My hat is off to many of you. Doc, Sledge etc. As I look at my measly positions in AGNC long calls and short puts I cant help but realize I am leaving so much money on the table. When I hear Doc talking 200 contracts here, and Sledge talking 700 contracts there I see that you guys are in this for big money. making serious money. The thing that bothers me is that I actually have that kind of money to play with but I am still coming up the learning curve in options. I have posted in the past that I have had upwards of 6000 shares of AGNC at times ( not even on margin) but I still soil myself at the notion of buying say, 200 contracts at $3 of something I feel very very sure about. Crazy I know.
Still learning. My compliments to you all.
You are indeed "players" in my book.
if you take such positions that they make you hover over the keyboard and cost you some sleep at night, or if you are constantly entering and then cancelling orders before they can execute, and you wish you could type faster, you have too much at stake.
my YTD total return is hovering around 25%, and i don't do any of those things any more. $1,000 worth of puts or calls, long or short, seems like a fortune to me, because i am not an options guy. equities or near equities. i also avoid bond debt, but i will hit some preferreds.
i still have to, on occasion, remind myself to let it alone. the temptation to trade is massive. i found that setting aside some "mad money"(not the Cramer kind) to play with satisfies the urge. the last one was facebook, and we all know how that turned out. if FB is still a dog in 10 more years, i can still eat well.
I felt comfortable with 140 AGNC calls last quarter. In for less so far this quarter, and it may take me another year or two before I feel comfy enough to have multiple hundreds of option trades going at any one time, but hey, this time last year I had never done any options at all, and one year ago last May I cashed out some bank bonds and started trading stocks so it's all a growth process!
While your positions may seem "measly" to you, they may seem huge to others. It's all relative. Each of us has our own individual appetite for risk, matched against available resources. That's the beauty of this board's diversity. While it is exciting to vicariously participate in some of the "Guerilla Trades" (think Rim, Roy, X), comparing ROI's is a much better way to measure trading acumen. If you are satisfied with the results (ROI) of your current trading "style", and you want a larger payday, simply scale up the size of your trades.
FWIW, when I evaluate a trade, preservation of capital is my highest priority. The very first thing that I look at is the probability/likelihood that my net position will at the least, BE. This may mean going deeper ITM, or hedging against near term price disruption by going farther out. I realize that in many situations, this strategy will have less leverage, and a lower ROI, but it allows me to sleep at night, with fewer laundry bills :-) (see your comment above).
Once I estimate a "realistic" BE, I then work my way through the options table, comparing the different cash requirements against the ROIs expected from each strike price/date. Basic cost/benefit, risk/reward analysis. I'm a big advocate of position "sizing", so I also limit how much I will invest in any one stock. Additionally, if I guess wrong on the timing of my initial position, I am not adverse to lowering my net by adding at a lower price and "repairing" my position.
Again, the key to my peace of mind is having a high level of confidence that my investment will at the least, BE. Once I am past that hurdle, the rest is gravy. Good luck with your trades.
Excellent description of how I trade as well. BE is always first on my list, not how much can I make with this trade. Then I look for a reasonable run up and pick the best strike price that will give me an except-able return --always ITM or DITM. Sometimes I get very lucky and it climbs higher than I expect. It seems to be easier to pick a good entry point, the courage is to pick the right exit. Everything I learned about trading options I learned on this board and the wisdom shared by the real pros. Thanks to all of you.
GL2UA and go AGNC.
Good morning Onion,
Funny, I have often posted that it is me, who admires the big players. I guess it is all relative. I thought Ben, Rim, Arsh were the big players until Roy came out with his 6000+ contract play on BMY last March, choking down over 345,000 dollars in profit from a dollar move. Then X is close behind. Keep in mind that Roy(I believe...correct me Roy) placed down about 33% of his money on that play, and as we know X placed 99% down on a uni-directional bet. I do not advise that.
I started a post/thread in Jan 2012, titled "Crumbs". It is my seasoned(i'm old...;-)) belief that slow and steady still wins the race. I have several hundred contracts out there(less than 800), spread between 5 main stocks, including spreads and short Puts. I hope to unload most this Sept OPEX. As Ephort(where are you?) has said, you feel so "light" when you unburden your worry, by cashing in all of those liabilities. I couldn't describe it better...;-)
Sentiment: Strong Buy
I agree, slow and steady wins the race....and can sleep at night. It must be an incredible adrenaline rush to be able to buy 100's of option contracts at a time. I closed out all of my long call contracts Friday(AGNC,CSCO,BMY). I am only selling AAPL puts at this time....sold my third set of contracts this morning( Sept$580,$600, and $615)...I sell $50 OTM only. This has worked for the last year or so...I never play them close to earnings, so October is on hold. It's not a gangbusters play, but can generate $5000 or more each month.
Oh, by the way, thanks for the heads-up on BMY....made a little bit on that one:)
That's about right Doc.
Still looking to go in big on the BMY Oct calls when I get the opportunity, hopefully after AGNC's exdiv. Looking to break 8 figures on the contract amounts if the price is right.
Calling it the "Retirement Trade" if it happens. ;-)
Sentiment: Strong Buy
Nope, not me.
I think you have XionRev in mind.[who is an inspiration to us all]
My largest account is still well below 100k, but it will have doubled[given a good div- run in three mreits] by the end of this month from a start date in march when I went online with it. I play a lot of internal mindgames to keep from beating myself over bonehead moves like buying 60 otm 20calls on AMTG and selling them back at half price only to see the MM exercise them a few hours later for a 100% profit. I look at it like Warren Spahn or Fergie Jenkins, they never pitched 1000 but were still big winners. You never know what will happen when that cross seamer leaves your hand, but you do have probability that Casey[the big MM] might swing late on it looking for a sinker.
The whole team inspires me, too many to list, and you are one of them for sure.
It was Rimboomer that has 700+ contracts.
Yes, I keep getting base hits my batting average is really high at this point. Thats what is bothering me. I am not swinging for the fences ever, Nor I plan to. The way I play it all I need is a small move and I ring the register. So If I bet bigger, with the same small moves I could be making 2x, 3x more...