What will HowardCohodas's month on month return be for March?

[Depth Trade]

Howard , let me give you a lesson on trading options Son. First off, you have to have an idea of where the market is going and know what the heck you're doing..

Buying slv spread call-put
April 15 2001 Exp.

37c 1.15- 35p 0.16
Paying 0.99
:whistling

Shh, this money making thing is easy!

37c 1.29- 35p 0.12
Paying 0.99
Current value 1.17
Gain +0.17
+18.18%

 

[HowardCohodas]

Because, for the gazillionth time, you haven't explained why the options are systemically mispriced.

You appear to believe your edge comes from your risk mitigation strategy... sorry, but that cannot be...

I'll give you that I have not explained my edge to your satisfaction and that I suggested that the management strategy permits taking advantage of opportunities to reuse the same quarantined funds and reduce the jeopardies. Collecting time premium with sufficient distance from the underlying to avoid (but not eliminate) the risk from being overrun you also rejected.

Given that, how does one explain the results in the account? Saying I cannot explain it to your satisfaction or you reject my explanation does not explain the results. Just because I cannot explain gravity to some arbitrary authority does not mean it does not exist. Gravity exists. My account performance exists. My inability to explain it to the proper authority does not make it go away, it just leaves it unexplained.

 

[TheBramble]

Thats irrelevant really.

Not in response to Howard's request it isn't.

 

[HowardCohodas]

Howard, has your system made you a net profit or a net loss?

Check my humble pie thread. It shows a graph of the results since Aug 2, 2010. Numerically, my March hit reduced my average month on month return from 11.4% per month to 7.3% per month. Some would maintain that 9 months is insufficient to be definitive, and I would be one of them. But, if I have no edge, as many maintain, what explains the results.

 

[Martinghoul]

Martin, I think he means he just needed a bit of cash to liquidate/buyback his spreads. He realized implied volatility is no longer the same and thus, wanted to cover his losses quickly.

I know what he means... The problem is that his method of generating this cash exacerbates the need for the cash in the first place.

 

[TheBramble]

I know what he means... The problem is that his method of generating this cash exacerbates the need for the cash in the first place.

I admire your fortitude and perseverance, as I don’t even have the energy to read this thread anymore.

 

[HowardCohodas]

Howard , let me give you a lesson on trading options Son. First off, you have to have an idea of where the market is going and know what the heck you're doing..

Buying slv spread call-put
April 15 2001 Exp.

37c 1.15- 35p 0.16
Paying 0.99
:whistling

This seems unrelated to my trading in several important ways. First, I traded credit spreads in indexes, not stocks, not commodities, not... Second, around 90% of the time I am able to place the companion spread that would complete an Iron Condor to nearly balance directional risk. And third, I cannot get PoT data for that period, so I have no idea if it would meet my entry criteria in the first place.

I am simply unable to learn any lesson from this example because it does not reflect my trading. Perhaps you have an example that does reflect my strategy that we could discuss so that I can learn something useful.

 

[Depth Trade]

Howard , let me give you a lesson on trading options Son. First off, you have to have an idea of where the market is going and know what the heck you're doing..

Buying slv spread call-put
April 15 2001 Exp.

37c 1.15- 35p 0.16
Paying 0.99
:whistling

End of the fcking world and I'm sitting here getting paid!!!!!!!!!

Current value
37c 1.45- 35p 0.10
Value 1.35
+24.14%

 

[the hare]

Given that, how does one explain the results in the account?

OMFG !

I am a kind and generous soul. I have on occassions mentored students who show promise

The first thing that I request them to do is to take trades based on the flip of a coin, closing the trade at a time determined in advance and at random. Can we agree that there should theoretically be no edge using this method ?

Over a large enough sample size of trades they should break even minus transaction costs. I make the poor ****ers do this for 6 months or so, and there's a very good reason why I take this approach (but not for discussion at the zoo)

You'd be suprised though at how many achieve a decent looking equity curve over a couple of hundred trades, but Inevitably the performance always reverts back to the long term expectancy.

Do not underestimate the effects of random chance.

If that can happen on a system with a theoretical 50% strike rate, think what might just happen if you engineer the strike rate to be much higher (by taking a higher risk for a reduced reward)

Are you actually sure you understand what an edge is conceptually ?

 

[Martinghoul]

I'll give you that I have not explained my edge to your satisfaction and that I suggested that the management strategy permits taking advantage of opportunities to reuse the same quarantined funds and reduce the jeopardies. Collecting time premium with sufficient distance from the underlying to avoid (but not eliminate) the risk from being overrun you also rejected.

Given that, how does one explain the results in the account? Saying I cannot explain it to your satisfaction or you reject my explanation does not explain the results. Just because I cannot explain gravity to some arbitrary authority does not mean it does not exist. Gravity exists. My account performance exists. My inability to explain it to the proper authority does not make it go away, it just leaves it unexplained.

I am speechless, Howard... This is so wrong on so many levels, I find it difficult to know what particular bit of it is the silliest.

 

[HowardCohodas]

This doesn't make sense. How can you build up cash reserves by liquidating some of the spreads, if you've lost money on them? You still don't understand. Your portfolio is short vol and has some directional exposure. In a relatively mild recent panic you got chopped, which is entirely natural. Your response to that is, basically, to do more of the same.

If you look at my humble pie thread, you will see that I allocate my trades in three dimensions, time, space and direction. With respect to time I trade the weeklies, the near month and the month after the new month. With respect to space, I trade both the NDX and the RUT which are not as highly correlated as say the NDX and the SPX. With respect to direction, I am in both legs of an Iron Condor about 90% of the time.

Therefore, as time passed and expiration dates came, I simply did not open as many new spreads as were closed or expired to raise my cash reserves. When the nearest expiration passed my stop loss and some of the circuit breakers did not fire because I ran out of cash, I began liquidating some spreads (both sides of the Iron Condor) that were further out in time that were profitable. One trick I did not think of until just now was to close the Iron Condor as a trading unit. I wonder if that would have avoided my lack of cash problem.

Yes, models are great, but only if they distil and summarize a common sense approach. Your solution to address the drawdown that you have just experienced is, effectively, to increase your tolerance for mark-to-mkt losses. Now I am all for that, generally, but in your case this is just plain suicidal.

Why is it suicidal. If the circuit breakers had been able to fire, even if I had slipped beyond my 20% loss limit trigger to 30% or even 40%, I would still have been better off.

Again, because you keep talking in generalities, do you want to go through a specific trade?

Back atchya by friend.

Actually, documenting March is in process.

 

[HowardCohodas]

I admire your fortitude and perseverance, as I don’t even have the energy to read this thread anymore.

The thirst to learn like the thirst to teach is an addiction. I am grateful to those willing to engage in both.

 

[HowardCohodas]

Howard , let me give you a lesson on trading options Son. First off, you have to have an idea of where the market is going and know what the heck you're doing..

Buying slv spread call-put
April 15 2001 Exp.

37c 1.15- 35p 0.16
Paying 0.99
:whistling

April 15, 2001 and you are still in it?

I don't get it!

 

[DashRiprock]

If you look at my humble pie thread, you will see that I allocate my trades in three dimensions, time, space and direction.

for everyone else, some of my finest work even if I do say so myself

Another song to Howard Cohodas, written by DashRiprock
(sung to the tune of "here comes the hotstepper", by Ini Kamoze)

Hit it
Nah, na na na nah, na na na nah, na na nah, na na nah,
na na na nah

Nah, na na na nah, na na na nah, na na nah, na na nah,
na na na nah


Howard is a plonker
(Short-Gamma)
Doesnt know his exposure
(Short Gamma)
no view on volatility
(Short Gamma)
Still trades the same strat
(Short Gamma)

No, No, we don't lie
we give true replies
your account will be small when the fat lady sings
Act like you know, you do
actually you know, **** all
probability of touch? Uh Oh!
what about the greeks?

Howard is a plonker
(Short-Gamma)
Doesnt know his exposure
(Short Gamma)
no view on volatility
(Short Gamma)
Still trades the same strat
(Short Gamma)

extra -a -polate it
your strategy is sh!t
Money to burn, howard all of the time
How to manage RISKS
How to take a HIT
Doesn't matter cos he went to flight schoo-ool

Howard is a plonker
(Short-Gamma)
Doesnt know his exposure
(Short Gamma)
no view on volatility
(Short Gamma)
Still trades the same strat
(Short Gamma)

Nah, na na na nah, na na na nah, na na nah, na na nah,
na na na nah

Nah, na na na nah, na na na nah, na na nah, na na nah,
na na na nah

he lives on a treadmill
he knows conceald carry
but this dont mean jack, thats it, understand?
MG's the daddy of option theory
when he tells you that your wrong, thats it
you'll say stop mis-represen-ting meeee"

Howard is a plonker
(Short-Gamma)
Doesnt know his exposure
(Short Gamma)
no view on volatility
(Short Gamma)
Still trades the same strat
(Short Gamma)

No, No, we don't lie
we give true replies
your so out of your depth, that its embarassing
act like, you know, your age
and your definately not, a sage
your probably just an-other trolllll

Howard is a plonker
(Short-Gamma)
Doesnt know his exposure
(Short Gamma)
no view on volatility
(Short Gamma)
Still trades the same strat
(Short Gamma)

Nah, na na na nah, na na na nah, na na nah, na na nah,
na na na nah

Nah, na na na nah, na na na nah, na na nah, na na nah,
na na na nah

 

[HowardCohodas]

I am speechless, Howard... This is so wrong on so many levels, I find it difficult to know what particular bit of it is the silliest.

Silly or not, explain it to us. You have helped me change my strategy in the past. Look past my limitations and help me do so again. It would be nice to have something worthwhile to add to my restricted thread.

 

[DashRiprock]

might as well re-circulate some old material, it's all jack dee does.

(to the tune of "Like a virgin" by Madonna)

http://www.youtube.com/watch?v=OI-LFxf9oB0&feature=player_embedded


(sing along if you want)


I have got all my risk assessed
my theta coming through
they say that it's all hogwash
but "you know who" knows the truuuuuth

whats the beat? NFP?!
I've been had! If I only knew
that it was all schpiel
yeah it waaaaaaas all schpiel
the spot has run throuuuuuuugh

like my short strike
Touched for the very first time
Like my shooooooort strike
and my gamma
climbing high

He's just another del-boy!
my profits falling faa-e-aast
for me no more cordon bleu
because I'm doing my ar$e

He's a swine! Bottom line.
Was so wrong! This was all foretold
now I'm full of douuubt
like a rainbow troooooout
that your confused and oooooooooold

like my short strike (hey!)
Touched for the very first time
Like my shooooort strike
and my gamma
climbing hiiiiiiiigh

oooohhhh
wooaaoohhhhhh (aah!)
wooaaohhhh

it's my time! what a crime!
Have to busk.. on the central line
this is not ideal
this is noooooooooot ideal
quotes a barn door wiiiiiiide!

like my short strike (hey!)
Touched for the very first time
Like my shooooort strike
and my gamma
climbing high
Like my short strike
Ohhh oooh like my short strike
of my spread inside
when you short me
and you hold me
till expiry

Oh hooooo-ooooo
ohhhhhh

 

[DashRiprock]

A song for Howard, written by DashRiprock
(sung to the tune of American Pie, by Don McClean)

(you can sing it along to the music from this video)

http://www.youtube.com/watch?v=uAsV5-Hv-7U&feature=player_embedded


INTRO

a long, long time ago
I can still remember
how that howard used to make us laugh

And I knew that if I had my chance
I could explain his r:r balance
was based on, imp. volatility, smiles...

but Howie would not let us impress
the extend of his unseen distress

Bad news on the doorstep
he hadn't done enough prep

I cant remember if I cried
as he parambulates while, spouting lies

but something touched me deep inside
his short strike... volatility... implied

So...

CHORUS

Bye Bye our little Howie,
sold a short strike bought a long strike and the short strike expired,
them good ole boys were drinkin whiskey and rye
singing "Howard your strategy does imply..."
"Howard your strategy does imply..."

VERSE


Did you read the book by Hull, and do you understand that your edge is Null?
the option theory tells you so...

and do you believe that theta decay
can provide you money that the market pays
and its just so easy that, all you need is, proabailityyyy

Well I Know that your option knowledge is slim
cos I saw you saying all you need is prem(ium)
you ignore everyone elses's views
your just an old man thats confuuuused

And your exposure to changes in VIX
can't be avoided by some probability tricks

and you will know when you are out of luck
the day, your trading account, dies.

EVERYBODY

Bye Bye our little Howie,
sold a short strike bought a long strike and the short strike expired,
them good ole boys were drinkin whiskey and rye
singing "Howard your strategy does imply..."
"Howard your strategy does imply..."

 

[j b]

Silly or not, explain it to us. You have helped me change my strategy in the past. Look past my limitations and help me do so again. It would be nice to have something worthwhile to add to my restricted thread.

It's been explained to you many times - with no view on direction, volatility, or skew, you have no edge. You are perpetually short vol, but don't believe options to be overpriced. Your expected return in the long run should be zero (minus transaction costs), HOWEVER, short vol strategies generally result in consistent profits, with occasional large losses. You've experienced some very good times, and a brief, relativley mild bad time. Your results therefore are as expected - you just havent blown up yet.

 

[HowardCohodas]

Do not underestimate the effects of random chance.

If that can happen on a system with a theoretical 50% strike rate, think what might just happen if you engineer the strike rate to be much higher (by taking a higher risk for a reduced reward)

Running a Monte Carlo approach using the probability of success and the levels of return available and testing it against the hypothesis that it is random sounds like a worth while experiment.

Thanks for the idea. "Fooled by Randomness" is not just the title of a book.

 

[HowardCohodas]

It's been explained to you many times - with no view on direction, volatility, or skew, you have no edge. You are perpetually short vol, but don't believe options to be overpriced. Your expected return in the long run should be zero (minus transaction costs), HOWEVER, short vol strategies generally result in consistent profits, with occasional large losses. You've experienced some very good times, and a brief, relativley mild bad time. Your results therefore are as expected - you just havent blown up yet.

Are you certain your set of alternatives is complete? I'd like to read your reference.