Optioneer

[3putt 10]

Anyone familiar or experienced with Optioneer Trading? Any input appreciated.

[Harlequin 10]

Not much action in the Options Laboratory. I guess most traders here trade futures and for a good reason. With options you can pick the market direction correctly and still lose money. Interesting statement on the home page of the website you mention:

 

"According to the Chicago Mercantile Exchange 76.5% of all options held to expiration at the CME expired worthless during a three year study."

[JPx2 10]

Not so........they are referring to un-educated novice traders who think that Options are an easy quick buck.

 

Like everything else, you need to know your enemy...knowledge is power.

[BlowFish 10]

Not much action in the Options Laboratory. I guess most traders here trade futures and for a good reason. With options you can pick the market direction correctly and still lose money. Interesting statement on the home page of the website you mention:

 

"According to the Chicago Mercantile Exchange 76.5% of all options held to expiration at the CME expired worthless during a three year study."

 

But you can be wrong on the market direction and make money with options!

 

76.5% makes options sound far to attractive (as a seller of course). What it does not factor in is the magnitude of the wins on premium compared to the cost of honouring expiration in the money.

 

Personally I find them a bit too 'sophisticated' or maybe I am just too unsophisticated I did read McMillan on options a couple of times whilst it kind of made sense at the time nowadays I wouldn't know a Greek from a Cretan.

[JPx2 10]

Probably the best video I've seen came from the developers at http://www.bestchoicesoftware.com .....there is one area...in the help section I think...where there is a video on options. It's the very best explanation of Options I've heard....it's simple and can show new options investors how to do it without throwing out the baby with the wash.

I'm not a BestChoice user or sponsor...I just happened on the site while searching for something else.

JPx2

[brownsfan019 17]

With options you can pick the market direction correctly and still lose money.

 

And that is the very reason I no longer trade options. I will never forget my last option trade - bought some calls on Boyd Gaming, the stock rose nicely and my option lost money.

 

:doh:

 

After that I decided it was time to move on.

[JPx2 10]

.....I have a few that run backwards on me from time to time. But the whole idea is the same a buying stocks......money management.

 

Sell that option and move on to the next.

 

I used to spend hours monitoring my options and the underlying stock as well as the volatility. Now, I wonder why I wasted my time. After your trade is confirmed, set your stop loss and your profit target and forget it.

 

There are approx. fifteen (15) stocks that I can trade on a seasonal trend. That's the best way to go rather than constantly scanning for new ideas. If you go to the brokerage I use, http://www.optionsmonster.com , you will see that they provide a scanner right on the page that already has trading ideas.

 

If your not sure about yourself, trade a vertical straddle ie. Take stock "TCK" for instance. If it's trading today at say $7.25 per share, buy one 7.50 CALL and sell one 10.00 CALL......you can't loose.

 

JPx2

[bbj_anchor 10]

They've been courting me for a couple of weeks to sign up. nice paper tarding available. which has pointed out (to me) an obvious weakness to me. There are numerous periods of time where vix is high that the system doesnt work and thousands are lost. low volatility and trending markets work fine but win hundreds.... thus watchout draw downs can be huge.... the loss periods of time often last 2 weeks... you dont lose for 1 or 2 months... how many trades would you have put on? how high is high? etc. They repeat over and over again that it's your choice to make the trades not automated etc.

 

I'm not going in for it...

 

BBJ

[Titan 10]

I've traded the Optioneer system since early 2002. I lost a lot in October 2008 thanks to the GFC...but who didn't? But this was after making excellent profits on most trades over 6 years.

 

I am constantly dismayed by people who denigrate a system without really investigating it or fully understanding it.

 

There is nothing particularly unique about the Optioneer strategy. What is unique is it's attempt to quantify every day the probability of your trade on the day of expiry breaking through the boundaries of the strangle set (and thus be a loser). This gives the trader some pre-warning of how risky his trade is becoming and he can then make his own decision to stay in or exit.

 

All the calculations have been automated by the website, so the actual time spent evaluating possible new trades, and monitoring current ones is small. Half an hour a day if you are setting new trades, less than 10 minutes just to check current ones.

 

Optioneer and their preferred and exclusive brokers also monitor and assess the market and use other indicators to give traders, on a daily basis, some general idea of what the market is doing, to assist them in making decisions about entering trades or exiting existing ones.

 

Optioneer don't pretend to be infallible, and don't pretend to have the ultimate answer. They stress that high-volatility times whilst they can be very rewarding, also carry greater risk. They constantly assess their strategy against current market conditions and have modified it several times to suit the current conditions. They don't tell you that you can double your money every 3 months or make millions on one trade. They stress that the best way to make money is to aim for modest profits on frequent and regular trades. Diversification is a constant theme... to set trades across a number of different indices, in different months and at different strike prices if within the same months. This means that if the market moves strongly against you in one trade, you will hopefully be ok in others (and generally are).

 

They also stress that not all trades can be winners. Yes, the loss on one trade can be the profit of several, but they are thankfully relatively rare. As a long term trading strategy, focusing on modest profits from frequent and regular trades, it is a very successful system that is also easy to follow once you are familiar with it.

 

One last thing...the strategy is designed so losses are NOT unlimited. They are structured so that the MAXIMUM amount you can lose on a trade is the cash allocated to that trade. Your account can be wiped out should Armageddon occur (as it virtually did last October), but there is NO RECOURSE on your other assets. You only need trade with what you can afford to lose.

 

I hope this helps...options trading is not for everyone, and Optioneer does not necessarily suit everyone's trading style. But it does work under all but the most difficult market conditions. I've spoken to the founder Andy Evans many times, he's now retired but I can pick up the phone and talk to his son (CEO of Optioneer) when I need to. These guys are genuine, honest and human - just not perfect.

 

(I suppose I have to add to negate the cynics, I have no financial involvement in Optioneer or it's parent company, I'm just a satisfied member.)

[M. Contrarian 10]

.....I have a few that run backwards on me from time to time. But the whole idea is the same a buying stocks......money management.

 

Sell that option and move on to the next.

 

I used to spend hours monitoring my options and the underlying stock as well as the volatility. Now, I wonder why I wasted my time. After your trade is confirmed, set your stop loss and your profit target and forget it.

 

There are approx. fifteen (15) stocks that I can trade on a seasonal trend. That's the best way to go rather than constantly scanning for new ideas. If you go to the brokerage I use, optionMONSTER: Real-time News, Webcasts, Education for Options Traders[/media] , you will see that they provide a scanner right on the page that already has trading ideas.

 

If your not sure about yourself, trade a vertical straddle ie. Take stock "TCK" for instance. If it's trading today at say $7.25 per share, buy one 7.50 CALL and sell one 10.00 CALL......you can't loose.

 

JPx2

JPx2, the TCK example is not a straddle, but rather a bullish vertical call spread, as both your long and short calls are out of the money. Importantly, you CAN lose in this trade if TCK closes below 7.50 at expiration. However, if you SOLD the 7.50 call strike and BOUGHT the 10.00 strike, you'd make money if it stayed below 7.50, and cap your losses at $250 minus collected premium on the spread between the two strikes. The spread as you've outlined it only makes money once the underlying stock exceeds the 7.50 strike by the amount of net premium you paid for the spread.

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