GregFokker Posted January 25, 2003 Report Share Posted January 25, 2003 There's more to it than premium decay- also want to see price appreciation for corresponding moves in the underlying security. It' s well worth looking at option chains with option greeks included- gives a much better idea of what you're actually buying/selling for your money. http://www.pcquote.com has a toggle on its options page to display the chain with greeks. All of these considerations are quantified using those measures, and it removes much of the guesswork. Link to comment Share on other sites More sharing options...
Madame Wrecked Him Posted January 25, 2003 Report Share Posted January 25, 2003 Greg: thanks for that link. It looks like it's exactly what I need. Link to comment Share on other sites More sharing options...
Drano Posted January 25, 2003 Report Share Posted January 25, 2003 There's more to it than premium decay- also want to see price appreciation for corresponding moves in the underlying security. It' s well worth looking at option chains with option greeks included- gives a much better idea of what you're actually buying/selling for your money. http://www.pcquote.com has a toggle on its options page to display the chain with greeks. All of these considerations are quantified using those measures, and it removes much of the guesswork. Yes, it's a swell link, thanks. Guess what ad came up when I went over there to check it out? www.bullmarket.com Link to comment Share on other sites More sharing options...
SkiddMarket Posted January 25, 2003 Report Share Posted January 25, 2003 Bless you brian4 and everyone else. Ask and ye shall receive. Now it's time to build a ladder down to hell. (Yes, I know.... Trade safe) Link to comment Share on other sites More sharing options...
bubbadropping Posted January 25, 2003 Report Share Posted January 25, 2003 I guess my question to Brian is, say you have a bounce in a longer term down trend, do you hold onto your puts as you ladder in your calls? Then the question is at what point do you take profits on your call ladder and load up at a higher level on new puts to extend your original ladder in puts? This is all entirely dependent on confident you are in the intermediate trend and at what points you see support and resistance but if the market is whipsawwing across supports and resistance it makes this strategy difficult nonetheless. Technicians will often argue that they have 'confirmation' of a reversal or a down wave but I am always doubting that. 'Confirmation' just as easily turns into 'reversal' or 'whipsaw'. Anybody spending anytime on Ewaves knows exactly what I mean. They change the wave count constantly to accomodate the days or weeks action. So what? They end up just chasing the price rather than predicting it or forecasting with any measure of accuracy. Sorry to ramble on but its important to play devil's advocate with these strategies. It doesn't mean much if you have both directions covered but have no way of knowing where the next reversal or confirmation is coming from. I think if I hear that word 'confirmation' used once more I'll vomit. There just are no certainties in TA, just vague probabilities in my opinion. Link to comment Share on other sites More sharing options...
rayok Posted January 25, 2003 Report Share Posted January 25, 2003 Gee Doc, this must be the promised land. Free at last, free at last! Link to comment Share on other sites More sharing options...
PileDriver Posted January 25, 2003 Report Share Posted January 25, 2003 BEARD, thanks for info. GF, Jim P is great. Perfectly named web-site. I also retreat to http://www.sovereignstrategist.com/updates/index.cfm ...after I've accidentally had my ears filled with complete bullshit from the mainstream media idiots. Wall St Week with Cliggot was a beautiful dose of reality. He was great, he must be a Stoolie or at least a lurker Link to comment Share on other sites More sharing options...
PileDriver Posted January 25, 2003 Report Share Posted January 25, 2003 Wow, we need an options thread Doc. Just kidding. Budda, I'm going to use deep in the money calls to hedge my shortfolio when the market is over extended (Dover Sole). I may also use the strategy next time I'm easing into a new shortfolio while the market is still rising/topping. Eases the pain. Couple of good option sites: http://www.ivolatility.com/ http://www.onlinespreads.com/ http://www.optionetics.com/ Link to comment Share on other sites More sharing options...
brian4 Posted January 25, 2003 Report Share Posted January 25, 2003 Budda-see the last part of my post this morning-"I straddle when I'm not sure". Obviously this ladder thing struck a chord from the e mails I'm getting sooo here is a strategy that will win 8 out of 10 times. Most people who say you can't make money in options are sheepie who bought out of the money calls or puts-had no stop loss and lost everything-so this is how to take advantage of sheepie who there is an endless supply of-this example is a play i am in now and can be used for any stock or index-up or down-my favorite sector to do in right now is GOLD-because the sheepie are everywhere. It's called a bull calendar spread-Tuesday I bought 10 August $35.-calls on ASA -(ASAHG) cost $8.60 per contract=$8,600- I then sold 10 March $45.- calls (ASAOG) for $2.- a contract so my cost is 8600-2000=6600. ASA doesn't reach $45.- by March-I make $2,000 and sell April $45's further driving down my cost. Or ASA goes to $45 and change by March and I am called so I exercise my $35's and I receive $45,000-35,000-6600=profit of $3,400 and I go buy another in the money contract and start again. Or along the trail ASA drops a buck or two so I buy the $2.- contract back for say 75 cents and I sell a lower strike and away we go again. The odds of a win are very high when you sell an out of the money call for a near month against a deep in the money call you hold farther out. If you want to be totally safe at the start i could have bought a March $35.- put (ASAOG) for 65 cents and then just sit back-but why the extra protection-it just cuts into profits. Try this strategy-you'll like it and make coin-there is a gizzled old option pro out there called Mike Parnhos-The Couch Potato Investor who has hundreds of these going at a time-Trade Safe! Link to comment Share on other sites More sharing options...
Drano Posted January 25, 2003 Report Share Posted January 25, 2003 B4, I look forward to your posts and your advice is always appreciated. This sounds like a good spread, but this is why I'd buy the puts: I did this on a company that looked great. Then the catastrophic news came out and the company was crushed, and with it, my capital. Even though gold is in a bull market, I'd have to be mightly confident to do one of these without protection. Disclaimer: I haven't looked at ASA closely. On the other hand, I think you have a certain political risk with South African miners, in case they are nationalized you are screwed. Link to comment Share on other sites More sharing options...
sweefraapp Posted January 25, 2003 Report Share Posted January 25, 2003 fib action Link to comment Share on other sites More sharing options...
brian4 Posted January 25, 2003 Report Share Posted January 25, 2003 Drano-there is always RISK- managing RISK is what it's all about-in the example I gave-with a 2 grand cushion and a bull market going for you-if you had to get out-you not only could but percentage says you could with a profit. The risks on a spread are less than those on a call or put! Trade safe! Link to comment Share on other sites More sharing options...
DrStool Posted January 25, 2003 Report Share Posted January 25, 2003 It behooves you more experienced people to warn of the pitfalls in options. Everyone I persnally know who traded them eventually lost everything. That doesn't mean there aren't exceptions. But anyone considering buying options should be aware that the deck is overwhelmingly stacked against you. Link to comment Share on other sites More sharing options...
The End Posted January 25, 2003 Report Share Posted January 25, 2003 I advised against pyrimiding on this thread Doc. A very dangerous game in deed or dead if you will. Link to comment Share on other sites More sharing options...
Hypertiger Posted January 25, 2003 Report Share Posted January 25, 2003 The key is to get out when the getting is good... When wild corrnered animal stage shows up the pros will be first in line... Everyone else will be wiped out. It will be first come first served, damn the women and children... You'll see... Convert 20% of your wealth to 5% cash, 15% Gold and Silver and you'll be laughing... That is prudent... Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.