I sometimes forget that I'm often talking to poor people here. GL to you and OP (you'll need it). Spa = non-American for jacuzzi.

I kind of regret getting Candy involved in options, at least in forex he was kind of contained. Candy's first option win, he's gonna lose his mind and his house.

I think its obvious to any serious traders that OP is not a +ev trader and is not on a track to becoming a +ev trader

I think the most surprising part of this thread is that you lasted this long

Honestly, I haven't learned the greeks as of yet. I did get out before it went hard the other way and made 8%


This may be the most trolly thing you've said itt. You've spent 90% of your posts here telling me about why I should get into options. And if I didn't lose my house in forex (undefined risk, potential for loss beyond account size in a single trade), I'm pretty sure I won't in options (defined risk, limited loss potential per trade). I'm not on here writing naked calls straight off the rip or anything.

That's fair. Although, understand that the impetus of this thread was to trade a microscopic account size into a slightly less microscopic size. That in and of itself tells you that I'm not likely to be a +ev trader. As to whether or not I'm on track - the fact that I moved all of my money away from forex and I'm solely in options is at least a step in the right direction. I surely have a long way to go.

Thoughts on trading credit spreads as a viable approach for beginners? I like the idea of selling for premium and both risk/reward being defined before you even execute.

It's not a judgement call, nothing wrong with trading for entertainment or an experiment. Just calling it like it is.

I don't see anything in your second post that has to do with ev. Any trade can be bad for the wrong price. There's nothing about selling premium that turns into a winner. Why are you selling spreads beyond it being something to do?

If you are going to do this you need to understand the greeks.

I know that there is nothing inherently +ev in one type of trade or another, it just seems like a good way to bumhunt fish who are trying to pick tops and bottoms.

Yeah, I was afraid that would be the case

I don't understand how or why you think this is true. Maybe you need to define your strategy more clearly

Take a decently liquid stock or ETF that is solidly trending downward on a high timeframe (for example EEM), wait for it to become overbought on a lower timeframe, i.e. a retracement, and open a bear call spread.

This is just an idea. I’m still backtesting approaches.

If you haven't studied the greeks and implied volatility yet you are way out of your league trading advanced setups. I hope your not trading a live account. Study first and then paper trade once you understand everything. optionalpha.com & tastytrade.com are good places to learn.

Thank you for the advice. I’ve been to both of those intermittently - seem to be decent resources so far. I am trading a live account, but it’s a rather small one at the moment and not risking a lot.

The saga continues (brought here from another thread):
lol dude, just lol. Every post you post it gets worse. The above is a recipe for getting absolutely screwed by the (bid-ask) spread. Option spreads have a place in trading but not for a newbie who has absolutely no clue what he's doing, as you clearly don't and won't for years. Your expectation is highly negative, one unexpected move can wipe out your account, and you have no outs to getting rich. What's with the stubborn self destructive behavior? Did your daddy beat you or something? You seem to revel in taking the most loserly course of action possible that guarantees you're gonna fail (trying to win at forex, selling option spreads).

Just go to Vegas and set up a competing stand to that guy who gets kicked in the nuts for $$, you're guaranteed to make more money and you'll have all the senseless pain you seem to enjoy.

What are you talking about? First off, Im not trading wide spreads. An unexpected move is not going to wipe out my account, ie both legs wind up ITM. That’s the whole point of the long call (in a bear call spread for example). Your max loss in the event of an unexpected move is the spread difference less the credit received. Provided your not maxing out your buying power (which I’m not) your account is not getting wiped out. Am I missing something?

*crickets*...???

You know, for someone who speaks like he’s an options trading expert, you make some pretty head-scratching comments. Firstly, your claim that a big move against will wipe you out, without realizing that the whole point of a vertical spread is that the long leg exists to keep that from happening. Second, you assume that if one is trading spreads they’re automatically taking 10:1 risk/reward positions. You do realize this doesn’t have to be the case if you’re targeting high IV underlyings and selecting narrow spreads, right?

Just this morning there was a call spread on URI giving 3:1 spread-to-credit with a 86% probability, which is clearly +EV even after factoring execution cost.

When you say idiot things I generally don't respond.

There's no "speaks like". I am an options trading expert. I've been doing this for many years.
If you're betting <10% of your stack on these spreads, given your goals, that's even more comical.

The 10:1 was on the specific SPY spread you claimed to have sold. I assumed you were in for a non-miniscule chunk of your stack given that you're a donk who's wiped out his account a lot of times, often in a few trades, and you said your goal is to grow quickly.
How is this "clearly" +EV? WTF? I hope you don't mean it's "clearly" +EV just using the numbers above? If you want to learn I'd suggest posting a detailed explanation of your reasoning why the above is "clearly" +EV. Then the options guys (not just me) can weigh in and you can get better.

I “wiped out” a forex account twice lifetime. I’d hardly say that equates to “a lot of times.”

I see why you would make this assumption, given how this thread started, but given that I have allocated more to this than a measly $100... I’m certainly not going to be risking large portions of my account. You seem to have lost sight of the fact that I was taking on -EV risks with super-aggro sizing due solely to the fact that it was an insignificant amount of money for me. You have ignored this consideration and assumed that it is my modus operandi in any and all risk-related endeavors. This is not the case.

I’m hindsight, I should’ve said “theoretically +EV” as there could certainly be factors I’m not taking into account. But this is what I’m referring to:

If y=credit received and z=spread-y

0.86y + 0.14(-z)= amount > 0

Obviously, this reasoning hinges on the reliability of the platform’s calculation regarding probability that the short leg expires OTM.

3:1 means someone more sophisticated than you was willing to bet real money on the short leg being itm >33%, while someone who makes more money the more edge you’re convinced you have says it is itm only 14% with no risk if they are wrong

Can you apply bayes formula to give us an estimate of the true %itm?

In all honesty, no. I'm only familiar with Bayes theorem in a general sense.

I'm curious at to why the counterparty is assumed to being a sophisticated trader when 90+% of options traders lose. This feels like a naïve question, but I'm curious to hear your response. Surely, a lot of the counter money in this exact scenario - needing URI to rally > 10% in the span of a week - are brain-dead idiots (at the time, this was a $117 short call @ 1.48 and a $118 long call @ 1.16 both expiring on 12/14)

Oh God, now you're recycling cuck memes from tradeoptionsthecleverway.com.

Options traders lose because of massive spread and fees (this includes selling), not because they're bad at finding edges. The rake is truly enormous on options, which is why you have no outs to non-failure paying the rake twice on your silly spreads.

I trade on Robinhood, so no fees just spread.

I made 15% this week trading my “silly spreads”

Had you bought puts instead of selling calls you would have made a 3000% on that trading view (bearish on the market) on two different days this week.

15%
3000%

Hmmm....? Nice job jackass. You finally go into an arena where you can make serious money, luck out with an incredible trading week with huge return possible on options that people wait years for, and instead of buying volatility for multi multi baggers you sell volatility and end up making next to nothing. Then you pat yourself on the back.

Peak cuck has been achieved in this thread. I'm not sure how you'll top this one but I have faith in your ability to achieve it.

Oh and best of all - about 70% of the time a blind monkey will make 15%/week selling their spreads. That's like the basic nature of selling out of the money spreads.

This "success" you think you had is about on par with winning a participation trophy, only it's less exclusive.

Duh. Obviously, I would've made exponentially more buying puts. I realize that.

If I can make 3-5% a week, I'm fine with that. And as I'm sure you know, you don't have to be hard bullish/bearish to accomplish that with spreads. It's easy to look back and say you missed such and such clear opportunity.

And no, peak cuck title goes to you - someone who makes a 5x trading bet and then just sits on the sidelines and watches the opportunities fly by. Jesus Christ, that's the ****ing definition of "cuck".

Oh, the irony.

I'm not watching the opportunties fly by. I trade daily. Today was so easy even the dumbest of money could make money.
Selling spreads is a classic loser trap. It has the following psychological advantages:

- You get extra cash in your account instantly
- You feel like the "smart money" because you're going short the vol/time decay that the smart people at optionwinners.com told you to!
- You win most of the time
- It's less stressful

It has the following monetary disadvantages:

- You pay double the spread
- You take on unlikely but enormous tail risk for much more than what's in your account
- You're extremely unlikely to have an edge in a frictionless market - there is zero reason to think you can price medium term volatility better than MMs. Which, given the spread, means you're gonna bleed away in fits and starts.

Regardless, your excitement at your participation trophy is comical. As is your notion that you can make 3-5%/week selling spreads. Good lord.