Back story: i have lost a whole bunch (100k) during last year end correction, mostly in options trading. Decided never to "play" options anymore. And now... Incidentally caught a couple of good ER pops and made up for my loss and more. I am on a lucky streak and made my 12k into 140k just in Nov. (Even I can't believe it) Now I am scared - but tempted (and greedy) to keep going. I am looking for some of your Options trading stories to keep myself grounded and not lose my shirt in the process. Any tips or suggestions? TC: 300k
If you're very surprised by your recent gains then it's mostly pure luck, not repeatable success. So my advice would be take your gains and play more safely. You can still use say 20% of your portfolio to be risky and adventurous so perhaps someday you do find strategies for repeatable success.
You’ve shown they you have the right stuff. High alpha as some might say. Ignore the naysayers. This is no time to leave money on the table. Keep going and see what you can make.
Read taleb
Hull would say that the three reasons for trading derivatives would be: hedging, arbitrage, and speculation. Clearly what you're doing is speculation. And with what you described, if you're being honest with yourself, you're straight up gambling without any specific option pricing machinery. The price of equity options represents hedging cost of getting to the strike. So be clear with yourself that you are gambling with a 100k bankroll. Would you be willing to go to a casino and dump 100k in? If not, don't do it with options either. Or if you would be willing to do that, go get help for traditional gambling addiction
You’re not generating Alpha... your risk will be equivalent to your gain unless you know how to hedge. Take the W and let your $100k capital loss offset the $100k this year through taxes and enjoy the $40k. Play with half of the post tax ($16k?) and see how far you can go again.
That's what I was thinking too. Thank you.
I trade options and think it’s a consistent way to make money regardless of the market’s direction. The key is to sell more premium than you buy. Most of my strategies actually involve just collecting premium on theta decay. I play earnings, but only with small amounts. When I first started I used to go all in on yolo trades. However if you want to last in the long run, you’ll need to learn risk management and proper portfolio allocation to each trade. I try to aim for 2% gains each week. May not seem like much but over a year that could be 200-300% gains
Are you playing mostly To Open or also to close position meaning are you selling calls as well? I do buy calls and puts and hardly make any
I do both. I don’t sell naked though unless I have the cash to cover. Some of my strategies include double diagonals, poor mans covered calls/puts, OTM uneven butterflies, vertical debit spreads, iron condors.
You could keep your profit, and continues gambling your initial 12k, see if you can make another 140k. BTW, what's ER pop?
How did you recover or make the 120k gain? What did u play
Just these 5: DIS, FB, ROKU, MSFT, AAPL. I know I got lucky.
Go all in and 12x your money again and retire early.
backoff options, this is a good chance to exit option market. Dont choose to exit when u lose everything.