Update: low volatility has forced me to grow

Low volatility in the US markets has forced me to adapt. I stopped exclusively selling simple options spreads like verticals, strangles and straddles almost a year ago. As a matter of necessity, I now employ a much broader array of strategies, to include unbalanced condors, broken wing butterflies, back/ratio spreads, calendars, diagonals, and combinations thereof. Many of these approaches are well-suited to low or rising volatility.

The learning curve with options is steep. Especially for a non-quantitative person. I’m far from where I need to be. Fortunately, it is easier than every before to discover and explore new approaches to trading today. (Easier to discover, but still difficult to master.) Just ten years ago, it would have been very difficult to know where to start — finding an appropriate strategy, modeling a specific approach for a particular market, and testing historical performance were the exclusive privileges of trading professionals. A free broker platform like thinkorswim, along with inexpensive subscription services like OptionVue and CMLViz, now afford access to high-end tools that only hedge fund managers and institutional traders had at the turn of the century at a cost of several thousands of dollars each month. Just ten years ago, the cost would still have been in the thousands for a retail trader. An explosion of technology and resources has allowed me to quickly discover, learn, test, and adapt. I’m grateful for the people who take the time to put their materials and analytical tools together — and I happily pay a few shekels each month for the privilege of using them.

So there it is. With the proliferation of such high quality trading resources, I have grown by leaps and bounds. Options trading in some of the lowest volatility environments in the history of modern markets has completely changed the way I think about risk. I’m still learning, of course, but I am much more well-rounded, confident, and measured than two years ago. Options trading has also made me a *much* better directional trader.

I am reactivating this blog and renewing my focus as part of my commitment to grow. I’ll be writing about my approaches, my trades, and people helping me along the way.


3 thoughts on “Update: low volatility has forced me to grow

  1. What is up in the hood Lonely? Thanks for the last recommendation regarding Options. It has been almost 6months for me in the Options world and it is refreshing to learn new concepts. I am still a bloody newbie :), but I am improving that every week. I was wondering if you have ever summarised in a written form your Options approach? So far my main two sources for learning are recommended Option Alpha (member there) and Tasty Trades resources (currently my broker). So far, so good. Lot of good content. I have not yet dived into http://www.OptionsTradingIQ.com you have recommended as well though. So far the bread and butter for me are Neutral strategies such as Straddles, Strangles, Iron Condors and Iron Butterflies. Although in the low IV. with few exceptions, I would love to hear a different angle how you are approaching trading this Env as well as what method you use to backtest/proof your hypothesis. Anyway, hope you are well. Look forward to your next posts.



    1. How’s my favorite James Bond villain? Been a long time. I have a couple of links to the approaches that I’m using now. The developers explain it far better. Will @gmail you. Will also send along some relatively inexpensive sites to test your ideas.

      Great to see you around. Cheers, Jay


      1. Great! Thanks for that. I will be glad if you do. As a Bond’s villain, I am always look for great opportunities :). With September coming, seasonals will slowly come onto a radar. What is your take/views on rising volatility in the upcoming months: September onwards? Also, if there is any slack/skype channel you are participating, will be happy to join the black magic club 🙂

        Thx and take care Jay 😉


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s