Written by Michael Bigger. Follow me on Twitter.
When I traded single-stock derivatives at D.E. Shaw, I was fascinated by observing my boss trade S&P options. He made money consistently while taking very little risk. He was a trading magician. He knew his options market, especially the S&P, and he knew how to trade spreads. He was constantly trading in and out, squeezing juice out of the lemon. The lemon never ran out of juice! It was a wonderful thing—a winning trading method.
He started his career trading options for O’Connor & Associates and later for Swiss Bank before joining D.E. Shaw. All of them are/were great trading houses.
I am telling you this story because I want to highlight the importance of trading methods for traders. At Bigger Capital, we use several methods that include but are not limited to convexity, volatility, and correlation. Our trading methods are responsible for generating most of our trading profits. Recipes are very important, but the method you use for squeezing the juice out of the lemon is even more so.
We have learned so much by studying how other people apply their methods. Here is a list of some of the trading methods you might want to investigate:
Expand your horizon. Explore the methods you know little about. Even better, develop your own.