In fact, some of the option sellers I know, whether in the US stock market or Mosaic, have used T+0 to trade doomsday options, thereby achieving low net value drawdowns, and even no drawdowns in the daily net value for half a month. I have also done 4-5 months of weekly or doomsday options trading before.
Let me talk about my thoughts and some reflections:
1. Short-term trading only needs to focus on right and wrong
Many people who do short-term trading, whether it is option trading, spot trading, or contract trading, always lose money as soon as they enter the market. They said they came to do short-term trading, but it turned out to be a long-term investment. Would you do this? They even comfort themselves by holding on to the value target.
In fact, in most short-term transactions, the price of the target is high or low, only the right or wrong transaction. In fact, I still recommend the U-standard trading platform for short-term transactions, because you only need to use US dollars to measure whether you are right or wrong.
How to distinguish right from wrong in short-term trading is to make money right and lose money wrong, which is completely different from investment. Because in short-term trading, or option doomsday trading, you make money from price fluctuations or implied volatility fluctuations.
2. What is the short-term comparison?
Today I was chatting with a fellow star about a trading teacher I like very much. He has been studying with that teacher for more than a year, learning trading systems. Whether it is short-term or medium- and long-term. It is not like doing college entrance examination papers. In fact, everyone is not competing on the same platform.
Everyone is learning how to practice, repeat, and practice continuously in the subdivided transactions that they are good at to become proficient. It is not about who knows more, who has more methods, or who has more fancy option strategies, but what?
As I said in the second lesson of Sober's Private Options Training Class yesterday, the most basic and most suitable options strategy for you requires you to know all the details of this strategy and understand it thoroughly.
I remember a teacher once gave a very good example: when learning to play the piano, one does not need to understand complicated music theory. After learning the basic piano knowledge, one can repeat "Für Elise" to develop muscle memory.
The same goes for short-term options trading. No matter what your strategy is, keep repeating it. For example, many players now trade perpetual contracts and use doomsday options for covered calls. I think this strategy will be very powerful if it is carefully crafted.
When I first started working, I was doing TMT research at a brokerage firm. I met a colleague who graduated from the same school as me. He was a trader who only focused on intraday options trading within 30 minutes of the closing time of A-shares. He relied on his one unique trick and worked full-time in the studio. He was not a legendary trader, but after more than 10 years, he had achieved A10 and was very famous among retail options investors.
3. If options are so dangerous, wouldn’t it be even more dangerous to trade doomsday options?
In fact, I have always said that the danger of options is that you do not understand options before you trade them. I have been participating in some real-time options competitions, or some strategies for retail investors. Not only do they not have any risk of liquidation, but they are even less risky than simply holding spot. Can you say that options are dangerous?
Most people who think options are dangerous don’t know the basics of options, or have heard that someone has gone bankrupt using derivatives. Imagine that you prepare 1wU and put it in Mosaic Options Cex, and tell yourself: I can’t afford to lose this 1 Wu?
Then you start trading. At the beginning, you should trade the options of Rock Sugar Orange. Don't touch other altcoins. Do it until you know that you can make steady profits. Even if you are always a seller, what is your maximum loss? If you don't oversell, even if the price of Rock Sugar Orange is cut in half, your loss will be less than the spot price.
Therefore, if you are really able to learn and understand options, it seems to me that it is a good T+0 tool, especially for very energetic players, to do some gamma scalping or short gamma+DDH strategies.
If you can see it clearly, you can make money in the future regardless of whether the market rises, falls, or stays the same. Don't get me wrong, the point is not to make money, but to see it clearly.
4. Doomsday round trading requires high psychological quality
Short-term or doomsday options trading does not require strong analytical skills. Why? Because short-term fluctuations are random.
If you are an option trader who has done short-term and medium-term option trading, you should understand this sentence:
The shorter the trading timeline, the more psychological control you need; the longer the trading timeline, the more analytical ability you need.
Because the trading timeline is short, you have to constantly make judgments and decisions in a short period of time. If you can't think of a strategy in advance, it will be very difficult.
Because the short-term doomsday market has many opening and closing operations that are so short that you have no time to think, the more you think, the easier it is to make a bad decision. You can refer to Texas Hold'em to see if the longer you think, the more correct the decision.
The most effective psychological control method is to objectively judge the market before taking any position, when you are most calm, and write a trading script first so that you can be ready to deal with any situation at any time.
5. Short-term high-win rate selling strategy: Don’t rush to win back when you encounter a pullback
Many ultra-short-term doomsday option seller strategies have a high winning rate, but they are afraid of the retracement. The ergodicity of the market tells us that being stabbed is inevitable. The key is: after losing money, don't think about winning it back in this round.
I don't know if you have had this experience: there is always a period of time when the transaction is particularly smooth. Even if you lose money immediately after entering the market, as long as you hesitate a little and wait or add a position, the losing transaction will soon recover. But this is not normal. As long as the market goes on and never turns back, a small loss will become a big disaster.
This is a typical selling strategy being stabbed. No DDH is opened, no positions are closed, and no spread is formed. All these flukes will eventually end in a sad story.
Let me tell you a story about a private equity fund manager of A-share options: he sells wide straddle positions for a long time, but also enters and exits the market for short-term trades every day. As the market has been average recently, with intraday fluctuations rarely exceeding 1%, he is also accustomed to making contrarian trades to increase his positions, allowing his positions to profit faster and make more money more comfortably.
In July last year, the ChiNext ETF options he traded opened low and ended up going higher, and then went faster and faster. When his friends became displeased, he started selling call options. In fact, the price he sold was not low, and he was quite skillful in selling, waiting until the ChiNext index had a slight pullback before selling the call options.
But the market always uses small pullbacks to lure him into the market, and after he enters the market, the market will continue to rise without looking back.
He thought that a normal pullback would pay off the position, but he suffered a huge loss before the market closed. He had no choice but to keep the position and wait for another day before making plans the next day. Unexpectedly, the market opened much higher the next day, so he had to close the position with great disgrace.
It was not necessary and impossible to lose so much money on this day. Because traders look at the market subjectively, they start to get impatient and make random moves involuntarily, hoping to get back the initial loss. However, this is just wishful thinking. As long as you fall into your own wishful thinking, you will fail. When losses occur and the situation is not good, the best action is always to stop losses. It is the best policy to stay calm for a while.
Similar events occur every once in a while in the double-sell option strategy. The double-sell strategy keeps selling and feels great, but is eventually knocked off the table by market ergodicity.
6. Develop your psychological qualities for short-term trading
Although short-term trading is different from gambling, we have to admit that there is a greater element of speculation and luck involved than in medium and long-term trading.
Therefore, when you are addicted to trading, you don’t want to leave the market for even a minute. You stare at the market while eating and you cannot sleep soundly watching the market. Especially with the trading rhythm of Mosaic, if you cannot formulate a short-term trading strategy that suits your work and rest schedule and personality, then you should really return to the medium and long-term.
Doomsday options trading also requires traders to have very high physical fitness. As we mentioned earlier, the shorter the trading time, the more difficult it is to control your mind, and the longer the trading time, the easier it is to control your mind.
Because of long-term trading, even if you suffer losses during the day and feel extremely anxious, you still have time to review your positions after the market closes to avoid placing random orders during the day and making outrageous mistakes.
From this, we can see that psychological quality is very important in short-term trading. Everyone has their own strengths and weaknesses. If you know that you are easily nervous, impulsive, unable to cool down during the trading session, or don't even know that you are excited, then in theory you should not engage in short-term trading. However, this does not mean that you cannot practice. If you want to practice, you must start with self-confidence.
There will definitely be an opportunity for you to believe in yourself and challenge your own possibilities, such as losing weight, exercising, learning, and working hard to achieve your goals. Believe that you can do it. If you can do it, it may be a good start. In the worst case, your body can get better.
6. Review your trading metrics regularly
For doomsday options trading, several indicators are particularly critical: win rate, average profit-loss ratio, and ratio of maximum profit to maximum loss.
If you don’t want to spend time exporting all your transaction logs, doing detailed data analysis, and iterating your own trading system, then you should try not to do Doomsday Round Trading.
1- Winning Rate
This indicator is very important in doomsday options trading. Since the range of ups and downs within a day is limited, the higher the winning rate, the better.
This indicates the accuracy of your entry. We hope to have at least a 50% winning rate in short-term trading, otherwise it will be difficult to make money in T+0 trading in the long run. (Generally, our strategy as a seller of doomsday options should reach more than 70%)
2-Average profit and loss ratio
This indicator represents the ratio of the average amount earned per profitable transaction to the average amount lost per losing transaction. Of course, the larger the ratio, the better, and at least 1 is considered a pass.
When many investors make money in trading, they take a few hundred dollars from the market and run away. When they lose money, they hold on to it until they die, and finally they can't stand the loss of thousands or even tens of thousands of dollars before they exit.
If this is the case, the profit-loss ratio must be very small. This trading style is definitely a model of losing money. Even if the winning rate is as high as 90% or more, it is not necessarily profitable. In the past 20 years of trading career, the two indicators of losing traders have continued to deteriorate, almost without exception.
3- Maximum profit and maximum loss
You should observe the ratio of maximum profit to maximum loss, and observe your extreme risk magnification. Since options use leveraged trading and some traders enter the market with an irregular number of contracts, these larger risk and profit figures can remind you not to magnify the risk too quickly.
Conclusion:
I personally think that doomsday option trading is the most difficult to master, but I do know quite a few experts in this field who can achieve a stable, high-Sharp performance curve for several years or even more than ten years. It depends on whether you are interested and whether it is suitable for you.
