherwise a bullish year would give an edge to the writers. In spite of the risk, this data series would make a profit. This would also be purely a mechanical method of trading, without any form of cognition.

IMHO, from the given data series a result will be achieved, the longer the time series the more finite the result. However, a trend may develop early, but would only be a skew. Personally, I have many strategies, and trade various instruments, I like to sell options when the volatility in the price is very high and to buy either put or calls directionally when the volatility is low. I'm happy with my delusion that there is an edge to this strategy. If I win I enjoy the profits, If I loose, I try again. That is what a game of chance is about, IMHO.

I don't know Soc or what he knows, never met the guy. Personally, I believe he is free to trade however he likes. This is a public forum and others will no doubt want to agree or disagree. There is a rumour the world is an eclectic place after all. Feel free to disagree or agree.

Regards and have good weekend,

WC

Hi WC

"the longer the time series the more finite the result" OK well I do have to disagree on that point.
If you flipped a coin 1,000 times and got all Heads would that convince you that the next flip or all future flips would be Heads ?
The length of the time series makes no difference to the fact the the odds are always the same i.e. 50/50 of Head or Tail.

You rightly point out that the success or failure of the strategy depends not on the strategy itself, but on the market conditions it is employed in. But that is always the risk and we have just seen a perfect example of how it go go horribly wrong, and if this is the start of a longer Bear run, it will only get worse.
The only way to guarantee successful application of this strategy is to use it in hindsight.

Do you think that if soc was aware of what was coming he would have opened those positions ? No SIr. He would have waited for the bottom and then written the puts. And prior to that he could have Bought puts to profit from the fall.

Yes agreed soc is free to trade how he likes, but has to accept that people may disagree with his assertions, proof methodology and his manner. Otherwise what is the point of anyone posting anything ?


Best wishes
Glenn

 

[dbphoenix]

Otherwise what is the point of anyone posting anything ?


Best wishes
Glenn

See your NPD post . . .