Option Volatility And Forecasting

For the purposes of practicality, I should be doing much of my trading on paper in a virtual account. And I've done that, but I don't stay focused on it and if I make a big win I feel like a dolt for not doing it for real.

Like the virtual trade where I turned $700 into just over $7,000 in two months.

Sheesh, that would be nice to have in the bank right now.

I've found that nothing focuses my mind (of late) like doing the live trades. The lessons I'm learning will definitely stick with me a bit more. Like the lesson of paying attention to the "implied volatility" of an option before buying into it. Shortly after I bought my CMG options I saw that the stock started going in my direction, but the option value dropped.

This is a relatively painless lesson learned since the stock continues to go in my direction and the options are in the green, but it could be more positive than it is now.

The Perils of Forecasting

The forecasting service I'm trying out is remarkable accurate in predicting market swings. It's not quite as strong in forecasting exactly when or how large those swings will be. While the SPY has been roughly following the changes forecasted, the amplitude changes are larger than I anticipated.

I'm at a loss right now on the SPY position, but on the upside this was forecasted to be a down day and they're calling for it to be positive by the end of the week.

Even if this turns out to be accurate, I don't think I will stick with the service. The regular cost is $200/month and I'm not trading in large enough amounts to make the relatively small swings of the indexes pay off.

I'm not really disappointed about that. I think I'm doing okay with my regular option positions so I'm going to keep doing that and continue building up the account.

I talk a little bit more about this in the video:

Options Volatility & Forecasting