Watch HowardCohodas Trade Index Options Credit Spreads

[HowardCohodas]

Do you disbelieve me? Consider martingale on roulette... very easy to guarantee either profits or blowing up 🙂

A little different than "you can make any strategy profitable."

Incidentally Howard there's been a noticeable drop in civility from yourself over the course of this thread... is that reaction to the way you're being treated or your true self coming out?

Thanks for the heads up. I'll have to be more aware. I hope the problem is the former and not the latter. Otherwise it would shatter my self-image. 😉

BTW, have I been uncivil to you?

 

[arabianights]

BTW, have I been uncivil to you?

Nope, no complaints there - just a friendly heads up 🙂

 

[arabianights]

A little different than "you can make any strategy profitable."

Yes, sorta... but again you can transform any strategy into one that will take an indefinite amount of time to blow up but still certainly will... therefore any strategy that the above applies to is useless...

 

[HowardCohodas]

Pls note that I, for one, while skeptical, never stated with any sort of finality that your approach doesn't work. A priori, there's always a probability that you have discovered edge, but, with all due respect, it's rather small. Pls don't take offense, but it's akin to a first grader claiming that he has proved Fermat's Last Theorem. It's theoretically possible, but highly unlikely. This is not to say that you're stupid and all the skeptics here are smart, but a simple matter of odds and incentives.

I agree. You were never categorical about this strategy never working. My referencing my results was in response to someone who did. You got sucked in by trying to warn me off of using my results to illustrate the error. No good turn goes unpunished. 😉

I am convinced that I have not discovered something that new. I'm so open with what I am doing because I want to learn what to watch out for before it stops working. The more early warning, the less I lose. The fact that critical issues remain unresolved pleases my ego, but does not convince me I've discovered anything profound.

 

[HowardCohodas]

Yes, sorta... but again you can transform any strategy into one that will take an indefinite amount of time to blow up but still certainly will... therefore any strategy that the above applies to is useless...

As long as "indefinite" outlives me and is practical, unlike Martingale, I'm good. 🙂

 

[HowardCohodas]

12 JAN 2010 Trading Plan

12 JAN 2010 Trading Plan

The Dashboard above informs me as follows:
Opportunity - Takeoffs are optional
Spread #61 is unpaired. Opportunity to form an Iron Condor.

Spread #75 is at 82% of it's capped profit but has only 1 day left until expiration. No opportunity to roll.

Spread #50, #69, and #61 at more than 80% of capped profit. Opportunity to roll.

Jeopardy - Landings are mandatory
No spreads show excessive probability of touching. Yellow in gauge.

Spreads #75 & #76 have 1 day remaining to expiration requires monitoring. Red in gauge. Red highlight in cell.

Two spreads show slightly negative return. No action required.

New Opportunity
None

 

[the hare]

As long as "indefinite" outlives me and is practical, unlike Martingale, I'm good. 🙂

Still waiting for the high school stats book to arrive I see. 😆

Unless you have some form of terminal illness, and you've been told you only have hours to live, what makes you think you'll outlive the inevitable ?

 

[DionysusToast]

I'm sure I've shown the calculations countless times. Let me think. Oh yes, every time a series expires, I show this calculation. Ya think a little effort on your part would answer this question?

I'm only responded to you this time because you gave me an opening I couldn't resist. I probably should have, but I couldn't. One of my weaknesses.

But you change the baseline on which you calculate percentages in order that the percentages look better.

1 spread = 1 unit of risk - 10% return
2 spreads = 2 units of risk - 10% return

2 spreads - Howard presumes 1 unit of risk = 20% return

In reality, your broker wants margin for both threads, so you need to put up twice as much. So your return would still be 10%.

 

[meanreversion]

Still waiting for the high school stats book to arrive I see. 😆

Unless you have some form of terminal illness, and you've been told you only have hours to live, what makes you think you'll outlive the inevitable ?

How do you make a Maltese Cross?


Stamp on his foot!

😆

 

[HowardCohodas]

But you change the baseline on which you calculate percentages in order that the percentages look better.

1 spread = 1 unit of risk - 10% return
2 spreads = 2 units of risk - 10% return

2 spreads - Howard presumes 1 unit of risk = 20% return

In reality, your broker wants margin for both threads, so you need to put up twice as much. So your return would still be 10%.

In the US this is not required. Many brokers, including mine follow these rules. Therefore my calculation is justified.

 

[HowardCohodas]

Still waiting for the high school stats book to arrive I see. 😆

Unless you have some form of terminal illness, and you've been told you only have hours to live, what makes you think you'll outlive the inevitable ?

This is out of context of the dialog that it was part of. We were talking about small but finite probabilities. Something more likely than the example I gave would be the probability of a meteor hitting your city and vaporizing you.

 

[meanreversion]

This is out of context of the dialog that it was part of. We were talking about small but finite probabilities. Something more likely than the example I gave would be the probability of a meteor hitting your city and vaporizing you.

Getting a bit personal now Howard??

 

[HowardCohodas]

Getting a bit personal now Howard??

My original had the word "me" in it. Making it personal is a rhetorical tool to help focus the mind. I find many discussions on improbable events so devoid from reality that they have no impact on the participants.

My personal philosophy is, if there are two ways of interpreting something, I always give the other party the benefit of the doubt unless they have shown unrelenting malice. It was never meant to represent any personal animus, because there is none.

 

[UgoDadeo]

Re: 12 JAN 2010 Trading Plan

12 JAN 2010 Trading Plan

The Dashboard above informs me as follows:
Opportunity - Takeoffs are optional
Spread #61 is unpaired. Opportunity to form an Iron Condor.

Spread #75 is at 82% of it's capped profit but has only 1 day left until expiration. No opportunity to roll.

Spread #50, #69, and #61 at more than 80% of capped profit. Opportunity to roll.

Jeopardy - Landings are mandatory
No spreads show excessive probability of touching. Yellow in gauge.

Spreads #75 & #76 have 1 day remaining to expiration requires monitoring. Red in gauge. Red highlight in cell.

Two spreads show slightly negative return. No action required.

New Opportunity
None

Howard -

Is spread # 70 or # 74 also unpaired? I ask simply to see if I really can read the dashboard correctly.

Would you also explain a little more about how a spread reaches "maximum profitability". I thought the spread hit the max at the moment of the trade and would only go negative in the credit spread.

 

[arabianights]

This is out of context of the dialog that it was part of. We were talking about small but finite probabilities. Something more likely than the example I gave would be the probability of a meteor hitting your city and vaporizing you.

That's impossible.

If it hit the city then it would be a meteorite. :smart:

 

[HowardCohodas]

That's impossible.

If it hit the city then it would be a meteorite. :smart:

I just learned more about something I didn't completely understand. Meteor vs. Meteorite vs. Meteoroid

 

[HowardCohodas]

Re: 12 JAN 2010 Trading Plan

Howard -

Is spread # 70 or # 74 also unpaired? I ask simply to see if I really can read the dashboard correctly.

Would you also explain a little more about how a spread reaches "maximum profitability". I thought the spread hit the max at the moment of the trade and would only go negative in the credit spread.

An unpaired spread is indicated by the cell in the IC column being highlighted in yellow.

Good eye at spotting an anomaly. You are the first to mention it. #70 and #74 both pair with #35. I added to this spread once it was established. On the CALL side, I added to an existing spread. On the PUT side I established a new one. Everything is kosher regarding it being an Iron Condor because the number of contracts is equal and the difference in strike prices are all the same.

A credit spread, by its nature, loses value over time because of time decay as long as the the underlying instrument prices leaves the spread OTM. Volatility has an impact on option value, so as time goes by, not only does time decay play its part, but volatility may make the spread widen and narrow as well. If circumstances are such that the spread narrows and I can buy it back at near maximum capped profit, it presents an opportunity to sell another spread for an additional credit. This the basis of rolling.

 

[meanreversion]

meteor/meteorite
potato/potatoe .. whatever ..

 

[HowardCohodas]

meteor/meteorite
potato/potatoe .. whatever ..

😆

You seem uncharacteristically funny today. Is that because you really are or I'm in a lighter frame of mind or both?

 

[UgoDadeo]

Re: 12 JAN 2010 Trading Plan

An unpaired spread is indicated by the cell in the IC column being highlighted in yellow.

Good eye at spotting an anomaly. You are the first to mention it. #70 and #74 both pair with #35. I added to this spread once it was established. On the CALL side, I added to an existing spread. On the PUT side I established a new one. Everything is kosher regarding it being an Iron Condor because the number of contracts is equal and the difference in strike prices are all the same.

A credit spread, by its nature, loses value over time because of time decay as long as the the underlying instrument prices leaves the spread OTM. Volatility has an impact on option value, so as time goes by, not only does time decay play its part, but volatility may make the spread widen and narrow as well. If circumstances are such that the spread narrows and I can buy it back at near maximum capped profit, it presents an opportunity to sell another spread for an additional credit. This the basis of rolling.

Howard - As an example, I can sell the credit spread in an opening trade for $ 1.60 credit. Later, I see that I can close the spread for 15% of the opening trade ($ 1.60 * 0.15 = 0.24 debit) then the dashboard would show the opening spread at 85% under the opportunity spread P/L heading. Now I can consider the opportunities for rolling the spread.
Am I getting it yet ?