FrankTheTank 839 Report post Posted August 24, 2020 (edited) I don't mean to sound indifferent as I remember feeling like this too. I remember getting so excited about the official SO performance and I was day dreaming about all that money I was going to make. Each time I saw Yowster and other make profits when I was losing money felt like a knife being jammed into my heart. It sucked. I get it. Based on my own journey - the sooner you stop trying to duplicate the official trades and admit to yourself that you cannot duplicate them the better. Unsubscribe from the SO alerts and just follow the unofficial trades and the trade discussion group to see what people are looking at (many times you find these trades before the official ones giving you a chance to get in early). Are Kim and Yowster trying to pull a fast one on us? No - but you also cannot replicate their trades exactly because some of these trades have low liquidity. As soon as any market maker sees 100s of orders coming in at the same strike they are going to raise the price of the options. This means you will always get filled on the losing trades and maybe get filled on some % of the winning trades. This can easily flip a strategy that makes 50% a year to one that makes 0% per year. So - once you admit that to yourself you have two options: 1) Give up. Move onto the next guru who claims they can make you a millionaire. 2) Figure out how you can make this strategy work. Whenever you miss a trade you can complain which won't change anything or instead ask Yowster what exactly he was looking for when he entered. Learn from him so you can spot your own trades and maybe get in before everyone else. I went from complaining about SO and quitting here to just closing out several calendar trades for 30% each. None of them were official trades or even mentioned on the board here. Just used the information Yowster teaches us and VOLHQ to find my own setups. Edited August 24, 2020 by FrankTheTank 9 1 TrustyJules, PeterBear, QuickNick and 7 others reacted to this Share this post Link to post Share on other sites
Yowster 7,882 Report post Posted August 24, 2020 Thanks @FrankTheTank, I agree with almost everything you mentioned. The only point I'd like to comment on is when you said " but you also cannot replicate their trades exactly because these are options with very low liquidity." I avoid setups with very low liquidity (although I use them quite often for my own personal trades). If we only used the indexes and high options volume stocks like AAPL, AMZN, etc we'd only have a couple of trades a month and I don't think anyone wants to see that. I actually thought quite a bit about make CPB an official trade because its volume is never huge, and is a bit lower this cycle - but we have a track record with it and we typically can get fills near the mid on entry and exit so I decided to use it. That said, your general gist about learning the strategies and analysis and applying them to your own trades is 100% spot on. Share this post Link to post Share on other sites
DubMcDub 122 Report post Posted August 25, 2020 (edited) The point's been made before, but even very high liquidity options can have their prices (and especially spread prices) temporarily disrupted when a sudden influx of orders hits. This is the algos trying to predictively front run the order flow. So I second @FrankTheTank's remarks. But also, I say again, there is no such thing as an options advisory service that doesn't suffer from this problem, especially ones that trade spreads or multilegged strategies. Also, maybe it's been mentioned, but I want to give Kim some kudos for allowing this discussion on a non-member board. Any prospective SO subscriber can see this. If this whole thing were a ruse or whatever, you'd think he'd prevent threads like this from being publicly visible on his own site. (You'd also think he wouldn't allow monthly memberships that can be canceled any time.) Edited August 25, 2020 by DubMcDub 2 3 QuickNick, FrankTheTank, Troy Mclure and 2 others reacted to this Share this post Link to post Share on other sites
Kim 7,342 Report post Posted August 25, 2020 @DubMcDub I'm actually glad that this topic has been created and it's open to non-members. I believe that prospective members can read posts from members like you and see the real value of the service. It also helps to set the right expectations and filter people who are not willing to put an effort or those who "cannot sustain losses". Of course everyone will see what they want to see, but we have nothing to hide, and we are trying to be as open and transparent as possible. "We are different" has to be proven by actions, not words. 2 2 maurizio, mccoyb53, Martin1 and 1 other reacted to this Share this post Link to post Share on other sites
betaboy3000 64 Report post Posted August 25, 2020 (edited) If I may post a contrasting experience to @yalgaar's... I am the newest newbie when it comes to options trading. After being a long stock investor for decades, I decided this year, after the crash, to figure out what options could do for me to provide a hedge. I did some free online courses, listened to a lot of podcasts, and then managed to lose thousands of dollars buying puts on a stock in an industry I am intimately familiar with, learning the valuable lesson (again, but with options this time) that the market doesn't care what a fair valuation is, and that it could stay irrational much longer than my options' expiration. I now realize this is a fairly typical entry for many a new options trader. I then sampled a few trade advisory services and then ended up here, intrigued of course by the returns, but also by @Kim's articles here and on Seeking Alpha. I joined SO in July. Since then I've done 7 trades: 6 official (BYND, UBER1, UBER2, LOW, BBY, BILI) and one unofficial (XLNX). Only one has been a loser (UBER2) My tips, all of which have been gleaned from advice from members here: 1) As everyone here seems to repeat Ad Nauseum, "Don't chase the entry!" For me, this means that if I can't get in within 2-3% of margin on official, I let it sit. From a post here I learned how to plot the strategy price so I can see it move during the day. I might place a day order for the first day, or even 1-2 days after the official notice, at the official price (or within 3% of margin if it looks like it will not go down), and then I just wait. If it doesn't get filled, I just walk away from the trade. As Kim has pointed out, the prices do sometimes go well below the official. 2) Once I get a fill, I immediately set a GTC close order because I'm on the other side of the world, and I can't be bothered to sit in front of the computer all night. For an earnings trade, if it doesn't get filled prior to the earnings announcement, I would plan on walking up before market close to close it, but I have not had to do that yet. My average GTC target has been around 10% return on risk, but I'm not stuck on that. Apart from SO, I'm playing with both VolHQ and ChartAffair, and I realize now that I'm going to need OptionNet to visualize potential trades better. I use IB but their option "Performance" visuals are lacking. But that is all I plan on getting. I am now reading books by Wolfinger and Augen, and I'm fully aware that this journey is going to take years. The more I learn, the more I realize how little I know. My results thus far: for the 6 winning trades I have averaged around 10% (unsurprising I guess given my target, but very surprising to me given that the average time in market was around 3 days per trade), and I lost 0.5% on the one loser. I'm glad to report that my first 2 months have more than paid for my subs! More importantly, I've learned A LOT in just a few weeks, and the curve remains very steep, but here I feel there's a culture of mentorship, something I'm going to need. Edited August 25, 2020 by betaboy3000 Formatting and spelling 6 3 DubMcDub, cmartin, ArunS and 6 others reacted to this Share this post Link to post Share on other sites
gf58 766 Report post Posted August 28, 2020 (edited) With the month virtually over I thought I'd give an update of my results since I stopped doing the stuff Im bad at (8 Aug to today): 7.8% return on capital including commissions 27 trades with 77.8% win rate Worst loss of 27.3% and best return of 30.2% with an average of 6.8% My trades consisted of most of the official trades along with a number of unofficial trades/strategies that I've learnt directly from the SO forum/members. The official trades that I missed were usually good ones (like BILI) and I whiffed a number of otherwise good ones (BBY was a 1.2% return after I hit BUY rather than sell and had to quickly unwind that mess). Id put the total result down to a combination of focus and luck. Focus in that I used my results to tell me what I seemed to do well and what I wasnt getting the hang of...then eliminating what wasnt working and focusing single mindedly on getting good at the one or two strategies I continued to trade. I cant emphasise strongly enough the benefits I got from just focusing on one thing at a time and relentlessly focusing on improving at it. Luck in that the outcome of each trade is random..so its kind of illogical to think that one or two trades is going to be consistently profitable...but applying the law of large numbers to a strategy with an established edge -ie do it a lot- and the numbers work out in your favour. Its been mentioned that an important step in the learning is putting on your own trades. Through having to identify my own potential stocks, identify my entry points, plan and execute my own exits countless times....well....the learning multiplies. One other thought: trading is the most honest task Ive ever experienced. There is no room for delusion, bias, negativity, optimism, excuses or blame. It demands total honesty of the self. Ive worked in jobs where the majority of the role involved wearing a suit, being likable and appearing to know what was going on...actually generating money for shareholders was an optional extra and could be frowned upon if done in a way that made others feel inadequate...ie most of the job was playing 'dress ups' as a busy business men in business. Trading couldnt be further from it. If you make a profit; thats on you. If you make a loss; thats on you. If you waste time not focusing on how to make a profit; thats on you. So without being provocative -and with the non-existant authority of someone who had a couple of lucky weeks in a row and still has too much to learn- if you're not making money then it stands to reason that its your fault. Putting aside the emotion this statement would conjure up in any human with a pulse, the correct response is to ask yourself what can I do to improve. I dont know if the discussion has moved on or not but I unfollowed the thread when there was a lot of finger pointing about commissions and impossible fills...it was bumming me out and screwing with my mental. The only thing that matters is how each of us can improve; blame is a waste of time. My biggest loss this month was on a low open interest CIEN ratio where the MMs immediately jacked the IV after I entered; the previous me would have bitched and moaned about how it was rigged or unfair. The me that's developed during my time with SO instinctively thought that sucked...how do I reduce the risk of it happening again in future. So I pulled some data, identified some micro structure behaviour, got a sense of where the punji traps were and adjusted my approach. Im still nervous as hell about it happening again and Ive by no means gotten to the bottom of it but the adjustments in my approach allowed me to close out a position today for a overnight gain of 16% all off the back of RV change in a low liquidity/wide spread market. I wouldnt have been able to do that had I not been punched in the face a week earlier and resolve to minimise its future frequency. Iago said whats done is done and John Galt said what is, is but a less esoteric boss once told me that its not how many times you get knocked down that counts, its how many times you get back up. As this last point is becoming a bit abstract but I'll try to bring it down to earth by summarising that a critical part of trading seems to be having an appropriate mentality; specifically one of complete honesty, resilience and self ownership of all outcomes good or bad. If you feel the urge to blame then youre probably on the wrong track. If you feel the urge to find a way to avoid that happening again then youre on a more profitable course. What that one improvement is going to be different for everyone but look at your trading log -you have been keeping one havent you?-, pick only one thing that will make a difference and ignore everything else until you've improved it. Edited August 28, 2020 by gf58 Broke up the wall of text 10 2 3 Jevgeni, QuickNick, zxcv64 and 12 others reacted to this Share this post Link to post Share on other sites
porgie 118 Report post Posted August 28, 2020 Congrats @gf58----7.8% in one month!!! Lets see--even 7%/month computes to 84% gain on capital on a year of similar and not unachievable months. Thanks for sharing and here's to more similar months!! Share this post Link to post Share on other sites
Kim 7,342 Report post Posted August 28, 2020 Thanks for sharing @gf58 and I really like your approach. Our current August return on closed trades is 9.5% excl. commissions, so 7.8% actually comes pretty close, depending on your broker. Share this post Link to post Share on other sites
zxcv64 694 Report post Posted August 28, 2020 @gf58, wow what a gem of a post. It's one which needs to be read a few times, and on a regular basis. You are raising the bar very high for the rest of us mere mortals 🙂 1 hour ago, gf58 said: So I pulled some data, identified some micro structure behaviour, got a sense of where the punji traps were and adjusted my approach. I have a feeling that there's little nuggets of golden knowledge in there - if you feel like sharing it on a new thread at some point, then I for one, would be very grateful. But no pressure, and no expectation. Happy trading. 1 QuickNick reacted to this Share this post Link to post Share on other sites
porgie 118 Report post Posted August 29, 2020 (edited) @gf58 I went ahead and ran my numbers and I thought they looked good: So for the month of August with just one trading day to go I have closed on 8 SO trades----for me there were 7 winners and one loser. Overall performance after commissions was 8.75%--please see explanation below as I have already closed 2 active open SO trades. I have already closed out CPB and KR for my profit targets and they are still open trades with SO---the main reason for closing these early is I will be spotty next week at being able to monitor the trades--my big winner this month was the TLT trade. In addition using SO trade theses and using smaller allocations ( because I am still learning ) for these trades I added another 1.3% after commissions with 7 winners and 2 losers and actually the 7 winners came after the 2 losers--so 7 in a row. If I had used the usual allocations I use for SO official trades the gain after commissions would have been 6.3%. My losers on my own trades were: BYND through earnings hedged straddle X 2, Winners were ZM pre-earnings calendar, PTON pre-earnings calendar, BBY earnings straddle, ZM pre-earnings calendar #2, ZM pe-earnings calendar #3, and CRWD pre-earnings Cal, and PTON pre-earnings calendar #2 Obviously I am more comfortable with the pre-earnings calendars than the straddles, but my comfort level is growing with time on screening for the straddles. Next to try to learn better over time is the ratios--note I have not traded any of these on my own as I do not feel I have studied them enough to really understand how to pick high probability winners. The real reason for my post is not to boast but to show other new members what learning the strategies and being patient and selective with entering trades can do to increase the odds of winners and add to overall returns/success So overall a gain of 10% on the month--not bad for an amateur.....I think many others probably did better than this.... P.S> I am also in the Anchor Trades on EFA, IWM, and SPY and these are also doing quite well Edited August 29, 2020 by porgie 4 4 Martin1, gf58, Kim and 5 others reacted to this Share this post Link to post Share on other sites
gf58 766 Report post Posted August 31, 2020 Thanks all. I had some own goals through poor execution of the officials, missed some officials through not being able to get in but also got headwinds from some better prices on the officials and earnings ratios/VXX Fades. I count those as part of it because the value of SO is so much more than just the official trades, its also the unofficial ideas and most of all the feedback from other traders in the forum. I think that countless others hit the nail on the head that the best way to implement the SO strategies is to learn them like the back of your hand and execute them on your own. So perhaps its not a big surprise that some of my best winners have been ones I've done on my own. So @Kim I've probably done slightly worse than that on the officials but the learning I've gained from them/forum discussions has enabled me to add in some great additional trades....and because I'm only looking towards my own positioning that has allowed me to approach some less liquid situations which has expanded my universe of opportunities further. Great work @porgie! 10% for a month is fantastic by any measure. I find it very very helpful mentally to go through the numbers on a weekly/bi-weekly basis. I've said elsewhere that the key for me is on focusing on executing the plan as well as I can and letting the plan/edge in the plan take care of the result. Regular reviews give me the confidence to do this. It also helps give a bit of a learning plan of what I want to focus on next. It looks like you've identified areas that you're more comfortable going out on your own. I'm much the same, I haven't had much success with earnings straddles...my official ones are fine but my self generated ones are not so good. Drawing from my experience with some of the less liquid ratios + other unrelated discussions, I suspect that the gap for me on earnings straddles is due to poor entries...my hunch is that because the avg gain on a successful straddle is much lower than other strategies, a good entry price is much much more important for consistent success. The learning opportunity will be different with everyone but until you review your numbers you cant begin to know where to focus your attention. I don't know how the education system works elsewhere but in Australia its not uncommon for kids from fancier schools really stumble in their first year of uni. High school can be an environment where their devoted teachers are structuring the lessons for small class sizes to teach them exactly what they need to know to get a great result on the end of year exam. Uni on the other hand features massive classes where the unpaid tutors arent exactly motivated to throw a life preserver to an individual student who's falling behind. Its a bit of a culture shock as all of a sudden you realise that -syllabus aside- you've got to take charge of your own learning, assess your own abilities and develop a study plan specifically for you...no one else is going to save you from drowning if youre not prepared to try to tread water yourself. I couldnt ask for a better set of resources to learn from than those available at Steady Options...but if you only put in the contact hours and dont do any study outside of class then you're not really getting your full money's worth. Analogy aside: I couldnt recommend more strongly that members review their own numbers and set your own study plan based on this. @zxcv64 unfortunately my approach wasn't all that exciting. I pulled some 5 second data from TWS via the API and worked up a bid/ask of the spread across a couple of sessions to get a feel for what the true mid might look like. I noticed that certain low liquidity legs have some really strange behaviour...The ask might be 1.95 and then all of a sudden the MM with blow the ask out to -say- 4.00 and then lower it back down to 1.95 by a cent per second...and this could be happening to multiple legs at the same time in the spread (occasionally cancelling out the apparent movement). I also noticed that putting in an ask at the right level would cause them to immediately update their ask their real level/skip the countdown. I have no idea why this occurs but it it took some of the unknown out of it...or at least made me a little less trusting of the true/ONE generated mid particularly with low liquidity chains. I noticed that these random spikes could throw the real mid off by 10-20% in one session...so although the mid might look stable in ONE the real price might change as soon as you put an order in. The best solution just seemed to be to throw an order for a single combo in several dollars below the mid/down at insult prices and then patiently step you way up..once you get a hit/establish the actual market mid you can then scale in from there. Not rocket science but its an improvement I never would have captured if I hadn't been launching my own trades and making myself focus on one thing at a time. 4 1 1 porgie, Kim, Martin1 and 3 others reacted to this Share this post Link to post Share on other sites
porgie 118 Report post Posted September 1, 2020 @gf58 A quote from your post above "The best solution just seemed to be to throw an order for a single combo in several dollars below the mid/down at insult prices and then patiently step you way up..once you get a hit/establish the actual market mid you can then scale in from there. Not rocket science but its an improvement I never would have captured if I hadn't been launching my own trades and making myself focus on one thing at a time." That seems to capture the essence of getting into some high probability trades. I also learned if I have the time to keep an eye on the computer---is to adjust your entry price to reflect a decent RV throughout the trading session. Another new lesson "learnt". See if others agree---say for instance a stock with reasonable liquidity has an RV of 5.0 on an earnings straddle 6 days prior and the median RV is usually 6.0--you also note RV stays relatively flat up to earnings and median T-0 RV is 5.5---so the setup looks good. The stock is trading at 100.00 at the open---so you place an entry straddle order a little bit low ( the 5.0 RV entry would be 100*.05= 5.00), so you start at 4.90-4.95 or so---now the stock goes to 105 a few minutes after the open. So the new entry at RV 5.0 would be 105*.05= 5.25. I've learnt to adjust the entry price a bit higher to get into some winning trades---in this case I may ratchet up gradually to 5.10-5.15 or so to see if I can get filled at a still reasonable RV. Perhaps at a smaller allocation, then scale in if the price comes back as you mentioned. Thoughts from the group? 1 gf58 reacted to this Share this post Link to post Share on other sites
Kim 7,342 Report post Posted September 1, 2020 @porgie this makes perfect sense, especially if you have a larger account and can scale in. And lets remember: trading is a business. As in any business, prices are involved, and our profitability of success will always depend on our ability to get good fills. Every business revolves around this cost equation... If getting good prices was so easy, there wouldn't be any markets/any business... Sometimes playing with orders helps too, increasing/decreasing by couple cents, pausing and resubmitting. It's a negotiation. In the same way you don't pay a full MSRP for your car (I hope), you should never pay an asking price for your options. 1 porgie reacted to this Share this post Link to post Share on other sites
gf58 766 Report post Posted September 1, 2020 13 hours ago, porgie said: That seems to capture the essence of getting into some high probability trades. I also learned if I have the time to keep an eye on the computer---is to adjust your entry price to reflect a decent RV throughout the trading session. Another new lesson "learnt". @FrankTheTank seemed to be getting some nice results with earnings calendars from tracking RV across sessions and entering when it veered lower; then turning it around quickly when RV veered to the higher end. Not sure of what tools you're using but a middle ground enhancement might be to spend a couple of minutes prior to each session recording RV prices at 15 minute intervals from the last couple of sessions (you could do this with ONE etc). This could give you an even higher probability but still practical target. To run with @Kim's analogy of negotiation, its always advantageous to know that that the dealer has quietly sold the same car for xx recently and then being patient enough to wait until they need to come down to your position to hit their sales quota. NB. I did buy a car at sticker price once. I was a beautiful Alfa Romeo convertible with red leather seats and a jet engine under the bonnet. Obviously after a test drive my brain wasnt fully engaged. Mistakes are OK as long as they're only made once. Share this post Link to post Share on other sites