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Let's Trade Options

  • #1,821
  • Nov 26, 2013 11:07am Nov 26, 2013 11:07am
Quoting The Fool
{quote} do you trade positions in each account separately or aggregate across all accounts?
everybody gets the same positions/strikes.....just different amounts of each. a $215k account may have 30 of the $100 calls, 20 of the $99 calls, and 30 of the $87.50 puts......but a $100k account will have around 1/2 of that.....roughly.
I usually trade everything proportionally.
it is easier that way for me, I have to look at the commodity itself more than individual accounts, losses are losses and wins are wins proportionally across the board
  • #1,822
  • Nov 26, 2013 11:40am Nov 26, 2013 11:40am
Quoting pipple
{quote} everybody gets the same positions/strikes.....just different amounts of each. a $215k account may have 30 of the $100 calls, 20 of the $99 calls, and 30 of the $87.50 puts......but a $100k account will have around 1/2 of that.....roughly. I usually trade everything proportionally. it is easier that way for me, I have to look at the commodity itself more than individual accounts, losses are losses and wins are wins proportionally across the board
May I ask a few questions? Are you a CTA? If not, how are you trading other people's money, how long have you been doing it and what kinds of returns have you seen? Sounds like a great wheeze to me. I'd love to do this, and have considered doing it for my parents (for nothing, obviously), who are earning very meagre returns from a rented flat, but am very concerned that I would blow up their account
I have no clue what I'm talking about.
  • #1,823
  • Nov 26, 2013 11:41am Nov 26, 2013 11:41am
Looking to get long (short puts) ES if we can see it trade down to around 1790 or the low 1790s, but I'm not sure they'll oblige.
I see a possibility this is going to 1850 in short order.
I have no clue what I'm talking about.
  • #1,824
  • Nov 26, 2013 12:02pm Nov 26, 2013 12:02pm
Quoting Cecil Gee
Took a trade based on the anticipation of a further fall in oil over the US holiday, SLB charts looks to be the best stock to take any advantage if it does. So I'm long $88 puts for 21c or $21 per contract. Fridays expiration weekly SLB Nov 2013 88.000 put (SLB131129P00088000) -OPR 0.21 {image} 0.04(23.53%) 15:02 underly price Schlumberger Limited (SLB) -NYSE 89.18 {image} 0.63(0.70%) 15:33 - Nasdaq Real Time Price
closed this trade out at 15c, so a loss of 6c or $6 per contract plus fees, may re enter at a higher strike near the end of trading, we shall see

SLB Nov 2013 88.000 put (SLB131129P00088000)
-OPR
0.15 http://l.yimg.com/a/i/us/fi/03rd/down_r.gif 0.02(11.76%) 17:36
  • #1,825
  • Nov 26, 2013 12:04pm Nov 26, 2013 12:04pm
Quoting Boy Wonder
{quote} May I ask a few questions? Are you a CTA? If not, how are you trading other people's money, how long have you been doing it and what kinds of returns have you seen? Sounds like a great wheeze to me. I'd love to do this, and have considered doing it for my parents (for nothing, obviously), who are earning very meagre returns from a rented flat, but am very concerned that I would blow up their account
I am not a CTA, as I have said here before. I have considered becoming one, but I choose not to because I would rather not have the performance/management fee influence my decision making.
I have been a licensed commodity/currency broker for almost 15 years, so I trade other peoples money for a living, just like a stock broker, but with commodities. I have a series 3 and a 34. I can either take discretion/POA on their account, or put it in a CTA, or just do it "broker assisted" where you recommend trades and they agree or disagree. I don't solicit new business much and have good relationships with my clients, so we have a trust and understanding that both parties value. I do not abuse that trust, they know that I trade when I see something I like, and purely to make money for them, my commission is a cost of their doing business with me.
I have used (and still use) CTAs over the last decade or so. I have found that although they can make a ton of money sometimes, they tread water a lot as well. They get a management fee for breathing, and I think that influences some (not all) to take less risk and just exist once they get to a large sum of AUM.
I am not going to post my track record, but I do well. Looking at the trades I have on now you can somewhat figure it out. I don't try to double accounts yearly or to be a hero, but I do shoot for a 5% return monthly(or per trading cycle as I like to refer to it). Very often I exceed that 5% goal. That is not as important as how much drawdown you can manage it at. Everyone makes money sometimes, but dropping your ego and getting out when you are wrong, in my opinion, is the way to exist long term. Options are risky, not for the faint of heart or for the inexperienced trader. What I will say is that every account I manage is at or near an equity high. I enter trades, manage risk, and am very careful.
I get paid a commission every time I trade an option. If I was not productive, I doubt my clients would stay with me.
You need to get licensed to do what I do legally, and a firm (an IB or introducing broker, or a clearingfirm, or FCM) needs to let you hang your license there, as well as be ok with what you are doing. I have been with my firm for awhile. The series 3 is not easy, but there are great learning tools available in this day and age.
You typically don't just get a license and clients just show up at your door, and firms don't just hand you equity....unless you are doing it for friends and family, it can be difficult to get started. Lot of phone work, soliciting, etc etc, that part of the business sucks and I wouldn't want to do it again. Thankfully I am at the point in my career where I have no need to do that. You basically need to build up your book of business, and then handle it responsibly and profitably. I can say there are NOT a lot of very good commodity traders out there.....so if you can get good at it, there is a need for it. People don't have the time to trade themselves in most cases, and if you can return a client 10-15% per year, you will most likely never lose them. I do better than that, but it took a lot of time and hard work to get there.
There are ways around the licensing I think, like if you want to trade for friends or family, but you would need to contact the NFA to find the loopholes. I also do not think you can earn commission like I do without licensing and working at a firm. The regulations are confusing, and in a lot of cases do not make a lot of sense IMO. They are there however because money attracts crooks and con artists, and a few bad apples have made it harder for guys like me to do my job. you are welcome to PM me and I can go over specifics. hope that helped.
  • #1,826
  • Nov 26, 2013 12:07pm Nov 26, 2013 12:07pm
Quoting Boy Wonder
Looking to get long (short puts) ES if we can see it trade down to around 1790 or the low 1790s, but I'm not sure they'll oblige. I see a possibility this is going to 1850 in short order.
I was actually just looking at the same trade....1720 puts for Dec are trading around $150 with mid Dec expiration. I am close to writing a bunch of them.....but I kinda wanted to wait.
I also am looking at soybean calls again....around 1370-1380 for $250-$350
haven't pulled trigger on anything yet
  • #1,827
  • Nov 26, 2013 12:22pm Nov 26, 2013 12:22pm
Quoting pipple
{quote} I am not a CTA, as I have said here before. ...
Sorry, I didn't know.
Thanks for the fullness of your reply. This is a very interesting area and one that I may at some point wish to look into seriously (if I don't end up like Livermore first). However, I'm a UK trader so the regulatory requirements may well be very different.
Your most salient point is the one about drawdowns, and this is one that applies to all traders: the single most important statistic is your max drawdown - not even of closed trades (i.e. booked losses) but of *all* trades during their lifetime. I.e. hanging on to what were massive losers until they become winners doesn't cut it.
Btw I wasn't looking to pry; but 50%, that good. That's very, very good. I think most hedgies are struggling to make even 10%.
I have no clue what I'm talking about.
  • #1,828
  • Nov 26, 2013 12:29pm Nov 26, 2013 12:29pm
Quoting pipple
{quote} I was actually just looking at the same trade....1720 puts for Dec are trading around $150 with mid Dec expiration. I am close to writing a bunch of them.....but I kinda wanted to wait. I also am looking at soybean calls again....around 1370-1380 for $250-$350 haven't pulled trigger on anything yet
Just found out I got filled on a short ES 1800P (Nov 29) for 5 even. Forgot I set the limit order, but happy to have a small long in the game.

It's interesting you go so far out i.e. to 1720. My problem is I'm too greedy and so I go for ATM or just OTM rather than far OTM. It's about time I did something about my greed. It would not only help my trading I would also get a better night's sleep.
Having said that Taleb likens selling far OTM options as like picking up pennies in front of a steamroller.
I have no clue what I'm talking about.
  • #1,829
  • Nov 26, 2013 12:31pm Nov 26, 2013 12:31pm
Quoting Boy Wonder
{quote} May I ask a few questions? Are you a CTA? If not, how are you trading other people's money, how long have you been doing it and what kinds of returns have you seen? Sounds like a great wheeze to me. I'd love to do this, and have considered doing it for my parents (for nothing, obviously), who are earning very meagre returns from a rented flat, but am very concerned that I would blow up their account
also if you are "concerned" that you would blow up their account.....I would suggest there is some work to do before taking control. I imagine you know this though.
I am not sure what "a great wheeze" means exactly.....but a lot of people think that it is easy to do this......it is actually a ton of stress. you get judged daily.....and are only as useful to a client as how much you have made them. people are funny when it comes to their money, and everyone values a dollar differently.
if I didn't develop a strategy that paid....I wouldn't do this....and I would suggest the same to anyone else. there is a great responsibility trading for other people, especially in their retirement accounts like a lot of my people give to me. you don't wanna be the guy who gets his ass kicked, and has to tell the client , "sorry about your luck"......so unless you get to the point where the market slows down for you and you can think and plan 3-5 steps/trades ahead....just papertrade. When I get into a trade, and really get married to a strangle like I am in crude right now, I have trades planned out for up to 10 different scenarios at a time. sharp down them up....slow down then up...down, down, down, etc etc. option premiums repeat themselves at the same times every cycle based on where the spot price is.....so you would want to pick some instruments and study them, get in some chart time, and paper trade. I know to an extent what the strikes will be worth at certain points, but the gammas/deltas will change based on volatility, and that you cannot plan for.
  • #1,830
  • Nov 26, 2013 12:35pm Nov 26, 2013 12:35pm
Quoting pipple
{quote} you are welcome to PM me and I can go over specifics. hope that helped.
thanks pipple for taking the time to share with us.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,831
  • Nov 26, 2013 12:35pm Nov 26, 2013 12:35pm
Quoting Boy Wonder
{quote} Sorry, I didn't know. Thanks for the fullness of your reply. This is a very interesting area and one that I may at some point wish to look into seriously (if I don't end up like Livermore first). However, I'm a UK trader so the regulatory requirements may well be very different. Your most salient point is the one about drawdowns, and this is one that applies to all traders: the single most important statistic is your max drawdown - not even of closed trades (i.e. booked losses) but of *all* trades during their lifetime. I.e. hanging on to...
funny you said that, I have considered going to work for a hedge fund, but I am comfortable where I am at for the time being. it blows my mind sometimes how little some of these "professionals" can return. I think a lot of it is such a scam. lots of fees
a lot of hedge fund traders make millions.....I do not....but I also get to come and go as I please and like my stress to be as low as possible. there are some funds/CTAs out there that consistently return 20-40% net....but it always seems like something happens to them.
consistency is important.
  • #1,832
  • Nov 26, 2013 12:42pm Nov 26, 2013 12:42pm
Quoting Boy Wonder
{quote} Just found out I got filled on a short ES 1800P (Nov 29) for 5 even. Forgot I set the limit order, but happy to have a small long in the game. It's interesting you go so far out i.e. to 1720. My problem is I'm too greedy and so I go for ATM or just OTM rather than far OTM. It's about time I did something about my greed. It would not only help my trading I would also get a better night's sleep. Having said that Taleb likens selling far OTM options as like picking up pennies in front of a steamroller.
ahhhh this is the great question.....how far do you sell em......
for me, if I were gonna just go that tight, I would trade futures, which I do sometimes.
larger accounts can handle writing 10-50 of a cheap option and waiting for exp. there is great risk in that as well. important to write the other side most times to mitigate a lot of the risk (market cannot be 2 places at once...my favorite saying)
this is exactly why I had to jump ship on that emini trade a few days back.....felt uncomfortable.....you will find though (at least I do) that if you stare at the options chains long enough something will jump out at you
I go flat risk off a lot when I feel queasy....but the writing of deeper OTM options has worked over time. gotta know when to roll em.
  • #1,833
  • Nov 26, 2013 12:43pm Nov 26, 2013 12:43pm
Quoting The Fool
{quote} thanks pipple for taking the time to share with us.
no prob fool....I appreciate what you guys have shared about your gig....I am learning from you and Cecil as well. Like I said, trading gets lonely.
  • #1,834
  • Nov 26, 2013 12:45pm Nov 26, 2013 12:45pm
Quoting pipple
{quote} also if you are "concerned" that you would blow up their account.....I would suggest there is some work to do before taking control. I imagine you know this though. I am not sure what "a great wheeze" means exactly.....but a lot of people think that it is easy to do this......it is actually a ton of stress. you get judged daily.....and are only as useful to a client as how much you have made them. people are funny when it comes to their money, and everyone values a dollar differently. if I didn't develop a strategy that paid....I wouldn't...
Absolutely there is still some work to be done. I'm so much better now than I ever was but I still have much work to do.
As to it being a wheeze, I was speaking tongue in cheek. What I mean is that you're getting paid to do what you already do anyway. I already do this for a living.
I have no clue what I'm talking about.
  • #1,835
  • Nov 26, 2013 12:47pm Nov 26, 2013 12:47pm
Quoting Boy Wonder
{quote} Absolutely there is still some work to be done. I'm so much better now than I ever was but I still have much work to do. As to it being a wheeze, I was speaking tongue in cheek. What I mean is that you're getting paid to do what you already do anyway. I already do this for a living.
gotcha....I guess it is a hell of a wheeze for sure then haha.

now if one of you guys can tell me how to get my health insurance to cost me less than a luxury car lease payment every month, I would really be in business.
  • #1,836
  • Nov 26, 2013 12:52pm Nov 26, 2013 12:52pm
Quoting pipple
{quote} larger accounts can handle writing 10-50 of a cheap option and waiting for exp. there is great risk in that as well
Yes, that's a lot of risk. I suppose there lies the rub. If you sell far OTM in quantity, you're exposing yourself to a ton of risk. But do you need to sell that many?
Like you said, 1720s are what, just under $3 now - $150. In a 100k account to target 5% you're looking for $5k..yeah, actually that's 30 of those suckers, LOL.
Wow, that's a lot of risk. It's all okay until it isn't. That's what stops are for though.
I have no clue what I'm talking about.
  • #1,837
  • Nov 26, 2013 12:54pm Nov 26, 2013 12:54pm
Just found out that I sold a bloody ZB call earlier. I meant to sell a ZB put because I'm bullish on bonds. That's $400 down the toilet. What an eejut. Not the first time either.
I have no clue what I'm talking about.
  • #1,838
  • Nov 26, 2013 1:26pm Nov 26, 2013 1:26pm
Quoting The Fool
{quote}... HPQ I will probably get in a cheap strangle today for Dec 21 and see if the earnings pop for me after hours...
wanted to get in HPQ Dec 21 long $22/$28 for <$0.50, but it went $0.25/$0.27 for net $0.52 debit. Now, just like at Christmas, I get to come back early Wed morning and see what Santa has left for me. Will it be $1.00? I've been good....

HPQ been flatlining, just waiting to explode....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,839
  • Nov 26, 2013 1:28pm Nov 26, 2013 1:28pm
Quoting Boy Wonder
Just found out that I sold a bloody ZB call earlier. I meant to sell a ZB put because I'm bullish on bonds. That's $400 down the toilet. What an eejut. Not the first time either.
I used to that kind of thing alla time when I was scalping fx all day. My cat stepped on the mouse more than once, executing trades that cost me $100's before I could get out....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,840
  • Nov 26, 2013 1:42pm Nov 26, 2013 1:42pm
Quoting The Fool
{quote} wanted to get in HPQ Dec 21 long $22/$28 for <$0.50, but it went $0.25/$0.27 for net $0.52 debit. Now, just like at Christmas, I get to come back early Wed morning and see what Santa has left for me. Will it be $1.00? I've been good.... HPQ been flatlining, just waiting to explode....
so you bought the 22 put and the 28 call for $520 total right?
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