<p>Yuh, how many traders have a stop on the upside??</p>
<p>Thanks. I am learning a lot on this thread.</p>
<p>"Yuh, how many traders have a stop on the upside?? "</p>
<p>I do and many more do also - selling calls against a position, selling and buying a call spread.</p>
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<p>Are you talking about a buy stop or trailing stops?</p>
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<p>I have a few stocks that are essentially buy and hold forever as I
have a great deal of trust in the management of the company or I like
the fundamentals and I have inside or better than average
understanding of the underlying technologies and management of a
company.</p>
<p>But I like to do just pure trades too. And there are a lot of others
that are technical traders out there and the herd tends to move as a
group.</p>
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<p>It’s a little easier to do mentally with a clean slate.</p>
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<p>Your argument is with Mr. Mauldin.</p>
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<p>I find that keeping things simple keeps me out of trouble. I probably
don’t make as much as the option guys but I like doing what I
understand and I like to keep things simple.</p>
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<p>Have you tried it?</p>
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<p>And you stop out. A gap down is always a risk.</p>
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<p>That’s a different trading technique. But if you expected it to go
lower, why not just be more choosy about your entry?</p>
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<p>There are a lot of other rules and they are generalized. If it were
really simple, then everyone would win. But it’s not a bad approach
to maintain your mental capital.</p>
<p>Actually, I don’t have an “argument” with anyone about the liquidity issue. It’s the biggest problem options traders face, it is not modeled, and it contributes to the blow up, if not causes the blow up, of most options traders when they have a problem.</p>
<p>In other words, you are saying LTCM put more money on a bad trade. I am saying because they couldn’t get out of the trade, they automatically needed more money, without putting any more trades into it. The spread itself, if you can’t get out of it, becomes more expensive, without the trader doing even one thing, and that is how they end up so highly leveraged. They don’t start out that way.</p>
<p>But, that’s institutional trading. Not personal trading. Brokerage costs are the least worry for the institutional trader. The “diff” is the biggest worry. I’m sure Corzine’s “diff” was huge. If you asked him, I’m almost certain he would have told you he “just needed more time.” </p>
<p>I’m not sure you can even really extrapolate from what a personal trader is doing.</p>
<p>What is “diff”?</p>
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<p>No, I didn’t say that. If you have an argument with what I posted,
contact Mr. Mauldin.</p>
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<p>Perhaps not. But it would be a lot simpler to just go with stocks,
whether you’re dealing with a personal account or an institutional
account.</p>
<p>"> I’m not a big fan of Dennis Gartman…and his analysis of continuing</p>
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<p>Have you tried it?"</p>
<p>Yes…</p>
<p>MF Global did not have the time because the firm was using margin…and the firm couldn’t come up with the margin calls. The firm did not have the money.</p>
<p>No different than an investor buying at stock on margin. An example…an investor buys a stock for $100 a share. The investor puts ups 50% margin. So the investor is using 50% equity…50% debt. The stock for whatever reason drops $50…wiping the equity out…the investor has to put up more capital…to hold the position. If the investor does…he can keep the stock…if not…the investor is sold out…</p>
<p>MF Global’s situation is similar to the investor…the numbers are different.</p>
<p>Yes, I know. </p>
<p>Thank you.</p>
<p>but, you can’t really extrapolate institutional options trading to what BC is talking about. The concerns aren’t even close to the same.</p>
<p>Unless one trades all day long, professionally, one ought not to trade any of these intruments. The traders I know don’t even trade other products beside their own. They invest their money in completely other ways. </p>
<p>Yeah, this was why I was originally staying out of this conversation and why I am now leaving. Have fun.</p>
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<p>Just avoid margin - how much money do these folks need to make?</p>
<p>Ok poetgrl…what is diff?</p>
<p>I don’t have any diff problems that I know of. :)</p>
<p>You know what diff is. And, I really am leaving this discussion in your capable hands. :p</p>
<p>“Just avoid margin - how much money do these folks need to make?”</p>
<p>I don’t know. A friend of mine said these people haven’t progressed much…
They live in the basic hunger stage…</p>
<p>They can’t satisfy their hunger. Money replaces food.</p>
<p>What is diff? - is it spread?</p>
<p>Yes, low level Maslovian needs do get mixed up sometimes…</p>
<p>P.s. Diff smells nice when you’re hungry that way</p>
<p>I agree with your post number 70, poetgrl…</p>
<p>I really don’t know what a diff is…I am not playing games. Maybe, if you told me, I would have an ahha moment.</p>
<p>I found your post Number 66 confusing when I first read it…which is why I wrote my follow up post. After rereading it…it was just me.</p>
<p>Okay, so, the bond comes mature at 100%, but it is trading at x% all day long. A local on the floor comes in and makes an offer at y% to keep it in line with their books at the end of the day. That local is on the mark committee. They say, “No, it was at Y,” when it was really at X all day long.</p>
<p>So, at the end of the day, you suddenly have a leg of your instrument marked where it isn’t even trading. If you have enough volume, that can make it look as if you “owe” more margin than you actually owe if it is marked where it is “really” trading.</p>
<p>This is the diff. Also, if your model shows something as priced at a completely different place than it is being priced, that is a diff as well.</p>
<p>This can get to be a problem for an options trader, and it can blow up in their face if their diff is wrong, if their model is not right. This is much more concerning to an institutional options trader than brokerage, which they do not pay at anywhere near the same rate as the guy on etrade or some such place. They pay cents not dollars per contract.</p>
<p>Ok…I get it now…I appreciate it…</p>
<p>I used to run a pit for an exchange. There were many market makers in that pit. My job was to make sure the rules were followed by these market makers…(and brokers).</p>
<p>A market in an option was 2 bid at 2 1/4…Pretty much the whole day. And 5 seconds before the close…a market maker said to a quote operator, “make the market 2 3/4 at 3”. The market maker was long a lot of those options and he need those options marked up. Or he was going to have some margin issues.</p>
<p>And I said, “No. Leave the market alone. That is the real market”. And then…the bell rang. </p>
<p>And the market maker Had a fit. He was a lunatic. Really. He had an enormous gun collection too. And we called two order book officials…and they said…I was right. The market is 2 bid at 2 1/4. </p>
<p>And after a lot of commotion…the maker maker came over to me. And all of a sudden he calmed down, and he said quietly…so only I could hear him, " I am going to kill you."</p>
<p>Then he walked away.</p>
<p>I …was…scared sh…less.</p>
<p>I still remember that bast…name. 30 years later.</p>
<p>Yep.</p>
<p>Well, I’m glad you made it out alive. :)</p>