It39s been about two weeks so maybe a small update uis due. The trailing stop has moved higher. The Bollinger Band expanded but not the type of explosion hence explain why the slow trend. Here are the closing options prices as of 14 Sep: Jan2007 32. Now, many are no doubt tempted to do a quick calculation to show: 71. If you are thus tempted, I say DON39T333333 This is the type of profit you see splashed on nearly all of the investment seminars advertisement you so often see in the newspaper.
will never want to misrepresent numbers. Percentage profit should always reference your Account Equity or what the Turtles call Notional Account Equity as the denominator. Never never the premium you pay.
NEVER NEVER NEVER333333 So to the traders who practice trade anaylsis in a professional way, obviously they know this is the wrong method. But to many layman they don39t, and this is why this type of hype always work. There is no way anyone can stop all the layman from being hyped. If they want to be hyped, they will treat you as blocking their road to riches. They just have to go through the proceess of being hyped, feel the pain and then hopefully learn from their mistakes.
Such hypes were common im the USA some twenty to thirty years ago. They are now happening in Singapore. hope other forummers gained as much as I did.
You mentioned you want the gamma to work for you but did not really explain. But firefighting is a skill that is sadly lacking in many traders. It is just my personal preference.
Sadly, this forum is full of monologue. Doesn39t anyone believe in a lively debate SometimesI have some debates with CSK, while I don39t believe I have changed his views nor he had changed mine, but I did learn something from the discussions. It is good to know that at least my effort is not in vain. Delta and Gamma In another post later, I will explain Delta and Gamma in the context of the examle trade.
will explain in a simple analogy, thanks to my little knowledge I have in maths and physics. Many have this knowledge too but sadly Options trainers never use it. If you see or hear them using this analogy after mine then you know it came from here. Cutting Loss I know that the example quotrealtimequot trade may turn out with a loss. That too can still be a lesson although a negative as well as positive one.
Yes, I will stick to the Turtle exits. Yes, this is a difficult part for the trader, me included. Many make the mistake of hanging on and hope. have done this in the past too.
Bollinger Band Squeeze The Squeeze does not tell which side will be the coming price directional breakout but only to expect an explsosion in volatility, therefore prce directional breakout. quot as such in the case of this ATampT example. Monologue I was hoping that forumers would contribute.
did ask for this in one of my earlier post. learnt about the importance of brain storming from my earlier work in the manufacturing industry. There should be no negative criticism of any ideas because no matter how ridiculous or stupid they may seem, there may be some worth either directly or indirectly in that it may trigger the brains of the others to improve on it. was hoping that someone with better options knowledge can offer a better trade than the simple one I am showing. Deleted postings I believe using an example like this is a much better approach than the style that the former forum member had used. It is good that he has realised the danger he may bring to himself.
This forum has accepted his request so that the danger may not happen. It is natural that some may still have questons or misunderstand such deletions so in the hope that all be cleared up, I attached here below the Personal Message I recieved from the forum member. point change in price by the underlying entity. unit change in the price of the underlying security. will use the Speed and Acceleration of a car for the analogy. The definition: Speed: The distance by which the car will travel for a one unit change in time.
unit change in time. Notice that the above are similar except in different area. The logic, though, remains the same. Let39s now talk about the car39s speed and acceleration.
When we apply more pressure on the petrol pedal, the car accelerates and thus its speed increase. When we release the petrol pedal slightly, the car retardates therefore its speed either increase less or slow down but the car still move forward. Reproduced below are the Delta and Gamma charts from an earlier post showing the situation at the time of order entry.
For this analogy, the Delta chart is the Speed chart while the Gamma chart is the Acceleration chart. of the Speed chart increase. of the Speed chart become less steep.
Here I have to say we have to assume for the analogy that we do not let go of the petrol pedal until the car speed slow down. At the time of order entry. ATampT was trading around 31. This is shown as the red vertical line.
Notice that for the 32. Call, acceleration is already at its peak while for the 35. Call, acceleration is still increasing and peak around 33. This is why I said the 35. Call would be better but it was not liquid at that time. Here are the Delta again as of 14Sep2006 vs 29Aug2006: Jan2007 32. Should ATampT rise further, the effect will be even greater. hope this simple analogy helps to understand Gamma. know it is not a perfect analogy but I try to make it simple to understand.
Here is a spreadsheet of the two Calls using data as of 14Sep2005 for simplicity. ATampT was lower on 15Sep so the numbers are lower. It should be noted that because the Delta for the 32. Call is higher so any price drop in ATampT will affect the 32. Call more than the 35. Assumtion used: RoundTurn commission: USD2. This is what TradeStation charges so this is a useable number.
of Acct Equity Position Risk 036. because Stop Loss is being used. There will not be total loss of premium paid. Of course, if I estimate where the Call premiums will be when the Turtle stop is hit, I will get a bigger Position Size as a result but that will complicate the example.
weeks has passed since the last update. So here is another update. Closing prices 25Sep2006: ATampT: 03633. From the above and also from the table below, you will notice that Gamma does in fact have make a difference on the positions. It is important I stress that these positions were quotlate entriesquot as I explained in my postings of 29Aug2006 and 30Aug2006 that the Turtle System had already went long much earlier and at a much lower price. If the Turtle Exit were to be hit now, it would still return a handsome profit on the original entry.
Now come the part where a lot of us are weak at. You see a profit and I know that a lot of us will fear it disappear. There is an urge to take profit. If we take profit now then what happen if it carry on higher If we don39t take profit then what if it drop from here Well, all of us have this weakness. It is up to us individually to handle this weakness. For me, whether it goes higher or lower from here, I will stick to the Turtle Exit. know I entered late for this option example and I know from the onset that the Turtle Stops will be tight.
months high again which also means a FailSafe breakout while in a trend. As we mix with all sorts of people in the marketplace, we no doubt will come across those who will say, quotYou won39t go broke taking a profit. quot Yes, I know it is tempting but do you have a trade plan and if you have are you going to stick to it If you stick to it, why If you don39t stick to it, why Here are the present status. The unprofessional will instead tell you they are 191.
the denominator is always your account size NEVER the premium you pay. Would like to find out if any of the options course is any good. am personally not interested but my friend is. He and wife wants to do options trading and he seems bought in by the sales pitch. told him to review carefully before commiting. am not able to share with him much as I only trade stocks and index futures so i have no idea how options work but i wan him to be fully aware before pumping the money into those courses. Would apprecite you candid comments about those options course offered in SG. Optionetics, some marian lady, etc.
All the courses are very expensive. Options is a very deep subject and it is unlikely that attendees can learn much in the 2 or 3 days seminar. learned options on my own and bought a software to do the analysis. It was simple but quite good, programmed by an option trader. Unfortunately it was discontinued, like a number of software I bought. have not attended any of the options seminars, not even the free preview.
If I am forced to choose one, I pick Optionetics. They have been around for many years. won39t choose any of the local ones as they appears to be more hype and motivation type of seminars than content. Just look at the way they dress themselves up and their hairdo.
