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Author: TMFHamp Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 11010  
Subject: Re: Optimal Position Size Date: 2/25/2007 10:32 PM
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<<How many option trades are you willing to do at a time? If you do more than one, do you balance them with some being bullish and some bearish ?>>

Hi Steve,

My general allocation is 40% bullish (stock vertical spreads), 20% bearish (stock vertical spreads), 30% market neutral (index calendars and index iron condors), and 10% volatility (i.e., stock straddles).

I always want a combination of different directional-bias trades because you are never certain what direction the market will go. Since the market goes up 67%, on average, I am willing to have twice as many bullish trades as bearish, however.

I also try to spread my trades among three separate expiration months so that I am not betting everything on the one month that is extreme in direction and/or volatility. This is not always possible, however, if I can't find enough trades to put on.

Lastly, I am theoretically willing to bet all of my trading capital at once (100%) if I find enough promising trades. In reality, the greatest percentage of my trading capital that has been invested in option trades at one time has been 70%.

Jim
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