Thread on 'no stop loss', 'adjustments' and 'Risk'
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Wanted to share my thoughts on this topic for a long time but this email sent by someone yday woke me up from slumber
Pls read the email 1st before delving into thread
(1/n)
In the past 1-2 years, there has been a sudden surge of traders who just talk about theta decay, option selling, adjustments and stuff like that..
It is all fair as long as the trader knows what he's doing. But the reality is far from what we see/perceive...
(2/n)
Many of these folks were told that one can 'adjust' their way out of any situation. Any sane options trader know that you cannot come out of any situation by adjustment
One of my friend used to do that(he is famous in options selling desi fintwit) for a long time until..
(3/n)
..he realized that one cannot possibly do that and its gonna burn him one day. He's pretty smart and hence, he put a portfolio level SL & when that hits, he will stop dancing, gets out and calls it a day
So, risk is managed at account level and he is quite clear about it
(4/n)
Unfortunately, 1000s of traders who does option selling(with adjustment) dont have this risk mgmt in place.
They think (i dont know if i had to call it false confidence or ignorance) their skills in 'adjusting' will take them ashore 😅
(5/n)