Just to Reiterate

Why I trade the way I do....

First off, you will be severely hard pressed to make any sort of money if you do not get the trend straight. Yes I am aware of supposed neutral trades. Those sound good on paper, but don't really work. Here is the reason. You are up against other traders that have the same news you do. They have to take the other side of your trade in order for the trade to be executed. Now if you are asking for the supposed by the book trade, no one will take the other side. Regardless of the theo or delta etc. and to top it off, your spreads are criminal to say the least but then we know this already. We know to get filled we have spreads that would make a loan shark blush. We digress.

So now we know in order to make any sort of money other than chump change, we need to be with the trend. Now options are just plain terrible to ride out a trend. I have yet to see a trend that did not have wild swings. If you are a market timer and good at it, (I have yet to know one. Athough many claim to be) then you will want to buy calls and puts accordingly. If you are one of these unknown to me individuals, let me know. I would love to learn.

Okay so we know time decay is eating us alive each and every day like clock work. so we can either take advantage of it or let it destroy our returns. Now if we happen (which means 50% of the time for me) to get into the trade as the market goes against us, we have to wait until the trend is once again established. If that takes any time at all, we have lost much time decay and now we not only have to have the stock move to gain back the time decay, now we are asking the stock to keep moving to start making money. Any more pull backs are we once again fall prey to time decay.

So to avoid this, we sell options that decay in time faster than the ones we buy decay in time. Thereby offsetting the time decay. This is done by spreads. Buying an option and selling an option.

Now since we have done away with the evils of time decay, now we have to decide if we want to have many short small gains each and every month that would in all likelihood be offset by one major wrong trade, So now we are at the point of my trading.

Using the same premise of spreads, we now take a longer term approach that smooths out the hick ups along the way that all trends come across. So now we can wait patiently for the trend to kick back in with out the worry of time decay since we are gaining time decay from the short sell.