Delta Neutral Hedging

If you are not a good directional trader, you have little to no chance making money trading options. The myth is that of the retail market neutral options trader. He doesn't exist. He may think he does, but he doesn't. There is a unique set of circumstances in options concerning "retail" traders that allows them to think they can make money trading volatility when in fact they are de-facto directional traders. True volatility trading dynamically hedges positions to have no delta exposure and isolates the volatility component. This is what market makers on the floor did for years. Lot of guys that trade iron condors think they are volatility traders or that they can have success slapping on a spread that will generate deltas (direction) and yet be impervious to the consequences of those deltas. Delta neutral trading though a retail broker will produce a horrific return on investment under retail margin. You are making pennies while tying up large amounts of capital. Also, delta hedging again comes down to trading direction well. If you sell stock on XYZ as its breaking out then you will bleed out all the gamma that is generating positive deltas so you will not have an opportunity to buy the stock back. Whether you buy or sell vol will be largely affected by the stock going higher or lower. It will be really hard to make money being long vol in a rising stocks and vice versa. And if the stock trends, you are done! So again, you need to be a competent directional trader. Not saying master stock trader, but competent. If this was such easy money, why are the 10,000 plus hedge funds out there spending a fortune on coding software and hiring 100 PhD's to come up with strategies.