Users tagged with 'Options Pro' flair have demonstrated considerable knowledge on option trading. Some have professional experience, but the tag does not specifically mean they are professional traders. Options trading success stories? So I've been learning options trading for a few months; been trading with real money since March.
I've had some gains and some losses so that my net is close to 0, maybe slightly negative. I've been learning "tastytrade-style," selling premium in high volatility conditions and trading small and often.
Most of my losses have been due to noob mistakes that I won't repeat again, but I still can't help but feel that options trading might not be worth the effort. For those of you who have stuck with it for awhile and have achieved some success, would you mind sharing your story here? And maybe some tips you learned from your early days of options trading? I'd just like to see some confirmation that it is possible to be successful at this. One guy I worked for was a market maker on PCX for a few years.
Pretty cool story, I might be able to get him to do an AMA. Options are a slow grind not get rich quick. The explosive returns lull you into thinking different.
I have been trading options for awhile because of the leverage they offer. I started off by traiding straight out calls or puts and got burned sometimes and won some. It is interesting how I remember the losers more than the winners. With options you have to understand you are going to lose money so you must ask yourself how can i reduce the risk? I use spreads and is working for me; especially, bear call spreads.
They offer limited upside with little risk which allows you to stay in the game. I trade the same groups of stocks every quarter.
The ones I'm familiar with how they behave. For example, I traded spreads on aapl 3 times in the last 4 months -Lost once and won twice.
Just because the next guy says options is a loser's game it doesn't mean you can make it work for you. No worries, it's all part of the game. I bought some more calls near the bottom yesterday, so I should end up close to even assuming aapl recovers a bit more. Are you averaging down on the same losing call? How far out is the expiration?
Theta daily time decay really hits hard on options expiring within 45 days. Why not let profits run and treat it as a trailing stoploss? Don't lock in a loss. Some of my early trades turned out to be big losers initially. They were defined risk credit spreads, but I freaked out and closed the positions once they had recovered a bit just to get out of them, locking in a loss. Don't scale your positions above what is appropriate for your account size.
I saw an opportunity in FXE due to the volatility of the Euro so I sold a bunch of iron condors in it, exposing myself to outsize risk compared to my account size. Best not to put all of your dollars in one basket Don't let short options expire ITM because they will be exercised, leaving you in a very dangerous and stressful position. The loss due to price movement of shares of stock can be devastating to a small account.
Instead, close those positions and take the loss. I had this happen to me and you can read about that multi-day melodrama in this thread. My biggest lesson in was that I placed a lot of trades, thinking I was diversifying my portfolio.
But in reality I was just trading correlated underlyings, which didn't give me protections. I started out trying to predict direction with vertical spreads. I picked wrong more often than right and one contrarian play would knock-out three of my winners. After six months I changed my strategy to neutral plays, usually placing Not caring about direction makes trading really easy and keeps research and technical analysis to a minimum.
I started with 11 or more indicators cluttering my price chart and often they would contradict each other. I'm not "Successful" just lucky so far. I've come up with a strategy that works for the time being pretty consistently.
It uses IV ranges and has contingency plans for every move. The only thing I'm lacking is the greek analysis, although I look at deltas if I'm feeling a bit zealous. So, we will see how the future holds. If you want to discuss strats, just PM me. I think the best strategy is to have a solid dividend portfolio that is converted into covered positions, which a portion of the expected return is used for trading options to get that extra kick.
I also thing, portfolio strategies need to be reevaluated every years, depending on market conditions and your current situation. So, right now, if you think most of the market is overvalued and you've gained a lot, its probably best to move most your money,less part of your gains, into other fixed income investments.
Of the gains and expected return from the FI, you can now trade part of those in options. This way, your portfolio is constantly growing. It's when people get greedy. I had a similar story with not being able to hold onto my wins until I was fortunate enough to get mentored by a successful fund manager for the last 3 years. Main things he taught me were: Lastly always spread your wins to make it harder for the market to take them back off you.
Want to add to the discussion? At the end of the day , success depends on the individual appetite for risk and hard work. I'll sell them once aapl gets back above Also, you would need a spectacular win percentage to be profitable. The biggest lessons I learned are:More...