I’ve been paper trading options pretty successfully throughout the last year. 2 weeks ago I decided to start with my real money. I started with a very modest 200 for my initial test but I perfectly executed a lot of trades, making multiples of many of them and compounding the amount of money I’m initially investing in entries. Also note: I pay very close attention to the historical resistances on the chart and play bounces off of those as entry points for eow options which has been very successful
In 2 weeks, I’ve gone from 200 to 5000 in my options funds. Mostly swing trading PayPal on the way up (while hedging with puts and then pulling out of any eow options that were too risky. Is this beginners luck or can some people just spot opportunity better.
Are some people innately good at options or is my confidence setting myself up for disaster?
byu/MarcoManatee inoptions
Posted by MarcoManatee
19 Comments
At least for me, the challenge is being patient enough to abstain from trading in between setups. Waiting is where the real challenge is, it’s pretty easy to estimate when something is going to bounce. When things heat up and you just saw something you’ve had your eye on go up 14% and want to buy in, that’s the deathtrap.
Why am in skeptical of this post!
Possibly a little of both. But what I want to hear is what exact strategy led to your successful trades? Can you replicate them? Are you disciplined to do only that on multiple other stocks? Basically, do you have a system that you have written down and have mastered or are you just slinging it in a short bull rebound after the market pull back?
It is quite possible you have a knack for spotting an opportunity that could be repeatable. Yes, in my experience some people have more of a knack for moving fast when they recognize specific technical patterns. But to bring that success long-term means you absolutely will get your face punched in by the market and it is how you respond to that , that will determine your long-term future.
Having a knack will only get you so far – and that is not very far. Having the discipline to hedge and know when to cut losses is what creates longevity in this career.
Also ALWAYS stay humble. Even Elliot management is only up 4% this year. Everyone eats it on certain years.
A whole two weeks during a seriously market wide bullish trend is not a good test of a gambling strategy.
The market WILL change.
There are different market environments that will flip the script on you. The entire market also changes over time so you must adapt.
Most people would at least do well in one type of market. Being consistent over a long period of time is much harder, and usually takes a few years for you to recognize what is happening.
I have been trading options for over a year now and am gaining a small amount of confidence (only on year 2)
I am not sure how you are coming to this conclusion after a few weeks.
Either way, best of luck and stay small and slow
Maybe you’re good. I was at the beginning as well however, I was ruined by bad risk management which led to me blowing up 2 accounts
Wow, you made buying options in a period of time where the SP500 had an 8 day winning streak?
“First one’s free”
Your next post will be: “This how I turned 200$ into 5000$ in 2 weeks as a rookie options trader”.
Joking aside, what kind of options were you trading? What was your success rate?
I have had some broker friends over the years that had success trading just one or two different stocks. It DOES allow you to really spend your time and effort in learning the way the stock behaves. But understand; no matter how proficient you become in trading that ticker, outsize movements from the market in general can screw up all your plans. Don’t get greedy…
2 weeks is hardly enough to determine if you’re good or profitable.
All option strategies work until they don’t. Just make sure when they don’t you know how to cover/adjust/accept the losses as tuition to learn the trade. (And don’t blow up your account)
Congrats on your success!
Buying options is very hard to make consistent gains, but hopefully you can continue but it would seem you have had some beginners luck on a stock moving to your benefit.
If you do have success of the coming 6 to 12 months then be sure to post your trading plan as many would appreciate it.
Some people are innately good at options. Because they invented the greek derivatives from charm to Aega, Rega, using the gamma-vanna-volga model, or bayesian synthetic proxies of first order of delta, theta and vega, given one can forecast those 3.
Academic quant finance on options Vs practitioner option traders, that gap is huge.
And academics are often a success, (LTCM), lol.
Well, you’ve had a %2.400 percent gain in 2 weeks. Think about it logically. People who trade professionally, and I’m not talking about day trading youtubers, but I’m talking the Carl Ichan types, would never even dream of that. That’s because they know to get such a big return you have to take insane risks and that won’t work out for very long. There is really no way to get that kind of return except to be lucky. Otherwise people would be trading up $500 into billions.
The last two weeks has been the biggest bounce of the year. All you had to do was try going up. So yeah, it could definitely be luck. Maybe you’re amazing though! Report back in half a year
Your success wasn’t cos you were good at trading options. It was because you were good at predicting stock direction. And because the stock moved in the direction you expected it to, your long calls (and some puts) rose in value.
If the stock had moved in the opposite direction, your options would have all lost money.
The driver in your trades is direction and not options knowledge.
That’s a great start! Yes, I do believe some people are innately better at options due to personality differences and how we react to a given stressor. Only words of wisdom I can suggest is that time is on your side, and experience only makes you better. In a few years, you’ll be light-years ahead in skill so its best to focus on RISK MANAGEMENT as a novice investor. Many people blow it all way too early in their trading career. Good luck!