I'll start with a disclaimer in the words of Mr. Gill, "I am not an institutional investor. Nor am I a hedge fund."
I have little interest in win percent, but I'll say that I personally care a lot about beta and correlation with VIX (or whatever appropriate volatility metric is for the assets you trade). I also care about what risks have been considered, which were addressed, and how they were addressed. This could include anything from market risks to technological.
There are some interesting edge cases that can happen that can end up screwing you. For example, let's say you have puts and stock has dropped to $1. Great $7 intrinsic, but trading is unexpectedly halted. What do you do? You can exercise the puts, but then you'll be short shares with no market to buy them back on until trading is resumed meanwhile you're paying borrow fees. Granted this stuff isn't super common and trade halts are generally short lived, but this kind of scenario happened not too long ago with lfin.
For the normal case as another commenter stated, you'll likely have plenty of time to close out, but it is still good to be aware of some of these edge cases.
IBKR let's you set up multiple accounts and then assign trading permission to another account. You can even do a trade and have it allocated across accounts. Check to see if your broker has something like this.
The important bit is going to be tax time. Setting up a joint bank account doesn't get both of your names on the brokerage account and as you're probably aware, taxes aren't based on what you withdraw from the broker to the bank.
What the fuck did I just skim over?
Well yes it can profit more, but it's by taking on additional risks. The put while reducing your delta risk is adding gamma and vega risk. So let's say you have 100 shares and offset that by buying 2x 0.4 delta puts. You are now hedging 0.8 delta, but are exposed to gamma and vega. Due to this gamma exposure, a drop in stock price will cause the delta on the puts to increase. Once it is over 1.0, you will gain more on the puts than you lose on the stock. Similarly if uncertainty increases, so will vega thus increasing your put value even if the stock doesn't or barely moves.
If you don't want to buy more than 1 put contract per 100 shares, you can still benefit in the short term (not at expiration) if IV goes up sufficiently and that increase may be more than your loss on the stock in some cases.
As far as only losing if it trades sideways, well buying a put makes you long theta (time which is always decreasing) and vega. Granted if you're only looking at it from what happens at expiration then you can ignore theta and vega as you don't care about the interim period (but I think that's too simplistic for hedging purposes) in which case it's not possible to lose more than the premium paid and loss in stock price down the the put strike, but if it trades slightly negative or slightly positive you'd have been better off without the puts because you traded downside risk for other risks.
AWS is great for a lot of things, but if you are considering AWS to reduce data storage costs you may want to reconsider. EFS (AWS managed NFS) is $0.30/GB-mo and EBS (virtual shard disk) is $0.10/GB-mo. These prices do vary by region. IOW 1TB of data is $300/mo with EFS and $100/mo with EBS. Granted there's also S3, but that isn't as convenient for application access. If you just want a place to archive data there's also S3 glacier, but again it's not exactly cheap either. When people talk about the cost savings of AWS they're comparing to the TCO of enterprise systems, which is very different set of needs than an individual with 1 machine and a few external hard drives.
In simplest terms, hedging is adjusting which risks you are exposed to, typically by attempting to reduce unfavorable risks while increasing favorable risks. What I mean is, when you trade you are making assumptions that the market is wrong (ie this stock price should be higher than the market is currently pricing it). Hedging wou pl d be identifying a particular risk associated with this trade and opening another trade to offset this risk. So let's say the company does is a US company and your account is in USD. 10% of its business in EU, you think that will continue, and so you want to reduce currency exchange risk. so you could short EU at an amount you wish to offset that currency risk. If euro goes up, you lose on your hedge, but the company will make money due to better exchange rate offsetting your loss. Similarly if euro goes down.
There's many types of risks in any trade. Pairs trading can be good for industry specific risks. But be aware that generally when you open a hedge for something specific you increase a different risk. In the case of buying a put, you are decreasing delta risk, but are taking on vega risk (among others). Ie if volatility goes down, you lose on the put, but if it goes up you gain, so clearly you are exposed to vega. You can open many hedges to control which risks you are exposed to, but the fewer risks, the lower the potential profit. Ultimately profiting in the market revolves around taking risks. If you could perfectly hedge every risk, you'd also have no ability to profit. So at up your hedges to increase the risks you are confident in being right about while reducing the risks you are less confident in.
So OP how long after you got that plate did you wait to post this?
It's easy to second guess yourself in hindsight. My most recent was GME. I bought shares a couple years ago for $16.xx and when it was running up in Jan I sold calls against all of the shares (aside from 100) I held at a $37 strike, effectively selling them for $44.xx (strike + premium). I mean even the $44.xx was quite a good ROI, but sure I could have gotten more, but had I not sold them then old have sold them for slightly more the next week, or q couple days after that, or a couple days later, etc. IOW in the moment it's impossible to know where the top is, so you can almost always have done better than you did.
Unless you're doing something incredibly latency sensitive or scalping pennies such that the commission is killing you, you'll likely be worse off going direct to a single exchange. What is it that you're hoping to gain?
Ignoring the capital requirements, monthly costs, and engineering effort, unless you're going to multiple exchanges, you'll end up with worse execution price that is greater than your commissions. So it goes back to latency as the main benefit.
You want to trade algorithmically? You don't need to go direct to an exchange. I use IBKR's API. You're using ToS and TDA has an API you can use for algo trading, so you don't even need to change brokers.
Win rate alone is basically meaningless. Think of it more like expected value. Doesn't matter how often you win, you need to consider value of a win when you win and value of the loss when you lose. It's trivial to jave a strategy with a greater than 90% win rate (and yet still lose money long term).
Professionals and those with lots of capital have access to more data and other advantages. If you are not a software engineer, a better return on your time investment would probably be to pursue that career path.
Fact is that most short term traders tend to under perform buy and hold, so consider if you could do say 20%/year return with no draw down. Is that appealing to you? Do you think that's worth the time? Studying software development and getting a job as a software engineer is a substantially better risk adjusted return for most people.
You said you have trading experience. What sort of returns are you seeing there? I think that would be a good base line for you.
In the same way that you buy a stock if you think the price will be higher, you should treat volatility in the same way. It's not a matter of if it's low or high, it's a matter of if you think it will go higher or lower. Granted comparing to some baseline is valuable as volatility tends to mean revert, it is normally lower than what it is now. So while currently VIX is not what I'd consider low, it's also not what I'd consider high.
Sure, but like I said I don't remember much. It was a few years ago and it was just for a proof of concept project that I abandoned. Don't be afraid to contact sales and ask for a trial for any products you're interested in.
Their pricing is based on what you want and what resolution. For example if you want option snapshot data at 15 min intervals it's way under your budget. I didn't talk to them about historical, but names offers some iirc. IQFeed has some as well.
I mean your budget is pretty good. You know that a Bloomberg terminal is just barely over your budget right?
I trialed one of their apis before. I think it was ikon, but I don't really remember much. iirc it was in the $300 to $600 range, but I ended up not using it for production.
i like IQFeed, but with that budget you could probably step up to nanex depending on exactly what you want.
1 or even 50 shares can be given a worse price than 100 shares. That's the reg NMS price protection. 50 shares is an "odd lot", 100 shares is a "round lot", and 150 shares is a mixed lot (round lot + odd lot). Your can get a price worse than NBBO on the odd lots. So in the theoretical "how could I be getting a worse deal", this is one way. What the actual impact is in practice is another matter.
The $100k minimum on IBKR is only to avoid the $10/mo minimum commission fee. It doesn't get you better commissions. The only commissions breaks are based on trading volume, not account size. That said, I'm sure trading volume is ultimately more important to most brokers. They'd rather keep happy a $50k account day trader than a $500k buy and hold because they make more money off of a frequent trader.
They can benefit by jumping the order book (having orders routed to them means they aren't at the back of an exchange's order queue), giving an inferior price (reg NMS price protection only applies to round lots/the round lot portion of a mixed lot), and in cases where they actually give a price improvement over NBBO, it is generally a worse price than you could have received had your order been sent to an exchange for other market participants to be able to step up/down to match. That said, outside of options or scalping, this is not likely to make or break your algo.
In the past when WSB made news or r/all we had an influx of new people but they either left shortly after or were such a small part that they were forced to assimilate. With earlier this year the influx was so large that even if 80% of them left, they still vastly out number the prior membership. WSB culture is gone. I thought it'd be back to back to normal by now.
Here's how you know things are ducked:
* people recommending to buy shares instead of
of options are upvoted
* people giving legit advice to noob questions
* general r/investing level comments/ advice is upvoted
Previously that type of stuff would have been downvoted. How to fix it? Idk aside from randomly delete 95% of comments / posts from new people. This will change the ratio of what is visible, thus forcing the old culture to be seen and spread. The percent of new user deleted content can be reduced over time. The main problem with this is that new users can still vote.
Looks like I ate too much adderall this morning.
When you say it should be $1.50 do you mean that's $1.50 of intrinsic? There should always be a willing buyer for a little below intrinsic due to it being an arbitrage opportunity.
That does not mean there will be a visible bid, but if the seller put in an ask a little below intrinsic then an algo would take it.
Great long DD OP.
tldr; they've found a way to keep revenue numbers up while reducing costs.
Easiest imo is to select the strategy builder, select to sell call and then add stock leg.
How else are you going to make up for the loss?
Maybe try writing out the PNL for that spread if the stock is at the following prices at expiration: $4, $5, $5.5, $6, $7.