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.