John Jagerson wrote:

I think optionvue is really good but not better than thinkorswim.If I had to pick a top of the heap software program thinkorswim would probably be it.

So ToS offers the same level of sophistication of OptionVue as far as ease of calculations and finding and ranking trading strategies that are most probable to be successful?

Surprisingly, you may want to check out optionetics. The education they offer is not great but the software is surprisingly good.

That is surprising. I read one of the Fontanills book and detected a strong odor of get-rich-quick. Strange to hear that the software isn't like that too.

Oh yeah the dark side of investor education is strong with that one. However, their software is pretty good. I have to qualify that a little by saying that the last time I saw the software was 2 years ago...

I think tos and OptionVue are equivalently valuable but there is some different functionality between them so check them both out.

I have to comment on your success probability comment...

Option brokers and educators love to talk about high probability trades but the problem with that is that option pricing accounts for it. That means that a highly probable trade will have a low profit potential and a huge downside potential in its infrequent failures. The opposite is also true. It kind of changes the high probability analysis argument.

That doesn't mean that option selling is a bad idea or that high probability trades are a bad strategy it just means that things sort of even out so make sure you are managing your trades throughout and not just relying on the initial analysis.

P.S. It is no coincidence that many options brokers love talking about high probability trades, especially complex spreads like iron condors and butterflies. They are multi-leg spreads and generate a ton of commissions and traffic.

John Jagerson wrote:
Option brokers and educators love to talk about high probability trades but the problem with that is that option pricing accounts for it. That means that a highly probable trade will have a low profit potential and a huge downside potential in its infrequent failures. The opposite is also true. It kind of changes the high probability analysis argument.

That doesn't mean that option selling is a bad idea or that high probability trades are a bad strategy it just means that things sort of even out so make sure you are managing your trades throughout and not just relying on the initial analysis.

P.S. It is no coincidence that many options brokers love talking about high probability trades, especially complex spreads like iron condors and butterflies. They are multi-leg spreads and generate a ton of commissions and traffic.

But when you combine option pricing, with expected return, volatility analysis, probability of strategies, cant you have a realistic ranking of strategies on the asset that you are looking at when you take all of those factors into account? Isn't this how accomplished options traders decide on whether they should use say a long straddle over say long strangle if they had to choose between those two strategies?

Not really. I am sure there are plenty of traders that do that but in a liquid market it pretty much evens out. It is more or less the nature of the uncertainty of the market combined with the efficiency of options pricing. You are always trading off risk for reward.

The real differential is probably your personal preference, account capabilities and skill level.

For example - I dislike short term trading and have a very low level of personal confidence in it. Therefore rather than buying calls with a short expiration that I anticipate selling in a few days or week I buy long term options that cost more but are actually cheaper on a day to day basis.

Having said that I agree with you to a point. Clearly there are some really bad ideas. I usually suggest that folks not subscribe to commission generating trades that are overly complex and don't really provide a real advantage like double diagonals, iron condors and such unless they can shift the balance of trade costs and amount invested much further in their favor than normal retail traders do. Or trading uncovered short options right before a planned announcement is usually a bad idea. The list could go on from here...

Now don't get me wrong... Trading options is awesome and personal preference for one strategy over another is very important. These are not bad things but make sure you are not forcing yourself outside of trading strategies that you like and are good at because someone is pitching it as a "high probability" trade.

One suggestion I always tell people is to compare the account value growth of brokers that specialize and encourage more complicated options analysis and trading with a broker dealer that doesn't. The numbers will be very similar.

John Jagerson wrote:
Now don't get me wrong... Trading options is awesome and personal preference for one strategy over another is very important. These are not bad things but make sure you are not forcing yourself outside of trading strategies that you like and are good at because someone is pitching it as a "high probability" trade.

I didn't mean 'high probability' in a generic sense (or God forbid - aget-rich-quick sense). The strategies seem like they're just tools and the appropriate situation will dictate the most appropriate 'tool' based on your experience. Is that right or is it something more to do with style when you say you like certain strategies over another?

So greedy brokers aside you don't think that they're are appropriate situations where an experienced options trader will have good reason to pick a 4-legged strategy - even then it's still overkill?