I’m calling your bluff. My job is 5% analyzing budgets, 5% sitting in meetings, and 90% babysitting program managers. It is neither difficult nor all that time-consuming. How do you think I manage to be on 2+2 all day?


And what is alpha for you? Macro events like today? Earnings? Some other fundamentals factor I’m oblivious to?

You wouldn't be the first guy to lose his money, his house and his job after getting a trading addiction. Keep your job man, I imagine trade windows open and lots of attention on them for much of the day is pretty -EV for job security.

Alpha is ...<edit: **** it I'm not giving it away that easily>... That's the most important sentence you'll ever read about trading.

Well, sir, somehow I managed to rebound from -23% and ended the week at +9%... Thanks to SPY and FB puts, the latter of which I’m still rocking.

Congrats, you are finally starting to do the types of trades that TS has been telling you to do all along.

If you don't have alpha, at least try your hand at lotto put/calls if you are going to do something.

It's an awful idea and you're an idiot for considering it. Why? Because everything you do that doesn't involve you listening to me is idiotic and waste of your time. You choose the lowest alpha dumbest plays repeatedly. You are a total idiot at trading and you have no idea what alpha is. You have a daughter for ****'s sake; pull yourself together with this self destructive nonsense. WTF is wrong with you?

Fill in the blanks:

I have a large enough edge trading earnings straddles such that I beat the spread and have some alpha left over because (check and fill in which applies):

[ ] With my two months experience, I understand and can model earnings better than the average of those involved the stock
[ ] Stuff moves a lot and it's fun!
[ ] There's overpriced premium available that's larger than the spread because _________
[ ] There's underpriced premium available that's larger than the spread because _____________
[ ] I want to lose money learning
[ ] I make more money when you pay the spread twice! I wish I could pay it 3x!
[ ] I'm such an idiot at the easier task of picking delta for 1x the spread that I must obviously be profitably able to spot overpriced/underpriced vol for 2x the spread!

Jesus, tell me how you really feel


[x] Stuff moves a lot and it's fun!

… obviously!... (I'm just kidding)

I know buying premium twice prior to earnings isn't exactly ideal. My approach would be to do this on lower-cap stocks that are more likely to move based on higher/lower expected reporting. I would not be taking this approach on NFLX, C, JPM, WFC, et al.

So, if one wants to take a crack, what's the better approach? Taking a single position after reporting? Staying the **** out of earnings altogether?

So what you're saying is that you're so utterly incompetent at picking delta on earnings that you would rather pay double volatility and spread at the highest rate possible (a strike straddle!) than pick delta? And that this is +EV?

WTF is wrong with your head? Like seriously. Read through the above until it sinks in that you're a ****ing moron.
Have a thesis that has strong identifiable alpha large enough to beat fees and spread with a healthy margin on top.
Bet on that thesis. Stay the **** out otherwise.

How is this so ****ing difficult for you? How are you so utterly stupid that this isn't obvious to you?

The reason that picking delta over taking a straddle isn’t utterly obvious is because I still haven’t bothered learning the Greeks yet, so I literally have no clue what delta really is. And before you flame me on that, it was you that said learning the Greeks was pointless. Your exact quote was, “Saying that you have to learn the Greeks in order to trade options is like saying you have to understand Newton’s laws of motion to ride a bicycle.”

So, what you are saying is that it should be intuitive, even if one doesn’t fully understand delta. Investopedia tells me that delta is the price-change ratio between the option and the underlying... so, if an option has a delta of 0.40 that means that for every $1 a stock goes up, the option goes up 40 cents. Correct?

See, here I am learning

No. I'm using delta as a shorthand for "picking a direction".

I'm juxtaposing two utterly absurd propositions you're putting forward implicitly:

- You are so clueless on the stock you can't pick which direction it's likely to move during earnings
- You are so clever on a stock you think you can be +EV paying 2x the earnings volatility by buying a straddle.

There are rare instances where this is true (binary outcomes on say a drug trial that's mispriced, options being abnormally cheap in the market generally, for example when volatility died in 2017 and options got too cheap), but none of those apply here, in fact the opposite applies regarding volatility cost.

And no that last sentence doesn't mean you should sell them instead. You should just stay the **** out because you have no alpha.

Ahh, well that makes a little more sense (re:delta)

So, if TS is trading options on a stock during earnings, he typically has already taken a position before earnings have come out, avoiding inflated spread costs, and in essence your “thesis” in this particular case has served to predict earnings and how it will move a stock. Correct?

I don't trade earnings except in exceptional circumstances. But yes.

I'm not even putting forward a thesis on what you should do during earnings. I'm pointing out that your approach is ******ed.

To buy a straddle, you need to say:

- I have absolutely no clue if it will go up or down
- BUT I know to a good degree that the move will be much larger than the market believes on both sides (1.5x as large as the bulls believe if it goes bullish, same for bears)

Cool story bro. What is your rationalization for this absurd position in a market where VIX is 20?

But you're not even thinking like that, are you? You're just playing roulette. And people who play roulette go broke, eventually.

I don't know why the concept of searching for and waiting for alpha is beyond you. It's a basic component of a non-loser mind, to avoid risking something of value on situations that have no edge in the long run. It's not specific to trading. In what universe do you think you have alpha buying straddles?

At some point you're going to have decide if you want to be a loser who's playing a very expensive casino computer game because he likes getting lost in clicking buttons, or someone who's going to make money reliably. You can't do both. One is a disciplined intellectual exercise and the other is "hurr durr that looks good, click yay!"

This is all easy for you to say when you have several years of options trading experience. Part of it is not fully knowing what works yet and wanting to experiment, part of it advice from articles/videos/etc. You can argue that I should be doing these things paper trading, but I’ve come to find that paper trading is largely a waste of time. You’ll never operate the same under real trading conditions and you won’t take lessons to heart when nothing is at risk.

Of course, you can also argue that I shouldn’t be “experimenting” at all and that 99% of all online trading advice is hot garbage.

How is a handful of options trades going to give you useful data? That's irrational. You were lovin' the put selling and thinking you had it nailed until a bad day, then you abandoned it. That's not a rational approach to learning trading, that's just bull****.
All the advice except mine is awful and confusing. You don't need advice. You need to get from brain from ****** level to alpha spotting level. Nothing you are doing is helping or training you to spot alpha.

You should be training your brain as rapidly and comprehensively as possible to find spots where the payoff is better than the odds. Dipping your toe into areas where you're certain not have an edge is stupid.

Think of this as sports betting on stock outcomes. You want a thesis about the actual event in the real world and then bet on that thesis if the odds offered are way out of sync with that event.

I guess my problem with you is that you're a lazy ****** doomed to fail with your current approach.

You first have to figure out why the market does what it does before you can start putting on trades that aren't drop dead obvious trades. You should be asking yourself thousands of questions every week in an attempt to get a broad picture. Examples of questions for today

Why was the market down today? What effect did that have on other stocks? Why was Tesla down more than the market? Why did CGC rip 10%? Will it do that reliably? On what kind of events? How much time did I have to get in on the trade? Why are banks strong and bonds weak? Is there a relationship between that and the market? Why is the market showing strength still after so much buying?

Or for the straddles you were thinking of "dabbling" in:

How are options priced for earnings? How does that compare to regular pricing? What makes it vary higher or lower? How have they varied previously? How much does the stock usually move? What makes it move? Does market volatility affect pricing? How can it get mispriced? Why does it get mispriced? Is there any data or test I can do to see if these theses are true?

You should literally have no time to watch worthless ******s on youtube because you're so busy asking questions to build out your own mental model of the markets. But you're a lazy worthless ****** so you click youtube videos to try and learn then decide to "try out a straddle or two on earnings to learn". What the **** is wrong with you?

Prizes in highly competitive free money games don't go to lazy ******s like yourself. So either change, or accept that you will lose all your money and then some, or stop trading. They're your three options at this point. There are no other options.

It’s truly hilarious for you to make these assumptions. I literally ask myself all those questions and more on a weekly basis. I spend pretty much every moment during trading hours that I’m not working reading CNBC, Benzinga, MarketWatch, etc. I follow experienced traders on Twitter and StockTwits.

You seem to think I just pull up an options chain with no prior thoughts at all and just pick whatever. That’s not the case.

But asking yourself relevant questions is not the same as having actionable answers, which someone trading in practically a brand new market is simply not going to have. You literally talk to me as if I’ve been trading equities for 5+ years. I’m very thick-skinned and take zero offense to the insults - in fact, I find it kind of hilarious for you to have the expectation that anyone who’s totally green in options would have the ability to see drop-dead obvious trades. What is drop-dead obvious to someone who’s been trading options for double-digit years is not going to be anywhere near as obvious for someone who has no experience. It’s kind of mind-boggling for you to speak like you don’t understand that.

You should be asking several hundred questions at least per day. If you have to read articles on options or watch youtube videos on trading you're doing it wrong.

And I talk to you like you're an average idiot first time trader approaching this incorrectly, PLUS deliberately making it harder than it needs to be by taking spots where you have zero chance of an edge, PLUS being too stupid to listen to advice.

Let's make this really simple.

Why do you want to trade straddles? Track the source of that idea in your head. What is it?

Anyone who has enough gumption to eventually become a winning trader should be able to spot these trades in the first two weeks. More importantly, they should be able to intuitively avoid idiotic trades. The conversation in your head should have gone like this:

"I want to trade straddles!"

"Ok so they cost a HUGE amount of money including unrecoverable spread x2, and I'm paying twice what a directional pick would take. And if I can't pick a direction then how much do I really know about the stock? How can I reliably have a sense of volatility after earnings if I'm so incompetent at picking a direction that I want to pay DOUBLE the amount to not have to pick a direction? What is my Fundamental Theory Of Investing as to why my straddles are +EV? Perhaps I'll leave straddles alone as there's no edge"

Why did this conversation not happen in your head? Why did you decide you were going to trade straddles anyway?

First off, the idea was not to start trading straddles exclusively as if it would be my main mode of operation. The idea was to pick a list of stocks as candidates and narrow it down to one or two a week out from earnings and buy an ATM straddle. I wouldn't be doing it the day prior since I know premiums get bid up at that point, increasing your breakeven point and decreasing your edge. I would be back-testing the stocks on the aforementioned list to get an idea of percentage moves on historical earnings releases. That, in theory, would give me an idea of which are more likely to move 10%+ when there's an expectation miss.

As I said earlier, I would be more likely to do this on low-cap stocks as it's my understanding that they are more sensitive to earnings surprises. There's also the added benefit of low-cap stock options being cheaper, so I can literally try out the approach for peanuts if I wanted to.

But why - what gave you the starting point of "I'm gonna trade a straddle - now I just have to find one!"? That's the core genesis of your stupidity and you're not honing in on it. Your own mental generation technique for trade ideas needs to be honed which means you need to go back to source and examine it. You can't polish a turd and sell it as gold, no matter how good you are at polishing. Perhaps you're not that kind of a thoughtful person with a high enough IQ to be able to track and then self improve your own models and processes - in which case you should quit trading now and find some of the many things in life that are far more fulfiling and wealth creating.

Anyway, I'll forge on in case you're not a lost cause. You're thinking about this entirely the wrong way. You don't pick a broad trade type - straddle is the dumbest broad trade type you could pick by the way - then go searching for a trade. That's ****ing idiotic and shows you don't think in terms of alpha.

Look at the TLRY trade. I started with an individual opinion, namely:

Opinion: TLRY is set up for a rip because the shorts are taking the wrong side of the trade on lockup and paying dearly for it, crowding the trade, as they're betting against old Wall Street sharks who control the float and whether stuff gets sold; thus is it ripe for a squeeze.

I then added a probability:

This is a counterintuitive narrative and it's already very overvalued; I can't count on more than 1 in 5 of this happening.

I then went in search of a trade to express this view:

- Calls that pay at least 5:1 are necessary for this trade to make sense

That's how a rational person approaches trades on the time frames you're using.

You're not doing anything approaching this. You're a solution (straddles!!!!) in search of a thesis. You have to have the thesis first - that's where the ****ing alpha is - then express that in a trade. And if you do it that way, you will just about never end up at straddles, because they're a terrible way to express most theses, especially when market volatility is high.

You have a bunch of idiot notions of incremental free money (sell options to collect the premium! Take a straddle to try and catch a missized move!) that people who listen to optioncucks.com think they're being clever on, but are really just deluded. Alpha comes from substantial mispricings relative to a correct thesis with a lot of leeway to be wrong. If you don't have a correct thesis and a lot of leeway to be wrong, you're doing it wrong and are guaranteed to fail.

You're not wrong. Trust me when I say that the TLRY trade is the blueprint for what I would like to be able to do consistently. Develop a thesis. Express said thesis in a trade.

I get it.

But once again - you are making bad assumptions about what is going on in my head. The impetus of the idea to trade straddles was NEVER "I'm gonna trade a straddle - now I just have to find one!"

The impetus was as such: Earnings can present an opportunity whereby substantial moves occur. However, I cannot (nor can anyone without inside knowledge) predict whether XYZ company's earnings report will be positive/negative and how it will affect the stock. Therefore, remove directional bias and trade a straddle.

I know it's not that easy. You don't put on straddles/strangles and just start printing incremental sums of money. There's risk that earnings don't drive any kind of substantial movement. There's risk when buying a week out that price can move to one side of your breakeven, creating a biased straddle going in to earnings that gets counterfeited when numbers come in to the other side.

So believe me when I say - I don't think that straddles are the Holy Grail. It was never about finding a trade type and then making a trade fit into it. This was about trying to leverage a strategy that doesn't require you to know a specific outcome for an opportunity that is, for a layman, impossible to predict.

I wish I was smart enough to predict CandyKreeps responses here, fascinating.

Yes I know that was the impetus. You're not getting it. The above is the crux of the stupidity. I'm not strawmanning you at all; I get precisely what's going on in your head. The stupidity is thinking they're worthwhile at all. If there's no way you can predict the direction there's certainly no way you can predict the volatility of an earnings event better than options pricers + the market. You're drawing dead in the long run. Don't be drawing dead, ok? And be smart enough to recognize when you are. That's all.

In every trade you should be able to identify:

- Who are the idiots
- Why you're smarter than them
- How money will likely flow during or following an event

The last one takes a lot of experience but the other two should be part of every trade.

How are you calculating this when the outcome isn't binary? I assume you could integrate a probability curve, but I'm guessing its less complicated than that.

Well, you think about it rationally.

Q: Are there likely to be pump events that will catalyze a rip?
A: Yes, it's such an obvious spot and the owners are old Wall Street sharks with a history of quality pumps, it's >70% they will.

Q: Is there buy energy to push the rip?
A; Yes x 2 - cannabis stocks have a bunch of a megatards with RobinHood accounts who pile in when it moves, and on the other side, shorts are getting killed by fees and some are going to tap out when their thesis gets gaslighted by the sharks. Shorts are also maxed out so they can't put on further downward pressure. The stock also has a strong history of same. So a rip is >80% likely to happen on a pump.

Q: Is there likely to be selling beforehand?
A: Yes, maybe 30-50% likely that there could be significant selling that will neutralize any pump/rip.

Put them all together and you come out to maybe 1 in 3 chance of a rip. You want 1 in 5 as a good margin of error.

So this stuff is mostly a science although it seems pulled out of my proverbial.

I'm talking about the payout itself.

When you say "xyz calls pay out 4-1", how do you come up with this payout ratio when a winning scenario is potentially one of multiple price points each with separate probability and payout?