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Don Schlesinger, author of one of the great bj books "Blackjack Attack" spent his career as a high level options trader and later an Executive
I don't trade options and don't plan to - not really motivated to make $ right now -
I'm no expert on this and am not claiming to be one
but it's quite interesting and I don't believe it's all that difficult to be profitable - Don's answer gives some clues
on another forum I asked him this question and got this answer
the most interesting quote - "the simple secret to options is selling them. the only thing you ought to do with an option is sell it or don't sell it"
this makes perfect sense - trying to take advantage of those who buy options hoping a stock will go way up
he said he sold "strangles" - I didn't know what that was so I looked it up :
"A strangle is an options strategy in which the investor holds a position in both a call and a put option with different strike prices, but with the same expiration date and underlying asset."
"Don, I'm curious if I might ask - as a Proprietary Trader and Options Strategist at Morgan Stanley did you have a set goal for your trading?"
"No, nothing like that. Never had the slightest idea what requirements were for taking the positions we did. Everything was handled by the back office. So, there was no notion of a ROI or ROE. We did primarily index options and futures (arbitrage) trading. Just sat there all day, doing absolutely anything I wanted to, trying to make money in as a responsible way as possible. Each trader had his own book and, therefore, his own personal P&L that contributed to the group's overall P&L. Marked to market everyday, meaning you made or lost REAL money every day, contrary to what you discussed above.
At the end of the year, you had a bottom line. I never had close to a losing year. We made millions. The simple secret to options is selling them. It's what all the pros do. I used to have a motto: The only thing you ever ought to do with an option is sell it or don't sell it! For the most part, I sold strangles, but of course fooled around with all different kinds of spreads -- always hedged. Rarely had a directional opinion.
Anyway, because of my former background as a teacher, I eventually left the desk to become director of worldwide equity derivatives training and education. And I traveled all over the world delivering the conferences. Exciting times!"
Don
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