Tom Sossnof's derivative trades

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Panayota
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Tom Sossnof's derivative trades

Post by Panayota »

My son has recently become enamored by Tom Sossnof's derivative trading. ( Tastytrade/Tastyworks)
This guy has convinced my son that he can make money on derivative trades in up, down and flat markets.
My son spent $860.00 dollars on these trades last year with very little return. This year , Mr. Sossnof is opening a
trading desk and he will make the money on trades. My son " a millennial" says derivatives are the waive of the
future and I and most investors just have not heard much about this because they are only seven years old. Where the
"little guy" can do exactly like the big hedge fund folks and manage his own money by making cheap trades and consistently
beating the markets. Prior to this new plan (scam) my son was a conventional investor for 15 years and did not do well. I keep
saying : "If it is to good to be true" . . . . I am a conventional retired investor after 50 years and did well with Vanguard and
other funds. Achieved " Bob Brinker"s" critical mass for a comfortable retirement. I fear for my sons retirement. Is this
Sossnof (Madoff) guy legitimate and can his plan work? Or is this the next "con"! Would greatly appreciate your take on this?
Thanks a million "Dinosaur Dad".
pkcrafter
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Re: Tom Sossnof's derivative trades

Post by pkcrafter »

Is your son an experienced investor/trader? I don't think any member here is going to have much good to say about this idea. Below is a link discussing derivative trading and a link to Tastyworks fees and commissions.
1.Derivatives should be used to hedge your cash market positions and not as a money making tool.Mark my words - you will lose more trading in derivatives.
https://www.quora.com/How-do-I-approach ... l-investor

https://tastyworks.com/commissions-and-fees.html
My son " a millennial" says derivatives are the waive of the future
No, they aren't, at least not for the prudent investor.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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snowshoes
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Re: Tom Sossnof's derivative trades

Post by snowshoes »

Quoting a market making wunderkind owner from liquid net, one of the current 40+ trading vehicles available today as a bond /equity/ liquidity provider in todays markets schemes said:

"We continue to invent things faster than the regulators can understand or regulate them unraveling us billions, the industry makes a tremendous amount of money creating new products until it blows up the world".

David Weild IV said: To much complexity is a bad thing.(paraphrase)
Taylor Larimore says: Simplicity is paramount. (paraphrase)
Gus Sauter a CIO @Vanguard said about "Dark pools"(anonymous trading networks) HFT : Fast trading is fine, and faster trading is better! The strong survive and others fall by the wayside. (in a interview, I saw it)

Additionally Harvey Pitt said,
"We have new technology being harnessed in a way that no regulator will think about till its blown up the world, yet when god wanted to tell the human race how to behave it only took 10 commandments (for those that believe).
Yet when congress wanted to tell the financial services industry how to behave it took over 2,313 pages. Clicks and algorithms, theres nothing anyone can do to stop it, except as we've seen, they fine them, and thats built into the scheme.This includes futures, options, puts, calls, etc. & derivatives amongst many other algorithmic trading schemes.

Markets are different now than they were 25 yrs ago and they will be different 25 yrs from now. Risk is real! Not everyone plays by the so called rules. These are actual paraphrased quotes for you or your sons consideration suggested you think on before engaging in derivative's speculation.
Good luck!
Tanelorn
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Re: Tom Sossnof's derivative trades

Post by Tanelorn »

I don't know Mr. Sossnof but one of the last stars of TastyTrade, "Karen the Supertrader", is getting charged by the SEC for some violations. I assume this is because she eventually lost a bunch of money, since otherwise no one complains to the authorities.

http://macro-ops.com/karen-the-supertrader-goes-rogue/

I would also note that trading options / derivatives is considerably more expensive in terms of commissions, fees, spreads, etc, than stocks, higher risk, and probably harder to have any real edge in as well. As such, one is likely to quickly lose all ones money trading options, while with stocks you're more likely to just have subpar returns from ineffective active management. You can still lose everything with stocks (through very concentrated portfolios, short selling, margin, or bankruptcies), but you have to work a lot harder at it.

I would advise your son to have nothing to do with this.
VaR
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Re: Tom Sossnof's derivative trades

Post by VaR »

Does your son intend to become a full-time options trader or does he have a regular full-time job?

My recommendatino is to stay away. Even derivative traders at investment banks and hedge funds know that the money is in trading with other people's money and taking fees off the top.
ValueInvestor99
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Re: Tom Sossnof's derivative trades

Post by ValueInvestor99 »

Options are a form of insurance and work well when used that way.
Sossnof and others are looking for way to get a riskless return on investment which is almost impossible.
Implied volatility is a measurement of how profitable options are if stock price doesn't change.
bigred77
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Re: Tom Sossnof's derivative trades

Post by bigred77 »

Derivatives have been around a heck of a lot longer than 7 years!!

If by derivatives he is referring to exchange traded options and/or futures, than these are relatively straightforward products for a finance professional but should not be used by a retail investor (IMO). Their primary purpose is for speculation and hedging.

Anyone (Tom Sossnof included) trying to sell a "system" or "course" in using options or futures to retail investors is unscrupulous at best. It's preying on peoples greed and naivety. It's pretty similar to the guys who sell courses/seminars on real estate "systems" to help "every day people" flip properties and "make millions using other peoples money".

Stay away.
691175002
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Re: Tom Sossnof's derivative trades

Post by 691175002 »

Derivatives cannot supplant traditional investment vehicles because their prices literally require a "boring" underlying investment to calculate their value. Derivatives have also been around a lot longer than seven years.

Transaction costs may seem to be low because you are trading very large notional values, but stock trading can be nearly free these days as well. Many derivative strategies are taxed immediately which severely hampers compounding of wealth.

Obviously anyone selling trading systems must be a scam artist - nobody advertises a working system.
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alpenglow
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Re: Tom Sossnof's derivative trades

Post by alpenglow »

How can derivatives be the wave of the future? I think futures have existed since ancient times.
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Re: Tom Sossnof's derivative trades

Post by nisiprius »

Panayota wrote:...This guy has convinced my son that he can make money on derivative trades in up, down and flat markets...
There's no doubt this is true. The question is, can he make more money on his profitable trades than he loses on his unprofitable trades?

He can go to the casino and go away with more money than he walked in with, and that, to, he can do in up, down, and flat markets.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
long_gamma
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Re: Tom Sossnof's derivative trades

Post by long_gamma »

Panayota wrote: My son " a millennial" says derivatives are the waive of the
future and I and most investors just have not heard much about this because they are only seven years old.
Derivatives is there one form the other from very ancient times. Wikipedia says 1750 BC. First official futures exchange in 1710 AD. There is nothing wrong with futures or options or any derivatives.
That makes your stock market new kid in the block :)
https://en.wikipedia.org/wiki/Futures_exchange

I have watched Tom couple of times. He overtrades a lot, mostly short options, mostly stocks rather than indices. Tough to win big with those scenario's, better to stick with good asset allocation.
Last edited by long_gamma on Mon Jan 23, 2017 3:04 pm, edited 1 time in total.
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Re: Tom Sossnof's derivative trades

Post by long_gamma »

ValueInvestor99 wrote: Implied volatility is a measurement of how profitable options are if stock price doesn't change.
What? profitable to who, buyers or sellers?
"Everyone has a plan 'till they get punched in the mouth." --Mike Tyson
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JoMoney
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Re: Tom Sossnof's derivative trades

Post by JoMoney »

"Trading" is a zero sum game. The assets being traded will not earn any more in aggregate because people decide to trade them back and forth. For anyone who earns something extra, there's a corresponding loss to someone else. Even worse, there are transaction fees associated with trading that create a drag that has to be overcome. The more trading going on, the more fees that have to be overcome. There is very little 'sucker' money in the game making it very difficult to have an advantage. There is a tendency for the losers accounts to be diminished, and the winners to represent a much larger portion of the trades. When you go out into the market, chances are you're not fairly matched, but instead are trading against someone who has better information and an advantageous position in the market. What is it you think you know that they don't?
Beyond that, there is a tendency for derivative traders to make highly leveraged highly volatile bets. Even if they were trading with some scheme that provided them an advantage over the competing traders, if they don't have a firm grasp of how to properly manage there exposure to risk and size there bets appropriately they could easily blow away there account from just bad luck. Having an edge doesn't mean you won't have streaks of bad luck, and if not prepared for it and managing the portfolio/bankroll properly it will pretty much guarantee the account will go bust as some point, and is a common pitfall of many gamblers and traders.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
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Re: Tom Sossnof's derivative trades

Post by long_gamma »

JoMoney wrote: When you go out into the market, chances are you're not fairly matched, but instead are trading against someone who has better information and an advantageous position in the market. What is it you think you know that they don't?
This argument is stale.

Most of the popular futures and options have one penny wide or 1 tick wide (for futures) thick book. Does that mean half of the side has good info and other half has bad info? Those trades happens because of wide variety of reasons.
"Everyone has a plan 'till they get punched in the mouth." --Mike Tyson
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stemikger
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Re: Tom Sossnof's derivative trades

Post by stemikger »

I have watched Tasty Trades numerous times and it seems so complicated. The personalities including Sosnoff and Liz and Jenny are fun to watch even though it is all gibberish to me.

I can't imagine anyone can do this on a part time basis. It seems like it would become a full time job, I'm sure they want to convince you otherwise and of course to buy their Think or Swim platform to trade on.
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JoMoney
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Re: Tom Sossnof's derivative trades

Post by JoMoney »

long_gamma wrote:
JoMoney wrote: When you go out into the market, chances are you're not fairly matched, but instead are trading against someone who has better information and an advantageous position in the market. What is it you think you know that they don't?
This argument is stale.

Most of the popular futures and options have one penny wide or 1 tick wide (for futures) thick book. Does that mean half of the side has good info and other half has bad info? Those trades happens because of wide variety of reasons.
Even if the the market is informationally "efficient" and the bet is fairly matched (I believe it might not be), it doesn't make it a bet someone should take. If there is no advantage and it just amounts to a fair coin toss then it represents unrewarded risk and isn't a bet someone should be making.
Saying this though, I'm distinguishing 'trading' as a separate activity from buying and holding productive assets that will grow intrinsically and not relying on a something extra from out trading the other side.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
inbox788
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Re: Tom Sossnof's derivative trades

Post by inbox788 »

Panayota wrote:derivatives are the waive of the future
Prior to this new plan (scam) my son was a conventional investor for 15 years and did not do well.
Is this Sossnof (Madoff) guy legitimate and can his plan work?
1) he may want to waive this option
2) What was his investment strategy as a "conventional investor"? What is his current strategy? Can he explain it?
3) Can you emulate professional investors and make it work?

Tom Sossnof a veteran in the industry. I haven't heard about Tastytrade until now, but I was a customer of ThinkOrSwim (now Ameritrade). AFAIK, these are legitimate operations, but realize the trading strategies themselves have risk. Some of them are the same strategies hedge funds use, and some well managed hedge funds go out of business. What these tools did was provide the individual investor with the same type of tools that professionals had to trade options. Look what that low cost stock brokerages like Etrade and ScottTrade did for individual stock trading. And what brokerages were favorites among day traders?

This is probably a 3rd chapter in his career, so "only 7 years" might be accurate for this new company, but I know nothing about the investment philosophy it's currently undertaking and whether it has changed from the past. (a quick glance at the pricing seems to be better than what ThinkOrSwim charges).

https://en.wikipedia.org/wiki/Tom_Sosnoff

The key is how one uses the tools he's given. Just like Vanguard ETFs like VTI and VXUS can be used for good (buy and hold for retirement), they can also be used for evil (trading twitter intraday posts).

FWIW, my understanding was that Sosnoff's positions were mainly delta neutral and short gamma. A user here, long_gamma, may be better able to comment on the risk involved.

OP, what is son's education level/background?
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Re: Tom Sossnof's derivative trades

Post by mcxavierdaniel »

I have experience with derivatives trading - Options and Futures. Options trading has been around since the 80s. It's kinda analogous to saying Texas Hold Em is new. It's not new, but there's more coverage than their used to be. CNBC's options action is an ok show to learn what's going on.

There are now 14 U.S. equity options exchanges and growing with each one trying to shave market share from others by providing better fee structures and price improvement mechanisms. It might be a little more popular these days because of the technological improvements w/ retail trading platforms, including fancy charts, indepth analysis, and strategy filters.

I'd say trading options or futures (any derivative) should really be left to the pros. I would not advise any retail trader or investor to invest significant assets into a derivatives trading strategy. Fine, if someone has some play money and wants to trade options and has a genuine interest in learning these markets, go for it. But, there is alot to learn if you want to make money. It's not like saying AAPL is a good company so I'll buy their stock. Of course one will be much better off the BH way over the long-run though.

Trading derivatives is expensive education. It was much easier in the 90s when all tech stocks went up so customer's long call options were in the money in no time. Retail investors don't have any of the edge pros have. The pros use algos that digest news and inputs in sub nanosecond timeframes, so any trade a retail guy gets off will be done with huge selection bias against him anyway. Even if the retail guy gets the delta direction correct, theta will bleed his profit until expiration if he is just a buyer of options.

I have seen tastytrade also. It's true that you can make money going long, short, or market-neutral. There are just many factors that move options or futures prices. It's hard for a retail guy to get direction and timing right when pros invest tons of resource dollars into it. The one thing the retail guy has on his side is that the pros are concerned about their overall position of trading hundreds of names and really look at the bigger trades, so a retail guy can find a niche and trade some 1-lots with success. My best advise is to (1) learn the greeks inside and out (2) learn about spreads to reduce cash outlay and maximize risk/return (3) have a risk mgmt strategy (4) paper trade before investing a dime. Best of Luck.
Day9
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Re: Tom Sossnof's derivative trades

Post by Day9 »

My understanding is that their strategy is to "sell volatility" and I believe I have read that this is a positive expected return strategy that is not correlated with the market so there might be some justification to do this kind of thing in addition to holding a Boglehead portfolio. I agree with the other posters here to leave it to the professionals and take serious consideration of risk and costs.
I'm just a fan of the person I got my user name from
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Re: Tom Sossnof's derivative trades

Post by bigred77 »

long_gamma wrote:
JoMoney wrote: When you go out into the market, chances are you're not fairly matched, but instead are trading against someone who has better information and an advantageous position in the market. What is it you think you know that they don't?
This argument is stale.

Most of the popular futures and options have one penny wide or 1 tick wide (for futures) thick book. Does that mean half of the side has good info and other half has bad info? Those trades happens because of wide variety of reasons.
The vast majority of that volume is generated by institutional money and/or professional traders.

For the retail investor (especially someone like the person referenced by the OP who is trading $860), I think 99% of the time they are taking positions against counter parties who are more sophisticated, with better information, and with better execution capabilities. Even if prices are efficient, their only chance is luck.
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Re: Tom Sossnof's derivative trades

Post by burt »

- OTC and exchange-traded
- Common derivative contract
- Collateralized debt obligation
- Credit default swap
- Forwards
- Futures
- Mortgage-backed securities
- Options
- Swaps

After the 2008/2009 crash from which we have yet to recover.
Absolutely remarkable.

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Re: Tom Sossnof's derivative trades

Post by burt »

Everybody thinks they are Michael Burry (The Big Short)... until they get hit.
(Paraphrased from Mike Tyson.)

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Re: Tom Sossnof's derivative trades

Post by long_gamma »

JoMoney wrote: Even if the the market is informationally "efficient" and the bet is fairly matched (I believe it might not be), it doesn't make it a bet someone should take.
There is no information asymmetry, when it comes to liquid contracts like SPY, ES, IWM etc. If anyone believes asymmetry, they can take the side of big bad boy with super computer. It is only penny wide, does not even cost that much. Easy way to be billionaire. Information asymmetry do exist for individual stocks tho'

JoMoney wrote: If there is no advantage and it just amounts to a fair coin toss then it represents unrewarded risk and isn't a bet someone should be making.
Saying this though, I'm distinguishing 'trading' as a separate activity from buying and holding productive assets that will grow intrinsically and not relying on a something extra from out trading the other side.
Agree with this. I am not encouraging anyone to the trading.
"Everyone has a plan 'till they get punched in the mouth." --Mike Tyson
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Re: Tom Sossnof's derivative trades

Post by inbox788 »

burt wrote:- OTC and exchange-traded
- Common derivative contract
- Collateralized debt obligation
- Credit default swap
- Forwards
- Futures
- Mortgage-backed securities
- Options
- Swaps
Options are but one type of derivatives available, though probably one of the most accessible to the individual investor (next to forwards/futures).

In 2002, Warren Buffet wrote (and guess what happened a few years later):
In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.
http://www.berkshirehathaway.com/letters/2002pdf.pdf

IMO, options are powerful tools that can be used by those that truly understand them, but they appear complicated, and in fact I believe are even more complicated than they appear. Those that tend to be overconfident are the most at risk for making big mistakes with them.
bigred77 wrote:
long_gamma wrote:
JoMoney wrote: When you go out into the market, chances are you're not fairly matched, but instead are trading against someone who has better information and an advantageous position in the market. What is it you think you know that they don't?
This argument is stale.

Most of the popular futures and options have one penny wide or 1 tick wide (for futures) thick book. Does that mean half of the side has good info and other half has bad info? Those trades happens because of wide variety of reasons.
The vast majority of that volume is generated by institutional money and/or professional traders.

For the retail investor (especially someone like the person referenced by the OP who is trading $860), I think 99% of the time they are taking positions against counter parties who are more sophisticated, with better information, and with better execution capabilities. Even if prices are efficient, their only chance is luck.
I'm a believer in the efficient market hypotheses, so for the most part, you're getting a fair price on the option, either buying or selling. But because the markets are smaller and less liquid than in the stocks, there is more room for periods of inefficiency that can be exploited. This is good if you can figure out how to exploit it, but the typical retail investor is the one that gets exploited.
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Re: Tom Sossnof's derivative trades

Post by long_gamma »

inbox788 wrote:
Tom Sossnof a veteran in the industry. I haven't heard about Tastytrade until now, but I was a customer of ThinkOrSwim (now Ameritrade). AFAIK, these are legitimate operations, but realize the trading strategies themselves have risk. Some of them are the same strategies hedge funds use, and some well managed hedge funds go out of business. What these tools did was provide the individual investor with the same type of tools that professionals had to trade options.
I was one of the early user ThinkorSwim platform in early 2000's. He along with Preston & Al (who were brain behind the software) had a good vision of developing software for option trading. Software was ahead of its time. Even now pretty much the same software is still competitive with all the new upstarts. Before 2000's trading option was mish mash to price an option, calculate greeks , track the position etc.

inbox788 wrote:
FWIW, my understanding was that Sosnoff's positions were mainly delta neutral and short gamma. A user here, long_gamma, may be better able to comment on the risk involved.
Even tho' I like Tom as a person (met him couple of times during trade shows etc) and as a early developer, I do not like his vision or his trading style. His vision is everyone should manage money by trading (he calls that as a reduction of cost basis). His style of trading and what he preaches is basically short volatility and going against current momentum. I am pretty much opposite of his style of trading. Short vol's are okay for indices (I also pretty much do the same), but he does mostly for individual high flier stocks. He is not delta neutral, but tries to manage reducing delta by shorting futures against his positions, as you know short vega and gamma positions can not be managed by delta alone. When his position blows up, he tries to roll over both time wise and distance wise. It is not my cup of tea, but may work for others.
"Everyone has a plan 'till they get punched in the mouth." --Mike Tyson
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Re: Tom Sossnof's derivative trades

Post by Waba »

Tanelorn wrote:I don't know Mr. Sossnof but one of the last stars of TastyTrade, "Karen the Supertrader", is getting charged by the SEC for some violations. I assume this is because she eventually lost a bunch of money, since otherwise no one complains to the authorities.
According to the SEC filings, Karen's fund had a worth of $136 Mil on Feb 29, 2016 and was carrying $57 Mil in unrealized losses.

The interesting thing about the case is that her fund allows participants to be redeemed based on their share of "realized gain/losses" only. So theoretically her investors (the first ones at least) can just walk away from that $57 Mil unrealized loss. Her fund is like a CEF that trades at %150 of NAV.

The SEC allegations don't focus so much on the losses itself but that while she was carrying these large losses she schemed to create artificial "realized gains" of which she then charged a 20% fund manager fee. Her fund prospectus described a fee structure where she did not get paid if the fund had "realized lossed". She has been rather creative in ensuring that her losses continue to show up as "unrealized" instead, neither the SEC nor the Judge in the case are quite buying into that much creativity.

To quote the Judge in the case:
Without delving too far into details not necessary in this Order, the result
of this alleged scheme is that, for about a week or two at the end of the month and
beginning of the next month, the Funds would convert realized loss to a
combination of realized gain and unrealized loss. Because they showed realized
gains at the end of the month, when the Funds calculated Defendants’ fees,
Defendants always got their incentive fee. A week later, however, the unrealized
loss and realized gains would convert back to realized loss.
Waba
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Re: Tom Sossnof's derivative trades

Post by Waba »

Panayota wrote:Is this Sossnof (Madoff) guy legitimate and can his plan work?
Sossnof is no Madoff (but see my other post). Sossnof got rich writing the ThinkOrSwim option trading platform that got sold to TD Ameritrade.
It's a pretty good piece of software actually and he is very passionate and knowledgable about option trading.
He is also very opinionated about hmm.. everything. I have no idea if he makes money from his own trading.

His stated goal with TastyTrade/TastyWorks is to make option trading accessible to a broader range of people and "demystify" it.
In the process he is also a great marketing person for TD Ameritrade and CBOE to drum up business for their option trading services.
Just like those home improvement series on TV make great marketing for Home Depot.

So yes, he is biased like hell and oversells the whole thing and downplays the potential for losses.
But if you can look past that it is fairly informative. The strategies are all some form of short volatility play.
You can look at CBOE's PutWrite Index (http://www.cboe.com/micro/put/) or its more recent IronCondor Index (http://www.cboe.com/micro/cndr/) to get an idea of the returns you can expect from those.

The main risk with option trading like this IMHO is, given that options are inherently leveraged instruments, that you unintentionally over-leverage and get killed by your brokers margin call when all your positions suddenly move against you as they some day will.
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Re: Tom Sossnof's derivative trades

Post by whodidntante »

If a guy knows how to beat the market he won't have time to educate me how to beat the market, at any price.

I watched several videos by a guy selling a trading system, out of curiosity. These were specific semi-daily examples of how his system works. It was total nonsense and cherry picking. He also made predictions about the future and I followed up to see how he did (not well). If there was something to it he would have convinced me, since I time the market, have a finance background, and I believe that momentum is a factor.
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Re: Tom Sossnof's derivative trades

Post by Waba »

ValueInvestor99 wrote:Options are a form of insurance and work well when used that way.
Sossnof and others are looking for way to get a riskless return on investment which is almost impossible.
Implied volatility is a measurement of how profitable options are if stock price doesn't change.
The riskless return comment is a mis-characterization.

Options are like insurance. And like insurance, they are slightly overpriced so that on average the insurance company makes money.

If you think an option is riskless, you have never held an option short for very long. There is real risk involved, but the point is that you get paid to take on that risk. Just like the insurance company gets paid. And just like the insurance company you will have to pay out every so often if you sell options.

Implied volatility(IV) is a measure of how the market prices the risk. (whether insurance is cheap or expensive)
Again, there is no riskless story here, if IV is high there is usually a very good reason for it. (just like there is a reason why 18 year olds pay more for their insurance.)
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Re: Tom Sossnof's derivative trades

Post by Waba »

And now for a reality check, this is me trying to earn $250,- selling options on Goldman Sachs the Sossnof way :annoyed

10/05/2016 - Mark to market = $2.76 - P&L = -$74.06
10/06/2016 - Mark to market = $2.21 - P&L = -$19.06
10/08/2016 - Mark to market = $4.25 - P&L = -$172.99
10/12/2016 - Mark to market = $3.29 - P&L = -$72.49
10/15/2016 - Mark to market = $5.88 - P&L = -$125.83
10/18/2016 - Mark to market = $3.30 - P&L = -$40.17
10/19/2016 - Mark to market = $4.39 - P&L = -$216.69
10/20/2016 - Mark to market = $4.12 - P&L = -$189.69
10/22/2016 - Mark to market = $3.84 - P&L = -$161.69
10/28/2016 - Mark to market = $6.38 - P&L = -$267.60
11/01/2016 - Mark to market = $7.17 - P&L = -$288.77
11/02/2016 - Mark to market = $6.30 - P&L = -$201.77
11/05/2016 - Mark to market = $17.55 - P&L = -$81.96
11/07/2016 - Mark to market = $13.30 - P&L = -$154.35
11/12/2016 - Mark to market = $31.97 - P&L = -$2,021.35
11/25/2016 - Mark to market = $32.75 - P&L = -$2,717.55
11/26/2016 - Mark to market = $32.62 - P&L = -$2,664.72
12/01/2016 - Mark to market = $47.69 - P&L = -$3,972.90
12/03/2016 - Mark to market = $51.75 - P&L = -$3,577.48
12/07/2016 - Mark to market = $70.04 - P&L = -$5,234.85
12/10/2016 - Mark to market = $88.22 - P&L = -$6,691.43
12/17/2016 - Mark to market = $82.83 - P&L = -$5,872.98
12/20/2016 - Mark to market = $88.65 - P&L = -$6,447.17
VaR
Posts: 723
Joined: Sat Dec 05, 2015 11:27 pm

Re: Tom Sossnof's derivative trades

Post by VaR »

Panayota wrote:Prior to this new plan (scam) my son was a conventional investor for 15 years and did not do well.
I think the annualized total return of the Vanguard Total Stock Market fund was 7.45% in the past 15 year period. $10,000 invested in 2002 grew to over 27,000 by 2017. Would your son consider this "doing well"? I would.

Maybe he's just disappointed at the returns of emotional "buy high, sell low" trading. So maybe he will find the total stock market example compelling. If he does not find a 7% annualized return compelling, then you have a different problem.
Ari
Posts: 643
Joined: Sat May 23, 2015 6:59 am

Re: Tom Sossnof's derivative trades

Post by Ari »

Panayota wrote:Where the "little guy" can do exactly like the big hedge fund folks and manage his own money by making cheap trades and consistently beating the markets.
You might want to ask your son to check out the track record of the big hedge funds. They're not consistently beating the market. They are, of course, making tons of money, but that's through commissions, not through trades.
All in, all the time.
long_gamma
Posts: 420
Joined: Mon Sep 14, 2015 4:13 pm

Re: Tom Sossnof's derivative trades

Post by long_gamma »

Waba wrote: The strategies are all some form of short volatility play.
You can look at CBOE's PutWrite Index (http://www.cboe.com/micro/put/) or its more recent IronCondor Index (http://www.cboe.com/micro/cndr/) to get an idea of the returns you can expect from those.
Risk premium enjoyed by individual traders selling crash premia will be less going forward imho. Big banks were in pressure to reduce their tail risk because of the regulatory measures. They could go to only one market they could lay off that risk, which is SPX. So IV's were elevated compared to realized consistently. With the expectation of winding down these regulations, these big players are more than happy to transfer that risk to american public.

That is one of the main reason financials have rallied and vol's have collapsed.

I won't extend the PutWrite index performances to individual stock put writing. They are two different animals.
"Everyone has a plan 'till they get punched in the mouth." --Mike Tyson
FLok
Posts: 1
Joined: Tue Jan 24, 2017 8:20 am

Re: Tom Sossnof's derivative trades

Post by FLok »

First the good news, I am an avid Tastytrader (TT) viewer and last year I made NET 15.71% proffit. Now for the bad news if you watched TT 2016 you would know that Tom & Tony and Liz and Jenny refuse to show their P&L or even discuss % gain this is for a good reason ?. Tony ran a beginners portfolio with his son who he was teaching, the portfolio swang all year up 4k to down 4k and finished the year allegedly flat. The only problem is that it was flat GROSS not NET, looking at them they adjusted every day to control the deltas so let's say they traded 2 trades (which is conservative) per day x250 days x $9 per trade = -$4500 (loss) P&L AT BEST. The other portfolio we could see the net lick was Ryan & Beef show, same thing flat for the year GROSS. So basicly what i am saying is YES TT can help you to be a better trader but will you make any money ?, PROBABLY NOT !! :beer
inbox788
Posts: 7800
Joined: Thu Mar 15, 2012 5:24 pm

Re: Tom Sossnof's derivative trades

Post by inbox788 »

FLok wrote:First the good news, I am an avid Tastytrader (TT) viewer and last year I made NET 15.71% proffit. Now for the bad news if you watched TT 2016 you would know that Tom & Tony and Liz and Jenny refuse to show their P&L or even discuss % gain this is for a good reason ?. Tony ran a beginners portfolio with his son who he was teaching, the portfolio swang all year up 4k to down 4k and finished the year allegedly flat. The only problem is that it was flat GROSS not NET, looking at them they adjusted every day to control the deltas so let's say they traded 2 trades (which is conservative) per day x250 days x $9 per trade = -$4500 (loss) P&L AT BEST. The other portfolio we could see the net lick was Ryan & Beef show, same thing flat for the year GROSS. So basicly what i am saying is YES TT can help you to be a better trader but will you make any money ?, PROBABLY NOT !! :beer
Since you're describing pros, and they end up flat, it kind of gives credit to the argument that A) short term/options trading is a zero sum gain (absent fees), B) the market is efficiently pricing the risk and C) even the pros can't pick the over/under. This is a fair game that I'm willing to play :mrgreen: For me, it's more fun and exciting than going to Vegas. Every other game in Vegas is a game of chance AFAIK, except for poker and blackjack, where skill matters. In poker, your skill have to be better than the other players. In blackjack, you have to know whether the deck favors or is against you. And like the market, there is a large element of chance. Oh and with the market, there is the additional element where the companies are growing at market rates, so to beat the market really means you beat the market growth, not just that you made a profit. You can make a small profit, but if it doesn't beat the market, it still loses, since you could have put it it all on SP500 and sat on your hands and beat that small profit. And paying fees to active mangers, paying a rake, or playing a game where the odds are against you are all costs that need to be overcome on top of the market growth, requiring even greater skill.

BTW, how much you win or lose is fairly meaningless unless you calibrate or scale it to the risk you took. If you bet $1M singly or all at once and you lost $5000, it's well within the expected results, but if you lost it on a small bet, you either got very unlucky or took great risk.
Waba
Posts: 416
Joined: Wed Feb 26, 2014 9:19 pm

Re: Tom Sossnof's derivative trades

Post by Waba »

FLok wrote:looking at them they adjusted every day to control the deltas so let's say they traded 2 trades (which is conservative) per day x250 days x $9 per trade = -$4500 (loss) P&L AT BEST.
How do you get $9 per trade? TD Ameritrade is $1.50 per contract.
The new TastyWorks broker that they started has actually a pretty decent fee structure for options:
$1.00 per contract ($1.10 with fees) to open and $0.00 to close ($0.10 with fees?)

That seems actually cheaper than IB where I pay about $0.80-$1.00 per contract.

I agree that costs matter.
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