Best Thread The Options edge (Writing Vs Buying)

[irishpaddypc]

Rather than take even more of this thread playing ping-pong with premium - why don't:-

Profitaker and Irish decide on a options swap.

Profitaker - you decide on an option you'd like to buy (actually, maybe a few...) and Irish, YOU decide which one you are willing to accept the premium for.

We use a standard options quote intermediary for the actual price.

The transaction occurs on the boards which we all witness. No actual money changes hands.

At any time, Profitaker can close his option and we settle the difference.

Whoever comes out ahead is the winner - the other one, is not.

No silliness about charities and all that other malarky.

Then, we can all get on with what the thread's really about once you two lads have settled down a bit.

Good idea? Bad Idea?

PS. I thought this thread had been closed.....

PPS - Profitaker, based on Irish's lack of research even as far as simply reading the whole of this thread before posting a clanger, I think you're in, right or wrong, for a winner.

Bramble,

I'm up for the chalenge. To prove that the Profesor is wrong and I'm right! I'm offering 2 to 1 to the profesor Profitaker!
And to prove also that i wont lose the profits when the steam roller arrives within the 10th trade! as the professor is suggesting!

And whats wrong with all that malarky by making the loser pay to charity??? I happen to enjoy making the payments if i lose!

I make my choice selling [short] trades! he makes his choice buying trades! sounds fair and good to me! and if you like to accept these conditions too? I'm offerring you 3 to 1! £300 to your £100 that i will beat the Professor! and to prove that the writer has the EDGE over the buyer, after all thats what this thread is all about!

I am able to CLOSE EVERY TRADE AT A PROFIT! even with the "steam roller" running at me!

Paddy

 

[jimbo57]

Jimbo 7,

Words dont make you a good profitable options trader my good friend! A good option trader has to have a BULLDOZER to knock out the nasty steam ROLLER of its course than he can pick up all those little pennies that our Professor Profitaker doest want or how to make it safe to pick the pennies up!

Paddy

I was merely pointing out how cheaply you use them...no more/no less.

 

[irishpaddypc]

I was merely pointing out how cheaply you use them...no more/no less.

The offer is open to you too Jimbo 7.

Yes, i did break my word on that promise as i didn't like to see people like you being misinformed/mislead on option knowledge/information!


Paddy

INFORMATION AND KNOWLEDGE IS THE KEY TO SUCCESSFUL OPTIONS TRADING!

 

[trendie]

I like TheBrambles suggestion.
All this referencing to theory / articles / urban-myths doesnt help us beginners.

I would really like to see a practical example of options trades being hypothetically being made, with reasonings, and seeing the outcomes in real-life.
I know CBOE have good data.
( I also monitor optionsxpress as I once almost bought a very expensive options course, (optionetics) a while ago )

Personally, my moneys on IrishPaddy. ( based entirely on logical deduction )
( writers have the edge )

Make this a good, clean fight.

 

[irishpaddypc]

I like TheBrambles suggestion.
All this referencing to theory / articles / urban-myths doesnt help us beginners.

I would really like to see a practical example of options trades being hypothetically being made, with reasonings, and seeing the outcomes in real-life.
I know CBOE have good data.
( I also monitor optionsxpress as I once almost bought a very expensive options course, (optionetics) a while ago )

Personally, my moneys on IrishPaddy. ( based entirely on logical deduction )
( writers have the edge )

Make this a good, clean fight.

Trendie,

Your in the minority my good friend! but, you made the correct decision! Now all we need is a one or two, three, four, five, or 10 oppositions to start the contest and watch this thread become the biggest in T2W. ONE condition is that Mr Professor Profitaker has to be in the contest too! Its his thread and topic and also his view that I'm wrong and he is right.

Offer still on table to Profitaker and any of his supporters who share/believe his views.

Paddy

 

[TheBramble]

Bramble,

I make my choice selling [short] trades! he makes his choice buying trades! sounds fair and good to me!

No, no, no. That isn't what I said. Go check again.

Premium writers don't get their premium unless someone wants to buy, normally mug punters.

Let's assume Proftaker isn't a mug punter.

You don't get to open any trades at all, or close them.

Profitaker will propose (if he chooses to) carefully selected option purchases from you. All you can do is accept or reject the proposed offer, at a price provided by an independent 3rd paty quote provider.

Profitaker decides when to close.

Still on?

 

[jj90]

Well before we start picking options, shall we set the ground rules? Such as can the buyer or seller close at any time, or only at expiration? The choice of underlying, number of winning vs losing trades to determine win/loss or the final P&L to decide? Should be relatively easy to decide, but has to be set in place first.

Let me start if I may:
1)While the swap is the same option obviously, the closure of the trade is entirely up to each side. Trades do not have to be held untill expiration.
2)While win/loss ratio shall be taken into consideration, final P&L will have the say.
3)Underlying shall be selected by the buyer.

Rather basic rules, but enough to get started. Any improvements of the rules are welcome. Now if both sides agree, let us start.

 

[jj90]

Well Bramble's rules are more straightfoward to a competition as it will take out trading styles and clearly show the final result. Mine are more flexible. Choose as you will.

 

[irishpaddypc]

Well before we start picking options, shall we set the ground rules? Such as can the buyer or seller close at any time, or only at expiration? The choice of underlying, number of winning vs losing trades to determine win/loss or the final P&L to decide? Should be relatively easy to decide, but has to be set in place first.

Let me start if I may:
1)While the swap is the same option obviously, the closure of the trade is entirely up to each side. Trades do not have to be held untill expiration.
2)While win/loss ratio shall be taken into consideration, final P&L will have the say.
3)Underlying shall be selected by the buyer.

Rather basic rules, but enough to get started. Any improvements of the rules are welcome. Now if both sides agree, let us start.

JJ90,
Its very obvious your knowledge on Options trading is more advanced than Mr Bramble.

4, Its NOT about who makes the most profit either! Its about proving who is right [seller vs buyer] Who is able to make MORE winning trades and without making a lossing trade! The first one to make a losing trade the contest is over! in other words if the trade is closed at a loss.

I agree to all your rules and happy to go along with them!
jj90 the offer i made is also open to you too at 2 to 1 and if you agree with the Professor Profitaker i am prepared to offer you 3 to 1 if you so wish.

Paddy

 

[Silent.Trader]

I like TheBrambles suggestion.
All this referencing to theory / articles / urban-myths doesnt help us beginners.

I would really like to see a practical example of options trades being hypothetically being made, with reasonings, and seeing the outcomes in real-life.
.

The urban myths of Paddy are indeed completely useless. Reference to theory looks pretty sound to me, but of course, it means you have to do your homework. It of course is much easier to be lazy and rely on some guy with nice promises.

The examples and proposed contest is of course complete crap again unless people are willing to invest a lot of time and energy. Just a couple of trades are completely meaningless. It's a matter of statistics and with 1:10 ratios as paddy claims you'll need at least hunderds if not thousends of trades to gain statistical significance. And even than... It's not the ordinary trades that kill, it's the exceptional occasion that does.

The plain fact that Paddy doesn't come up with anything substantial imho pretty much proves the point. If that intrinsic edge exists at all, you may confidently assume that its insufficient to compensate for the risks associated. I'ld say you'ld far better off to rely on some external edge.

grtnx
Wilco

 

[irishpaddypc]

No, no, no. That isn't what I said. Go check again.

Premium writers don't get their premium unless someone wants to buy, normally mug punters.

Let's assume Proftaker isn't a mug punter.

You don't get to open any trades at all, or close them.

Profitaker will propose (if he chooses to) carefully selected option purchases from you. All you can do is accept or reject the proposed offer, at a price provided by an independent 3rd paty quote provider.

Profitaker decides when to close.

Still on?

Mr Bramble,

The competition has to comform to ALL OPTIONS rules! this is the whole idea of the arguement here.
The buyer NEVER TELLS the seller what underline, strike, number of contracts, when to get in or when to close a trade. Each must make their own decisions on ALL things! within the options rules. Sorry to say, but most of your rules are not correct.

The winner will be declared VOID if any options rules are broken!

Do U want peice of the action while we all wait for Professor Profitaker to decide?
My offer to you is 3 to 1 that the seller will make the most winning trades and that the seller has the EDGE over the buyer! I'm prepared to put the money where my mouth is to prove the point and the true facts concerning EDGE.


Paddy blue boy

CORRECT information and knowledge is the key to successful option trading!

 

[Profitaker]

TheBramble

Your intentions are admirable, but just to remind you;

This thread created for sensible debate and reasoned argument as to whether one side of the fence (buyer / writer) has any inherent "edge" or "advantage".

I don’t really see how your suggestion would further the debate. Are you saying that the outcome would prove an edge one way or the other ? In which market ? Are you saying that I would be forced to buy premium, when I may want to sell it ?

Selling DOTM Puts is a sport mainly undertaken by novices that are oblivious to the risks involved. Unfortunately for Paddyfool it’s the only strategy he knows, which is why he cannot join the writer / buyer debate as he can only relate the debate to selling DOTM Puts.

Perhaps someone might like to start a thread for strategy discussion ? Then we can have a look at a warts n all case study in selling DOTM puts which expired 10 months ago.

Then, we can all get on with what the thread's really about once you two lads have settled down a bit.

I’m always settled. As for Paddyfool, I have no time for him, or the cretin he calls an uncle. He thrives on antagonizing people and works himself up into a frenzy when people bite. His ultimate achievement is to destroy and then close down a thread. He almost succeeded with this one.

I’ve wasted enough time on him in the past, and don’t intend to waste anymore. But be my guest….

 

[irishpaddypc]

TheBramble

Your intentions are admirable, but just to remind you;



I don’t really see how your suggestion would further the debate. Are you saying that the outcome would prove an edge one way or the other ? In which market ? Are you saying that I would be forced to buy premium, when I may want to sell it ?

Selling DOTM Puts is a sport mainly undertaken by novices that are oblivious to the risks involved. Unfortunately for Paddyfool it’s the only strategy he knows, which is why he cannot join the writer / buyer debate as he can only relate the debate to selling DOTM Puts.

Perhaps someone might like to start a thread for strategy discussion ? Then we can have a look at a warts n all case study in selling DOTM puts which expired 10 months ago.



I’m always settled. As for Paddyfool, I have no time for him, or the cretin he calls an uncle. He thrives on antagonizing people and works himself up into a frenzy when people bite. His ultimate achievement is to destroy and then close down a thread. He almost succeeded with this one.

I’ve wasted enough time on him in the past, and don’t intend to waste anymore. But be my guest….

Mr Profesor Profitaker,

This/your thread is about "EDGE" and NOT about strategies. Just to remind you, you have said time and time again that the seller has no more edge than the buyer! Thats the real issue here!
You have a bad habit of changing your comments and also moving the goal posts!

There is a thread that is designed for strategies but you have declined to participate as ussual!

All you like doing is show off your knowledge on the GREEKS and turn every subect towards the GREEKS! If your really consider me a "FOOL" than why do you hesitate to chalenge me. You have maintained that niether the seller or the buyer has the edge! where as i have maintained that the seller has the edge!
You also believe/imply that the writer does NOT know how to HEDGE if the positions goes against him and then gets "STEAM ROLLED" [your quote] This indicates lack of knowledge to me by you!

btw, Are you approved by your broker to sell PUTS naked??


Paddy blue boy

 

[Profitaker]

The examples and proposed contest is of course complete crap again unless people are willing to invest a lot of time and energy.

Just a couple of trades are completely meaningless. It's a matter of statistics and with 1:10 ratios as paddy claims you'll need at least hunderds if not thousends of trades to gain statistical significance. And even than... It's not the ordinary trades that kill, it's the exceptional occasion that does.

Again..... very refreshing !

 

[irishpaddypc]

Again..... very refreshing !

Mr Pro,

I did make a selection of a trade on this thread which came to over £9,000 income! do you want me to show you another wiv higher takings??

If you want to talk about Options strategies? here below is a thread that can be used for that purpose:

http://www.trade2win.com/boards/showthread.php?t=17561


Paddy blue boy

 

[Profitaker]

Mr Pro,

I did make a selection of a trade on this thread which came to over £9,000 income! do you want me to show you another wiv higher takings??

If you want to talk about Options strategies? here below is a thread that can be used for that purpose:

http://www.trade2win.com/boards/showthread.php?t=17561


Paddy blue boy

An error in judgement again Paddyfool. The above should be sufficient to conclude that you have been banned from these boards and have now returned to annoy / disrupt / destroy using a different name / IP address.

Frugi ?

 

[irishpaddypc]

An error in judgement again Paddyfool. The above should be sufficient to conclude that you have been banned from these boards and have now returned to annoy / disrupt / destroy using a different name / IP address.

Frugi ?

Correction! He was not banned from this forum! Get to know the true facts before you make errors of judgments my good friend.btw, theres only one e in judgment i fink?]
He asked for a lifeban from this forum cause of people like you! and your pals.

So I'll watch with great interest all that you say concerning this topic on this thread.

Have a nice week/year .

I now leave and go to another forum. You can now have the floor and educate the members with your gifts on making profits on options without getting run over by the "Steam Roller"

btw, WE will be returning to your posts and correct you if you make errors! so that the members dont get decieved and fooled by your comments on OPTIONS TRADING.

Paddy boy blue [ buldozer's nephew ]

 

[trendie]

Profitaker,

is the threads original question based on owning the underlying ?

or would owning the underlying shares of an option strategy be classed as being hedged ?

if, for example, Microsoft shares, MSFT, were at $24; and the option to buy them, Call, at $10, in July, were being sold for $17.20, would you not sell (write) such an option ?

if you own the underlying, and they are worth $24, and you collect $17 for them, to potentially let go of them at $10, arent you making $3 profit ?
( potentially sell them at $10, for a share at current value of $24, losing $14. but you are being paid $17 for the privilege. The shares would have to tumble to $7 for you to break even. This has to happen within 3 months, or the bets off. I understand the last 30 days the value of options plummet, dependent on volatility, so perhaps the action has to take place within 2 months. nearer the time, you could potentially offset your risk by buying the call-option back cheaper.
I also think US-style options means you can elect to trigger your option at any time, whereas eith European-style, you can only exercise your option on day of expiry.)

clearly I am not considering tranx costs.
please bear with me, I am trying to think aloud, while showing my amatuerish knowledge.
consider me a mug-player, looking to be educated from the false-assumptions that beginners make.
( hope I am not taking this thread away from its current path. I would like to explore a real-example )

 

[irishpaddypc]

Profitaker,

is the threads original question based on owning the underlying ?

or would owning the underlying shares of an option strategy be classed as being hedged ?

if, for example, Microsoft shares, MSFT, were at $24; and the option to buy them, Call, at $10, in July, were being sold for $17.20, would you not sell (write) such an option ?

if you own the underlying, and they are worth $24, and you collect $17 for them, to potentially let go of them at $10, arent you making $3 profit ?
( potentially sell them at $10, for a share at current value of $24, losing $14. but you are being paid $17 for the privilege. The shares would have to tumble to $7 for you to break even. This has to happen within 3 months, or the bets off. I understand the last 30 days the value of options plummet, dependent on volatility, so perhaps the action has to take place within 2 months. nearer the time, you could potentially offset your risk by buying the call-option back cheaper.
I also think US-style options means you can elect to trigger your option at any time, whereas eith European-style, you can only exercise your option on day of expiry.)

clearly I am not considering tranx costs.
please bear with me, I am trying to think aloud, while showing my amatuerish knowledge.
consider me a mug-player, looking to be educated from the false-assumptions that beginners make.
( hope I am not taking this thread away from its current path. I would like to explore a real-example )

Trendie,

PM sent

 

[Profitaker]

Profitaker,

is the threads original question based on owning the underlying ?

or would owning the underlying shares of an option strategy be classed as being hedged ?

You’re introducing strategy into the debate, nothing wrong with that, but hedging doesn’t improve edge, it reduces it.

if, for example, Microsoft shares, MSFT, were at $24; and the option to buy them, Call, at $10, in July, were being sold for $17.20, would you not sell (write) such an option ?

Selling calls when long the underlying is the same as selling naked puts. In the example you give above it’s the same as selling a $10 strike Put, a DOTM option. Puts and Calls are fungible.

I also think US-style options means you can elect to trigger your option at any time, whereas eith European-style, you can only exercise your option on day of expiry.)

Correct. The value of early exercise is already priced into the options and is miniscule. It’s very rare for an American to be early exercised unless there is a dividend in play – and you should be able to see it coming anyway.