When a trade goes our way, all is good. But 50% of the time , it won't. What separates a good options trader from bad is how we adjust when things do not go our way. This is why I sometimes don't post these trades at closing, I know how to adjust and escape unscathed.
https://twitter.com/SubhadipNandy16/status/1412977928661467136
But unless one has a strong grounding of the greeks and understands the nuances of this strategy, one would freeze like a deer caught in the headlights and suffer losses. It's not always possible for me to post adjustments in a fast moving markets specially in BNF
The quoted thread will give you a good idea on how an options buyer also adjusts his positions, for which I have a few iron rules
1. No extra capital must be used
2. Trade must remain define risk
3. Enough time must be there to let the trade work out
1. No extra capital must be used
2. Trade must remain define risk
3. Enough time must be there to let the trade work out
My adjustments may not seem "theoretical" what you learn in books. I have honed and made these rules by putting on 100s of trades, suffering, getting losses and learning. My knowledge is "practical", not "theoretical"
The major problem people face in adjustments is using more and more capital. This is not feasible as capital is limited for all of us retail traders. Another problem is keeping a leg at unlimited risk, this will bite you bad at one point of time or the other.
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