Best Thread The Options edge (Writing Vs Buying)

[SOCRATES]

Hopefully this will be new evidence based on rational argument, rather than the same old links to the cash cow strategy here at T2W and John Suma's half baked article at investopedia, I fear however that it probably wont be. Lets hope Im proved incorrect

regards
zup

Understand that this is not posted as an affront to you personally since last year you helped me with an enquiry (non market related) and I am very grateful for your assistance in that regard. I never forget people who help me but equally I do not forget people who do the opposite, EVER....and what is more, I do not forgive as I have been taught, against my better jugdement, not to do it.

One of my guys has just sent me a rubber stamp in the post which arrived on Monday:

The Truth is Too Precious
to give to any fool who
just asks for it.

It is a lovely little gadget....self inking and everything.....He sent it to me as an unsolicited reminder not to be generous to unsuitable people.

This is a public board and not a boardroom.

Because it is a public board then what can be prudently posted has to be carefully weighed so as not to contradict the stamp.

Therefore the readers have to content themselves with what is given and no more.

Reading this thread does not confer upon the reader the right to ask for more and it does not impose the obligation on the poster to explain more than is prudent in a public website to strangers.

Already many gems have been posted here. It seems as if they are regarded as no more than pebbles. They are regarded as such because curiously that quality of torpor, of dumbed down thinking as self imposition is exactly what the public deserves and no better. Therefore information can be released but up to a certain point and no further

In this regard there are three points I will make.

The first is that the article written by this lady Carly in the Knowledge Lab is absolutely spot on...but like a lot of really accurate and valuable information it is disregarded by the majority.

The second point is that the study by John Suma is not half baked, it is the brutal and naked truth, but there again, it is diisregarded and ignored by the majority.

The third point is this shows the majority are incapable of recognising evidential fact.

If the majority are incapable of recognising evidential fact then to provide more is a waste of effort in the first instance and in the second a not worthwhile excercise.

Then again what is craved for here is to be taught. This thread is not the Options Trading School, even if one were to exist There is also a craving to be mentored. NO mentoring or tuition will take place. This thread is for the purpose of discussion of the topic in hand, the question of whether the buyer or the writer has the edge in options.

By now it should be patently obvious to any thinking person that the edge is with the writer and not with the buyer, so the object of the thread is satisfied.

No new information will be released, as it is not necessary to do so, or even advisable or even prudent.

Discussion can continue, as enough evidence of fact has been provided to cause readers to arrive at the inexorable conclusion as detailed above.

I now leave you to discuss all of this to your hearts' content, among yourselves.

You cannot say I do not soc it to you....and now back to the games...

No1 http://www.trade2win.com/knowledge/...the-cash-cow/?r

No2 http://www.investopedia.com/article...r/03/100103.asp

No3 http://www.investment-tools.com/options_reports_1.htm

 

[SOCRATES]

Incidentally...while we are at it...you can all expect an imminent decamp of major contributors to this site as a consequence of your collective and individual conduct...that is the end of tomorrow's news today.

 

[CYOF]

Anyone else find it weird that there's an identically titled thread running on Bulls*tter's forum
at the moment.

Here's the last post . . .

Re: The Options Edge [writing vs buying]
« Reply #101 on Jan 16, 2007, 9:38am »

--------------------------------------------------------------------------------
OPTIONS EDGE: WRITER vs BUYER

8. QUESTIONS for you guys that trade Options:

1. The short PUT/CALL has an advantage "EDGE" over the long PUT/CALL TRUE or FALSE

2. The WRITER has the advantage and "EDGE" over the BUYER. TRUE or FALSE?

3. The BUYER has the advantage and "EDGE" over the WRITER? TRUE or FALSE?

4. Neither the WRITER or BUYER has the advantage or the "EDGE" over the other? TRUE or FALSE?

5. Who has more % gain on trades entered over the long term.? is it the WRITER or BUYER. In otherwords who has more chance of achieving more WINNING trades on the spin?

6. MORE than 50% of contracts expire worthless each month?TRUE or FALSE?

7. Options are a wasting asset? TRUE or FALSE?

8. All the above questions are suited to the title of thread and are on topic. TRUE or FALSE ?

Bull
« Last Edit: Jan 16, 2007, 9:48am by MalteseBull1 »


But hey . . . you decide.

My my, you really are a silly person.

Yesterday you were gone, never to come back, and today, here you are back, with silly remarks.

In case you have turned into a SPIDER, I will re-write, just in case you have difficulty in reading, for it is ineed apparent, that you have GREAT DIFFICULTY in understanding.

I have clearly stated that how is I am able to find "FACTS".

It is clear to any person, with the smallest amount of logical thinking, that if I am to post FACTS, then I am obvious going to use information from a FACTUAL source.

Have you seen me post any thing trading related that is not FACTUAL, to date.

And then, along comes the same people again - I can not use the appropriate word just now as I promised the moderator - AND I KEEP MY WORD - and come out with the most ridiculous of statements, that anyone can see are just pure rubbish.

My caller ID is summoning me, please wait and I will continue shortly.

 

[CYOF]

I myself commented on the similarities of CYOF and Bulldozers posts back in december.

CYOF, I’ll give you a considered response later.

http://www.trade2win.com/boards/sho...3&postcount=918

Kindly added for you by CYOF

However, the effects of your recent mentoring by bulldozer are already quite apparent. A marked degradation in your grammar and spelling, typing in bold capitals and littering your posts with smilies

How quickly the new student learns his craft.

Perhaps the 3.4S reference implies they both share a level of intellegence 6 standard deviations above or below average (I'll let the general readership decide that one for themselves)

Zu,

I take that as a compliment. I am very glad, indeed, that I made the transition to move a MASSIVE step forward and join the ELITE CLUB. The trades are showing HUGE profits in the open lounge and MEGA BUCKS profit in the ELITE LOUNGE -known as the Platinum Lounge.

BTW, I'm still learning from the ELITE members. I am NOW CONVINCED that your English, grammar and spellings have NOTHING to do with been successful at trading the MARKETS FOR HUGE PROFITS

I AM FAST BECOMING THE No 2 BULLDOZER OF THE OPTION MARKETS

At least the textbooks got one thing right, and that is that the opportunities are well and truly there for all to take, but as I keep saying, you must speak with those that know how to do it, not with those that think they know how to do it - therein lies THE TRUTH.

I have finished my call with SE3.4S No.1, and I will post as he has asked me to do.

BULLDOZER may not like this, but so be it. For it will not be long before I surpass him, just in case he decides to peep in here

But, I can tell you now, that you and your type, are making this very hard for me, and I may have to "shut up" again, due to the inability of a few to understand. It is, as Montaigne rightly says, a great calamity, how so few, can do much damage, to so many. And in case you do not fully understand what he is saying - I will tell you - he is saying, that ignorant people prevent others from learning, and this was in 1580, and we are now in 2007

 

[CYOF]

Before I continue to enlighten the readers about what Option trading is really all about, I have been TOLD by SE3.4S No.1 to bring up a true story which I mentioned previously, and to post only in this manner for the time been, as they want to make sure that I do not give away too much. Unfortunately, this true story came to an abrupt end, due to the surfacing of what I call, interferers.

Interferers are those that prevent others from learning – in other words, they interfere in the learning process.

Let us continue with the true story:

Quasimodo, who is still working as the BELL RINGER in the Notre Dame Cathedral, and still carrying that BIG HUMP around all day, which we now know is really a POT OF GOLD, and which we also know never gets smaller, and again, we also now know WHY it never gets smaller.

Now, this enormous BELL that Quasi rings, each and every day, also rings louder at certain times, some of which we have stated for the US Markets. But, Quasi also rings the BELL for the UK markets, and all World Markets, for he is indeed an all obliging chap.

This is very important, as the ringing of the BELL at certain times, has a distinct purpose, and when this distinct purpose is fully understood, then, and only then, can one discover how to sneak up on Quasi and touch that BIG HUMP of GOLD on his back. Again, thanks to my little friend LouDean, who is now off on Holidays in Siberia, we also know that all we have to do to get some of this GOLD, is touch that BIG HUMP on Quasi’s back – remember, we do not have to knock him down to steal it, or anything like that, just TOUCH IT.

We have aptly described how to sneak up on Quasi for the US Stock Market, in order to touch the BIG HUMP several times, if required, but we have also warned that by touching the BIG HUMP twice in the one day, can, and will more than likely, result in any previously released GOLD been sucked back into the POT. If you need a refresher on any of the above true story, then go back and look at my How To Think Correctly thread that was relegated to the section that “has absolutely nothing to do with trading” – what can I say, only beware the interferer.

So, as we are talking about Options here, lets see how we are going to be able to touch that Big Hump on Quasi’s back, and for the purpose of learning, we will pick the UK FTSE INDEX, which I think is the best for this site, as most of the members are from the UK, and will be able to relate to it better.

Now, does anyone wan’t to start talking about how real Option Traders operate, or do you all still wan’t to continue to speak about things that the majority will have no interest in what so ever. I can, if I so desire, sum it all up for you in a very small paragraph, but to do that is an injustice to the learning process, of which I am great believer in, thanks to Montaigne and Socrtaes, to name a few. Another very important person, whom I have forget to mention so far, and who definitely deserves a mention, is a chap by the name of William Ellis 1800 – 1881, another rare genius, in the true sense of the word.

I will contiunue to post some more "real information" of value, and remember, read the information for what it is worth, and ask yourself, is this FACTUAL or not.

I can not be any clearer than this - but, beware the interferers, they will destroy any hopes you ever have of learning anything of real value, ALWAYS.

 

[Spam Man]

Some of you reading this thread may be wondering "What is this Elite 4.3S club? They sound like a bunch of knobs". Well, I have the answers. They are an Al Qaeda sect who have been responsible for several recent terrorist atrocities, including daubing their slogan ("YE ARE ALL IGNORANT FOOLS!") round the back of a post office. Blessed with stunning abilities to predict the market, unfortunately they have all forgotten their brokerage details so the last time any of them placed an actual trade was some time in the late 1970's. If you are demented enough to stump up for one of their seminars, they will teach you the following amazing secrets :

1) How to mistreat household pets.
2) How to barge in front of pensioners at the supermarket.
3) Most importantly, the incredible truth of how you can make a complete ass of yourself on an internet forum, throw a big wobbler and leave, then come back a bit later to repeat the whole glorious process.

 

[CYOF]

My my Zu, you really have riled a few people, for they are now starting to agree with me

SE3.4S No.1 has rang me again - thanks Zu

He has told me that he has got the green light form LADY CARLY to put up the following CASH COW link, which YOU have referred to as rubbish, and which clearly shows that you are an INTERFERER.

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

It is only right, he says, that this common factual knowledge is made available to all.

And what is more, (Zu, please do keep it up, for this is unprecedented) he is also going to explain to me in detail some of the things that I have been asking, so that, I may show others, in my own way, what INTERFERERS really do best.

Thanks ZU, and I really mean it

 

[zupcon]

The study by John Suma is not half baked, it is the brutal and naked truth, but there again, it is diisregarded and ignored by the majority.

By now it should be patently obvious to any thinking person that the edge is with the writer and not with the buyer, so the object of the thread is satisfied.

Hi Socrates,

No offense taken at all, and I hope things are going well.

Perhaps describing John Summa's article as half baked was a little unfair. The point I was simply trying to make, is that Bulldozer (currently using CYOF as a proxy) continues to labour this point but provides nothing new in the way of information to back up his claims. Therefore the debate cannot proceed and we inevitably go around in circles.

I dont disagree at all with the figures quoted by John Summa, but the big issue for me, viewing this from the sidelines is the caveat in John Summa's article which states "Option Sellers had better odds than option buyers for positions held until expiration"

Im the first to admit that my knowledge of options is extremely limited, but I assume that the analysis was undertaken on American Style options, and thats why I personally feel that the study seam's somewhat flawed by limiting analysis only to options held until expiry, yet this aspect of the study always seems to be completely overlooked and fails to be addressed.

I'll use an extreme argument to try to demonstrate my point. What if 90% of all options where actually exercised at a profit, prior to expiration, leaving only 10% to run to expiry. Then of those 10%, he finds 80% are worthless ?.

The statistic 80% expire worthless certainly holds true, but it dosnt actually paint the complete picture, and basically thats my concern with the John Summa article.

The article only concerns itself with percentage of expiring worthless, it dosnt present any details regarding the value of the 20% that expire in profit. Perhaps someone with a better grip of the subject matter could comment.

Im obviously in complete agreement with most of your other points, some things just arnt a suitable topic for discussion on a public board.

kind regards
zupcon

 

[CYOF]

Some of you reading this thread may be wondering "What is this Elite 4.3S club? They sound like a bunch of knobs". Well, I have the answers. They are an Al Qaeda sect who have been responsible for several recent terrorist atrocities, including daubing their slogan ("YE ARE ALL IGNORANT FOOLS!") round the back of a post office. Blessed with stunning abilities to predict the market, unfortunately they have all forgotten their brokerage details so the last time any of them placed an actual trade was some time in the late 1970's. If you are demented enough to stump up for one of their seminars, they will teach you the following amazing secrets :

1) How to mistreat household pets.
2) How to barge in front of pensioners at the supermarket.
3) Most importantly, the incredible truth of how you can make a complete ass of yourself on an internet forum, throw a big wobbler and leave, then come back a bit later to repeat the whole glorious process.

Here we go -I predicted this on a good thread by Charlton in the Psychology section - for I said that I would be hounded any time I try to post information of value.

Lets just see who the real INTERFERERS are - but I think by now the majority are beginning to see the real TRUTH, and it is to go without saying, for any person with any bit of logical deduction, can easily see who is posting FACTS, and who is not.

Al Qaeda, you should be ashamed of yourself to say something like this, knowing too well the hurt it may cause some people here - you should, if you have any bit of decency left, immediately ask for your nick to be removed from this site, and let it be a good lesson to you, the next time you open your mouth, do try and do a little thinking first, for you may well be surprised at what will happen :idea:

 

[Spam Man]

I said that I would be hounded any time I try to post information of value.

You can cross that bridge when you come to it.

 

[zupcon]

My my Zu, you really have riled a few people, for they are now starting to agree with me

Good, Im glad I brightened up your day at the rat race.

Let me see if I have this correct, Bulldozer gave you PERMISSION to post a link to a public domain article, that he himself has publisised and promoted at every possible opportunity to back up his assertions that the seller has a statistical edge over the buyer.

Why on earth do you insist on posting links to the same material time after time after time. Its common knowledge, its in the knowledge lab on this site for gods sake, its there for all to see, read, analyse and use or ignore. The administrators of the site do everything in their power to promote these articles to the membership. You really would have to be as thick as two short planks not to have realised that.

For your information, there is a mass of information and knowledge out there, I suggest you try looking for it sometime, rather than limiting your horizons to articles youve found in wikipedia

Im still eagerly awaiting the fireworks

 

[CYOF]

You can cross that bridge when you come to it.

So I take you are not going to do the honourable thing - as I suggested to you, and which I am very sure, many will agree with, for comments like that, are nothing short of scandalous.

Do I have to engage you in a dialogue similar to ION, where you will eventually see how false you are, or do you want to do the honourable thing, and do as I suggested.

But, I will not ruin this for others who are trying to learn something.

You, as an INTERFERER, are now known for what you do best - and that is to interfere in the learning process.

It is a pity that more will not come out and say what they really think of you, but, you and your type, who appear to be trying to control the threads on this site, are, in fact, doing nothing only preventing people from learning what they really need to learn.

And what is more - you more than likely think an OPTION is an ONION, and it will go nice with your can of SPAM :cheesy:

 

[Spam Man]

So I take you are not going to do the honourable thing - as I suggested to you

If I ever decide that it is a good idea to heed the advice of babbling lunatics, I'll certainly re-visit your suggestion.

 

[CYOF]

Good, Im glad I brightened up your day at the rat race.

Let me see if I have this correct, Bulldozer gave you PERMISSION to post a link to a public domain article, that he himself has publisised and promoted at every possible opportunity to back up his assertions that the seller has a statistical edge over the buyer.

Why on earth do you insist on posting links to the same material time after time after time. Its common knowledge, its in the knowledge lab on this site for gods sake, its there for all to see, read, analyse and use or ignore. The administrators of the site do everything in their power to promote these articles to the membership. You really would have to be as thick as two short planks not to have realised that.

For your information, there is a mass of information and knowledge out there, I suggest you try looking for it sometime, rather than limiting your horizons to articles youve found in wikipedia

Im still eagerly awaiting the fireworks

Zu, for someone who has clearly stated thier academic achievements (and you know what i think of that type of learning :cheesy: -remember Montaigne) you continue to show everyone your limited abilty to logically deduct - I know what I would like to call you here, but I do keep my word, as stated.

Socrates has told you, many times, in fact, so many times that even I can see how infuriated he is with your antics, and you still persist to keep it up.

Let me do a very simple bit of enlightening for those who may have any litkle doubt as to what I say is FACTUAL - if I have to write thisd word one more time I will expolde.

BULLDOZER is an expert at trading Options - FACT.

BULLDOZER has a site called www.citybulls.com, where, for his own reasons, and, may I add at this stage, many of which are indeed very horourable, the FACTS been there to see for all.

Now, why does one give money to charity - I will tell you why.

Because THEY CAN.

I am probably giving away a little too much here, but it is very relevant for the truth, so I will continue.

In order for one to be able to GIVE generously, one must first have.

In order for one to HAVE, one must first DO.

For one to DO and HAVE, one must KNOW WHAT ONE IS DOING.

In order for ONE TO KNOW WHAT ONE IS DOING, one must SPEAK WITH THOSE THAT KNOW.

Can I be any more clearer than this - or are you going to reply with more complete and utter rubbish.

Do we not all agree that the 95% figure that loose, is, in fact, very accurate.

Do we also not all agree that the 5% that win, is in fact, also very accurate.

So, if we all agree that these figures are indeed very accurate, does it not IMPLY that a very small few are in THE KNOW, and a very large majority are in the DARK.

Now, a child will tell you who you should be talking too, but as Socrates keeps telling you all, to be in THE KNOW is not for all, it is for very few indeed, and this is why he continues to say that, in his opinion, which I happen to agree with 100%, traders are born, not made.

Do you now GET IT - for I may well be banned for giving so much away -but I do not think so, for I always speak THE TRUTH, and that is why those in THE KNOW are now starting to speak with me. Do you really think this is all a game, for if you do, then you are indeed a "the word I said I would not say".

 

[Profitaker]

I'll use an extreme argument to try to demonstrate my point. What if 90% of all options where actually exercised at a profit, prior to expiration, leaving only 10% to run to expiry. Then of those 10%, he finds 80% are worthless ?.

Spot on. The percentage of options expiring worthless doesn't mean anything. It's just a small part of the big picture. This has been said and explained many times during the life of this thread but I guess they will ultimately believe what they want to believe.

Spam Man - Calling them lunatics is doing a dis-service to lunatics LOL.

 

[CYOF]

If I ever decide that it is a good idea to heed the advice of babbling lunatics, I'll certainly re-visit your suggestion.

Enough said, one down, many more to go.

Let the remaining INTERFERERS now come, for all now know what you all do best - and that is, of course, INTERFERE.

 

[CYOF]

Spot on. The percentage of options expiring worthless doesn't mean anything. It's just a small part of the big picture. This has been said and explained many times during the life of this thread but I guess they will ultimately believe what they want to believe.

Spam Man - Calling them lunatics is doing a dis-service to lunatics LOL.

Now, you Profitaker, may well be, what is called, THE MASTER INTERFERER.

For, unlike THE MASTER TRADER -that BULLDOZER is, you do the complete opposite.

A MASTER INTERFERER works as follows:

1. He starts a thread
2. He starts spitting out rubbish
3. He associates with fellow interferers, for like good traders, bad interferers also stick together.
4. When he is questioned, by the presentation of FACTUAL information, he goes and hides.
5. He lets his fellow interferers carry the can (btw. this does not happen with GOOD TRADERS - NEVER) and make themselves look silly.
6. He then returns, when he thinks all is quiet, to start INTERFERING again.

But, sometimes he gets caught, and I can assure you ALL IS BUT QUIET here, I am only starting.

For all is not quiet. I have been told by SE3.4S No.1, that thet are now of the opinion, thanks to Zu, that INTERFERERS must be shown up, so that at the very least, the general public have a chance to get some of that 95% back.

They do not want it ALL, or never did, and this is why so much goes to help those in need.

But, they also recognise that a good portion of this 95% is coming to them from unsuspecting people, some of whom can not afford it, and this, they do not like.

So, hopefully, some may be enlightened, and I am here to help any who are interested, for it should be now obvious, that when I was speaking of helping others to help oneself, I actually meant it. Give and it will be given - take and it will be taken.

The immutable Laws, never forget them, and you will never be wanting for anything.

I will respond, in due course, to show just how silly the mentality of the INTERFERERS really is.

 

[A Dashing Blade]

Second time pal . . .

I've demonstrated beyond reasonable doubt (anyone disagree?) that your writing style is radically different from earlier postd by CYOF.

Moreover, the post from CYOF (as was) alluded to a trading history totally different to the one you are implying.

Ergo : You are not the same person.

For the second time (the current) CYOF . . .

"So to the person pretending to be CYOF, are you the banned member known as Bulldozer?"

"Yes" or "No" , it's not a difficult question to answer is it?

CYOF . . . .
Third time I'm asking
Wanna answer?

 

[barjon]

ok one and all, time to call a halt.

I've been hit with a deluge of reported posts - mainly objecting to those of CYOF - and I must say that the thread has deteriorated markedly into comments about the posters rather than the subject in hand.

Please keep to the topic - I'll be deleting anything else from hereon. Thanks

jon

 

[Profitaker]

CYOF

What is the chances of a 0.10 delta option expiring ITM ? What chance of the strike being touched prior to expiry ? Have you ever heard of “fat tails” ? Which market are you talking about when you assert that sellers have the edge (equity / index / commodity or what) ? Have you studied the particular distribution ? Or do you even know what a distribution is ?

For your information, selling DOTM Footsie puts would have been quite profitable over the past year. Well almost….have a look at the April / May 2006 – how do you think naked put sellers would have faired then ?

I can see I’m dealing with the educationally challenged here so let me give you a little example of how it can all go badly wrong….

19th April 2006 FTSE100 closed at 6089
20 day Historic Vol running at 10.3%
Lets be generous with the skew and say you could have got 13.5% IV for a 0.10 delta put
Strike 5825 written for a premium of 15
The options expired 1 month later on 19th May at 5684
Making a loss of (5825 – 5684 + 15) 156
That loss will have wiped out roughly (156 / 15) 10 months worth of premium received

The above is a very recent but relatively minor example. If you want some real eye watering stuff have a look around 9/11, or Oct 1987 and then tell me the writers have it