what kind of strategy do you use?

[wallstreetsedge]

i use a lot of option trades personally, on average each one of my positions is about $10k and i always buy in the money but i was wondering what are some strategies that everyone on this board uses?

the way i use my strategy is i always buy 1-3 strikes down if im buying calls or 1-3 strikes up if im buying puts, the number of strikes also depends on how far out im going especially if im betting on earnings

i also use spreads 20% of the time if im only going out one month

and how i go about in picking is i go strictly by candle sticks when it comes to option trades. such as lets say GD is at about 90, and i expect it to go to 95+ in the next 30 days, i would buy jan or feb 85 or 90 calls. in some cases, i might even sell the 100 calls

another one is im expecting BZH to go to $2 in the next 2 months so i bought the march 10 calls. since theres a short restriction on it, im not bothering to use spreads.

on avg im making 20-30%+ per month


other times i make a lot of gambes such as over the summer in july, i was buying the august 10 calls on nfi at 5¢ and cashing out at 10-15¢ when the stock barely moved. do a lot of you guys gamble on volatility or do you mainly use a strategy like ive been using involving candle sticks?

[netwrangler]

i use a lot of option trades personally, on average each one of my positions is about $10k and i always buy in the money but i was wondering what are some strategies that everyone on this board uses?

the way i use my strategy is i always buy 1-3 strikes down if im buying calls or 1-3 strikes up if im buying puts, the number of strikes also depends on how far out im going especially if im betting on earnings

i also use spreads 20% of the time if im only going out one month

and how i go about in picking is i go strictly by candle sticks when it comes to option trades. such as lets say GD is at about 90, and i expect it to go to 95+ in the next 30 days, i would buy jan or feb 85 or 90 calls. in some cases, i might even sell the 100 calls

another one is im expecting BZH to go to $2 in the next 2 months so i bought the march 10 calls. since theres a short restriction on it, im not bothering to use spreads.

on avg im making 20-30%+ per month


other times i make a lot of gambes such as over the summer in july, i was buying the august 10 calls on nfi at 5¢ and cashing out at 10-15¢ when the stock barely moved. do a lot of you guys gamble on volatility or do you mainly use a strategy like ive been using involving candle sticks?Wow, that sounds really aggressive.

Do you have any open positions now so we could follow along?

Also, it sounds like your positions involved trading options, and not the underlying stock. Did I get that right?

TIA

[aiki14]

i use a lot of option trades personally, on average each one of my positions is about $10k and i always buy in the money but i was wondering what are some strategies that everyone on this board uses?

the way i use my strategy is i always buy 1-3 strikes down if im buying calls or 1-3 strikes up if im buying puts, the number of strikes also depends on how far out im going especially if im betting on earnings

i also use spreads 20% of the time if im only going out one month

and how i go about in picking is i go strictly by candle sticks when it comes to option trades. such as lets say GD is at about 90, and i expect it to go to 95+ in the next 30 days, i would buy jan or feb 85 or 90 calls. in some cases, i might even sell the 100 calls

another one is im expecting BZH to go to $2 in the next 2 months so i bought the march 10 calls. since theres a short restriction on it, im not bothering to use spreads.

on avg im making 20-30%+ per month


other times i make a lot of gambes such as over the summer in july, i was buying the august 10 calls on nfi at 5¢ and cashing out at 10-15¢ when the stock barely moved. do a lot of you guys gamble on volatility or do you mainly use a strategy like ive been using involving candle sticks?

Forgive me but this is gonna come across as belligerent.

Taking your last statement first, in July the Aug 10 calls never traded near .05, in fact they were in the money until the 31st, when the underlying moved down from 12.56 to 9.64. so they opened up the 31st at 2.85 and closed at .80. And there were no 10k positions moved on the Aug 10 calls any time in July or August. Not even close.

That said, I'll address your "strategy" of using 1-3 strikes in the money positions. Your surrendering any delta by doing this, and if you're not holding the underlying, therefore not a hedge position, I don't see any benefit in taking the option position versus the stock. In fact you are increasing your risk with no upside. Just the opposite of good options strategy.

I'd love to hear the reason for 20% spreads if you're going out one month, why not 100%. One month out seems capping your upside and taking a risk reduction position would be a better play.

Maybe you could elaborate on using candlestick analysis for options trading, are you plotting the underlying or the options? And what pattern or patterns are you looking for to trigger your trades? Your GD is a curious example, notwithstanding the fact that it doesn't say anything about candlestick analysis, using a stock with a .90 beta as an options example is odd at best.

Speaking of odd, BZH 10 calls? The underlying is 7.11, you expect the price to go to 2, you buy the Mar 10 CALLS? That indicates a complete lack of understanding of the concepts, or a typo. And again no way you could play 10k positions in this, on either side, at any strike, there isn't near that kind of open interest. (although if you were really buying 10k of mar 10 calls there would be a line to sell them to you, I'd write them myself in a heartbeat)

You're averaging 20-30%+ per month.

I'll just let that sit out there by itself.

[madcowdisease]

Wow, that sounds really aggressive.



I'm with you, Net. Wow! You're much more of a risk taker than I, my friend. I won't touch a front month contract on any option plays. I am always 6 months out or more and don't like to hold anything that is 90 days or less until expiration as time value decreases significntly at that point.

Good luck to you though.

[netwrangler]

I'm with you, Net. Wow! You're much more of a risk taker than I, my friend. I won't touch a front month contract on any option plays. I am always 6 months out or more and don't like to hold anything that is 90 days or less until expiration as time value decreases significntly at that point.

Good luck to you though.Hey, MCD, thanks for your support.

In fact, most of the expiry dates for the options I buy or sell are 2-6 weeks out.
Most of the time, these options are connected to a long position I am holding.

If I can toot my own horn, check out the thread "Option Strategy — aka (DD)²".

I believe that option strategy requires knowing the DD of both the underlying security and the option itself.
Knowing both is easier if you start with a long term stock position.
[The assumption is that you have done the DD on that long term position.]

Without the DD of both the stock and the option, a one-month expiry in an option is a real crap-shoot — with odds that are less favorable than you would get at a craps table in Vegas.

With DD on both, options can be a very attractive investment.
Of course, you have to have faith that your DD is on target. :?

[wallstreetsedge]

akai, i dont want to sound rude but the stock was trading roughly around 7.50 to 8 at the time. youre getting your prices post-split and post symbol change. the stock did a 1:4 split at the end of july. if anything, ill pull up my statements to find the buy date and sell date.

i dont follow delta in my purchases. instead, i look more at my cost for time value. there are also a lot more benefits in my opinion when it comes to buying in the money. lets say rimm for example, when the stock was sitting at 99-100 a couple of weeks ago.

i had the march 86.6 which cost me roughly 18-19 and the march 116.6 which cost me roughly 8. after earnings, i sold out my options and cashed out of my march 85's for roughly 33 and my march 116.6 for roughly 13.25

i take the option position rather than stock because of leverage. why control 100 shares of rimm when i can control 500 shares for a limited time period at the same cost with a higher percentage returns? id take options over day trading and margin any time. i made almost 100% on my rimm

the day after rimm reported (options expiration date), i was also playing the dec 115, got in as low as 3.30 and as high as 4, got out at 4.8. i had 20 3.30's, 10 3.40's, 10 3.80's, and 20 4's

also by 20% spreads, i mean to say i only use spreads 20% of the time. lets say for some reason i like EMC at 18.3, i think it goes to 24 but not by jan exp, then what i would do is i would probably buy the EMC may 15 at 4 or 16 at 3.2 right now, making my breakeven about 19 or 19.2 by may exp and sell the jan 19 or 20 as it climbs

my open option positions right now in expir order are...

long 20 nfi jan 35 calls (sucks! i never managed to sell all of them)
long 20 wu jan 17.5 calls
long 20 wu jan 20 calls
long 10 wu jan 22.5 calls
long 5 mer jan 65 calls (sucks!)
long 10 mer jan 62.5 calls (sucks more!)
long 10 rimm jan 86.6 calls
long 10 rsh jan 15 calls
long 10 bcsi jan 25 calls
long 10 cmi jan 130 calls
long 10 gd jan 90 calls
long 10 nyx jan 90 calls
long 10 cmg 85 calls (owned for 6+ mo)
long 10 cmg 90 calls (owned for 6+ mo)
long 10 cmg 100 calls (owned for 6+ mo)
long 10 aapl april 230 puts
long 25 mtg jan 22.5 puts
short 10 bcsi 35 calls
short 10 calm jan 30 calls
short 20 calm jan 35 calls
short 10 amzn jan 105 calls
short 10 rimm jan 145 calls
short 10 axp jan 50 puts

long 20 calm march 22.50 calls
long 10 calm march 25 calls
long 40 bzh march 10 puts
long 10 cmed march 50 puts
long 10 fslr march 320 calls

long 10 mrx april 35 puts
long 15 ebay april 30 calls
long 15 msft april 30 calls

long 10 july amzn 85 calls
long 10 july xom 95 calls


recently closed option trades, i lost $ on only wnr, cwst, and gs 240 calls

long 5 rmbs dec 30 puts
long 10 wnr dec 25 calls (sucks, i bought them when the stock was around 35)
long 10 ma dec 150 calls
long 15 ma dec 155 calls
long 5 ma dec 160 calls
long 10 avav dec 22.5 calls
long 20 pss dec 15 calls
long 10 cwst dec 12.5 calls
long 10 etfc dec 12.5 puts
long 5 abk dec 35 puts
long 15 nile dec 105 puts
long 10 nile dec 100 puts
long 10 tlb dec 17.5 puts
short 20 hoku 12.5 calls

long 6 goog 630 calls (played it twice with 3 calls each, so i listed as 6)
long 10 ma 200 calls
long 20 hoku 7.5 calls
long 8 grmn jan 90 calls
long 5 grmn jan 95 calls
long 10 lcc jan 25 puts
long 20 gs 230 puts
long 5 gs 240 puts
long 5 ma jan 200 calls
long 10 hpq jan 50 calls
long 5 rimm jan 95 calls
long 5 rimm jan 100 calls
long 10 rimm jan 106.6 calls
long 10 rimm jan 116.6 calls
long 20 rht jan 20 calls
long 10 orcl jan 20 calls
long 30 aapl jan 95 calls (owned 6+ mos)
long 10 aapl jan 190 calls
long 10 mo jan 70 calls (sitting in this since summer?)
long 10 msft jan 32.5 calls (sitting in this since spring?)
long 20 msft jan 25 calls (sitting in these since summer of last year)
long 40 mtg jan 22.5 puts
long 20 cfc jan 17.5 puts
long 25 gs jan 205 calls (nice move bought them same day they announced earnings and came down and sold when stock went to about 215)
long 10 gs jan 240 calls (sucked! bought them after stock popped above 230)
long 7 mbi jan 45 puts
long 10 frpt jan 20 puts
long 20 peix jan 2.5 calls
long 15 ed jan 45 calls

long 10 rimm march 85 calls
long 10 rimm march 100 calls
long 10 rimm march 106.6 calls
long 20 rimm march 116.6 calls
long 30 fslr march 320 calls


watching to buy calls on
emc
more calm on weakness
more amzn on weakness
more cmi on weakness, further out
more gd on weakness, further out
drys
xom

looking to buy puts on
nvda
moc
trow
crox

possible earnings long calls...
sonc
bbby
cit
edu
ebay (already own)
msft (already own)
crel
rmbs (tough call, will probably lose but raise guidance)
jnj
unh
qcom (tough call)
ryl
wdc
cmi

possible earnings long puts...
kbh
apol (already mentioned)
mtg (already have some)
mtb
c
wm
cal
rmbs (tough call, will probably lose but raise guidance)
cof
xjt
ori (will hit this one hard!)
etfc
aapl (already own)

wow that took a long time to write up. i was actually thinking of going into the office today that was around 9, its 1050 now lol

as for candlesticks, im not plotting them for the options themselves. im plotting them for the stock itself. ie, lets take gd and go back i expect to go to 95-98 by early jan, the beginning of the month when i first saw this, i decide my if jan exp is far enough out or if i should hit feb. then i figure out my degree of risk and what the cost avg would be compared to the stock.

for simple math lets say at the time, gd was 90, and the jan 85's go for 6, i figure my break even is 91, assuming it takes till exp to hit 95, my profit is 4 with a risk of 6. i always assume the stock will go the exact opposite and consider which strike i want, how far out i want to go, and how much capital im willing to risk. just because im willing to risk say 20k on rimm doesnt mean id be willing to risk 20k on aapl.

as for 20-30% mo, thats off the top of my head based off of what was made for the year (excluding what i made on rimm). i dont base everything on candlesticks, sometimes i just go with if i think a stock came down way too much like when grmn went from 115 to 85.


you know what, i read your post and i made a typo. i meant to say i own the BZH 10 puts going out to march

i was in a rush and probably wasnt thinking straight




Forgive me but this is gonna come across as belligerent.

Taking your last statement first, in July the Aug 10 calls never traded near .05, in fact they were in the money until the 31st, when the underlying moved down from 12.56 to 9.64. so they opened up the 31st at 2.85 and closed at .80. And there were no 10k positions moved on the Aug 10 calls any time in July or August. Not even close.

That said, I'll address your "strategy" of using 1-3 strikes in the money positions. Your surrendering any delta by doing this, and if you're not holding the underlying, therefore not a hedge position, I don't see any benefit in taking the option position versus the stock. In fact you are increasing your risk with no upside. Just the opposite of good options strategy.

I'd love to hear the reason for 20% spreads if you're going out one month, why not 100%. One month out seems capping your upside and taking a risk reduction position would be a better play.

Maybe you could elaborate on using candlestick analysis for options trading, are you plotting the underlying or the options? And what pattern or patterns are you looking for to trigger your trades? Your GD is a curious example, notwithstanding the fact that it doesn't say anything about candlestick analysis, using a stock with a .90 beta as an options example is odd at best.

Speaking of odd, BZH 10 calls? The underlying is 7.11, you expect the price to go to 2, you buy the Mar 10 CALLS? That indicates a complete lack of understanding of the concepts, or a typo. And again no way you could play 10k positions in this, on either side, at any strike, there isn't near that kind of open interest. (although if you were really buying 10k of mar 10 calls there would be a line to sell them to you, I'd write them myself in a heartbeat)

You're averaging 20-30%+ per month.

I'll just let that sit out there by itself.

[wallstreetsedge]

since i made a typo in my original post about owning calls instead of puts.. i may have put a few typos in my reply as well :O if something looks odd let me know but ill try to check on it briefly

[wallstreetsedge]

yeah i caught a ew typos in the listings post but i think i fixed them all

i also reread some posts, i dont follow delta, i look more at time value vs. margin interest rates thats also my reasoning for buying in the money because since theyll move dollar for dollar if they stay in the money

remembered i had closed out puts ive been holding onto since summer on mgi (moneygram) but the post wont let me add it

[Albert0373]

Lovely thread, thanks for the posts kthomllc.

[netwrangler]

Do you have any open positions now so we could follow along?

TIA


watching to buy calls on
emc
more calm on weakness

more amzn on weakness
more cmi on weakness, further out
more gd on weakness, further out
drys
xom

looking to buy puts on
nvda
moc
trow
crox

possible earnings long calls...
sonc
bbby
cit
edu
ebay (already own)
msft (already own)
crel
rmbs (tough call, will probably lose but raise guidance)
jnj
unh
qcom (tough call)
ryl
wdc
cmi

possible earnings long puts...
kbh
apol (already mentioned)
mtg (already have some)
mtb
c
wm
cal
rmbs (tough call, will probably lose but raise guidance)
cof
xjt
ori (will hit this one hard!)
etfc
aapl (already own)

Looks we are both swing trading with options, with a couple of key differences in tactics.
By swing trading I mean that we follow a "list" of stocks and:

When a stock on our list is "up" we sell the call and/or buy the put;
When a stock on our list is "down" we buy the call and/or sell the put.

[I'm using the term "list" conceptually here. You posted a list, but I'll bet your list changes month to month as mine does.]

The differences in tactics are:

I usually own the underlying security.
I never sell a naked call. (Is that a difference?)

Owning the underlying security gives me a bias to seek stocks for my "list" where I am bullish long term. That has worked well for me during the bull market of the last few years. If the market softens in 2008, I expect I will be entering into more short sales and more pure option plays, and the nature of my list will change.

I created two new watch-lists based on your post — "Kens Calls", and "Kens Puts". I want to spend some time working on some questions:
Are the stocks on the right list? You have RMBS as both a possible long earnings call and earnings put. I like that. Makes it an obvious candidate for a long straddle or strangle if the premiums aren't too high.

What are the swing points that I see for stocks on the list? I like to plan ahead for a possible move. That way, if the move comes about, I can react quickly.

What stocks would I add to each list? What stocks might I remove?
I'll post my thoughts and reasoning in these areas. Maybe by sharing some thoughts and strategies, we will both be better off. [I figure that was the implied intent of your OP for this thread.]

[wallstreetsedge]

im not really going naked on any calls.. if youll notice, i own calls going out to a further expiration date and my short calls are simply at a closer exp date, creating a spread and taking advantage of the volatility

also another strategy i use that i didnt list is similar to your avg strat, rather than own a security and trade around it... sometimes i like to own the call and trade stock around it or trade options around it. an example would be with rimm

you for example would buy 1000 rimm at say 115, if the stock runs to 125, youd probably sell some jan 120, 125, or 130 calls, let it pull back, and buy them back, right?

if i wanted to play it the same way, what i would do is if i liked rimm equally, i would probably buy 10 march 96.6 calls instead of the stock at 115. then as rimm runs to say 125, i would either short some stock or sell the jan 120, 125, or 130 calls against it rather than outright sell the calls

as for rmbs, yes i have im watching it for a possible straddle. to avoid the high premiums, i would buy them in the money by 2 strikes going out to march if there are any march options.. i just walked in and didnt have a chance to look but ill assume rmbs is at 21. so what id do is i would buy rmbs mar 17.5 calls and mar 25 puts or if the premiums are too high, id go deeper in the money and pick up rmbs 15 calls and 27.5 puts. the candlesticks also point that rmbs willprobably go to 24 before earnings so what id do is i would probably buy 50% more in calls.. ie 15 calls and 10 puts. rmbs is also a bit shaky, so i wouldnt hit it as hard as i would with other stocks like i did with orcl, rht, and especially rimm. if rmbs looks to get oversold by earnings, ill probably buy only calls, no puts

as for the swing pts, ill normally pick up a small portion on the same day that i see the pattern then add to the position on a giant move away from vwap, 2% moves unless the 2% move compared to vwap is scary. ie, on a 2% down day, buy calls, on a 2% up day buy puts. i also like to buy around 11:30 to 1pm, prices tend to settle down at their furthest points from the vwap here

as for stocks to add and remove? do you mean for earnings plays? those are all the stocks im watching for this month going into earnings.

i also like to listen in on the conference calls for a co's competitors. such as avav i was playing for earnings, i learned a lot about their standing vs the competition which gave me reason to stay bullish on gd and cmi and to go bearish on frpt.

also with orcl which i played for earnings, the conference call gave me reason to go bullish on rht and go bearish on ibm


also i have diff reasonings for buying options. i usually prefer to buy options on stocks with betas above 1.5 and also stocks that are normally over $85+, the higher the better because they move in dollars vs cents and when it comes to options that are in the money, you tend to get spreads on avg that are 10¢ to 40¢ between the bid/ask so higher cost and beta make them more attractive... thats also why in my list of closed positions, you see bigger positions on co's like rimm compared to etfc



if i missed something let me know

[wallstreetsedge]

by the way, co's like mtg and bzh, i would buy puts on them now on up days like today. we know the news that has been out on the co's for quite some time and the only reason why they're making big moves up are because these stocks are short restricted. also the exchanges have put very short time periods for short sellers to cover their positions. i havent checked on mtg but bzh has only about 9 to 14 days to cover the last time i checked which is why we see giant 4-5% moves every other day

[wallstreetsedge]

someone asked me a question about my options and there seems to be a little misunderstanding. the options that i listed, ive owned them for a couple of weeks or months. i didnt just start buying them all recently! lol

[kingfisher]

[QUOTE=kthomllc;88135]by the way, co's like mtg and bzh, i would buy puts on them now on up days like today. we know the news that has been out on the co's for quite some time and the only reason why they're making big moves up are because these stocks are short restricted. also the exchanges have put very short time periods for short sellers to cover their positions. i havent checked on mtg but bzh has only about 9 to 14 days to cover the last time i checked which is why we see giant 4-5% moves every other day[/QUOTE


Ken
This is what I was refering to in my 9-14 PM.

[wallstreetsedge]

oh ok then i made a mistake in my response...i sent you a very long response too lol

im not saying to short bzh... i was saying to buy in the money puts on it. when you have a stock like bzh which has a short restriction and 9-14 days to cover, of course you wouldnt wanna short it because you only have 9-14 days to cover your position. even if you wanted to short it, you probably cant because it has a short restriction - too many shares are shorted and you probably wont be able to find any to borrow. thats why i said i would buy puts.

as for which puts, i really dont recommend doing

spot month for a few reasons... 1 - you never know what will happen in the 3 weeks you have left. 2- going out further lets you trade around it. 3 - you cant use unsettled funds to trade spot month.

the only way youd catch me playing spot month is i f im playing earnings or if a stock made some sort of big move on news/earnings then if be buying spot, in the money with very little time value and trade aggressively both sides using a straddle. i did it when rimm announced earnings... i made more money the day after earnings trading in the money calls and puts vs holding options for earnings

[wallstreetsedge]

i thought you asked about trading around an option in the private messages so i thought id put this up here if anyone didnt understand how it works...




do you mean trading around an option? im buying an calll going out to march or further and the options i trade around are january. the calls are covered because im long on calls and shorting calls in the current month, it works in my favor because time value eats at short calls. as the stock goes doewn, i buy the short calls back cheaper or as time goes on i can buy the short calls back cheaper. this counters loss of tiem value on my long calls and it also hedges my position making money everytime the stock comes down. its similar to selling calls against a security that you own,

its like saying... rimm is at 113, you buy a march 96.6 call, itll probably cost you around 20. your break even point is 116.6 by option exp.

lets say the stock runs to 125 later this week. your call option will probably be worth about 29, losing some time value. what you do is youd sell a jan 120 call, youd probably get 8 or 9 for it. now lets say the stock pulls back down to 113 next week.

your call would be worth somewhere around 19.5, and your short call would probably worth somewhere around 1, 2,, maybe 3. so now you buy back your short call for that price, pocketing about 7pts in realized profit. or lets say you sold the 125 and got about 6 pts for it and the stock pulls down to 120, you could probably buy back the short for 3pts.

another example would be lets say its monday of expiration week and the stock is 125, you can sell the 130 call and probably get 1pt for it, probablyu more. lets say the stock stays 126, which is probably what youre worried about... then your short call expires, you pocket the 1+ pts from tthe short call. or lets say the stock runs to 135 which is also what you were probably worried about.... then your short call will have no time value on exp, only intrinsic.. itll be worth 5, which is a 4pt loss because you got 1+ pts from shorting it. well you have the march 96.6 call, since the stock is 135, it would be worth about 36pts, so you sell it. you paid 20 for it, you made a 16pt profit on it, 1+ pts from the short call, then lost 5pts on the short call. so you net a profit of 12pts which is 60%

i didnt have time to look up the last trades on them but those numbers should be close to be good examples

[Chubby Khabob]

i thought you asked about trading around an option in the private messages so i thought id put this up here if anyone didnt understand how it works...




do you mean trading around an option? im buying an calll going out to march or further and the options i trade around are january. the calls are covered because im long on calls and shorting calls in the current month, it works in my favor because time value eats at short calls. as the stock goes doewn, i buy the short calls back cheaper or as time goes on i can buy the short calls back cheaper. this counters loss of tiem value on my long calls and it also hedges my position making money everytime the stock comes down. its similar to selling calls against a security that you own,

its like saying... rimm is at 113, you buy a march 96.6 call, itll probably cost you around 20. your break even point is 116.6 by option exp.

lets say the stock runs to 125 later this week. your call option will probably be worth about 29, losing some time value. what you do is youd sell a jan 120 call, youd probably get 8 or 9 for it. now lets say the stock pulls back down to 113 next week.

your call would be worth somewhere around 19.5, and your short call would probably worth somewhere around 1, 2,, maybe 3. so now you buy back your short call for that price, pocketing about 7pts in realized profit. or lets say you sold the 125 and got about 6 pts for it and the stock pulls down to 120, you could probably buy back the short for 3pts.

another example would be lets say its monday of expiration week and the stock is 125, you can sell the 130 call and probably get 1pt for it, probablyu more. lets say the stock stays 126, which is probably what youre worried about... then your short call expires, you pocket the 1+ pts from tthe short call. or lets say the stock runs to 135 which is also what you were probably worried about.... then your short call will have no time value on exp, only intrinsic.. itll be worth 5, which is a 4pt loss because you got 1+ pts from shorting it. well you have the march 96.6 call, since the stock is 135, it would be worth about 36pts, so you sell it. you paid 20 for it, you made a 16pt profit on it, 1+ pts from the short call, then lost 5pts on the short call. so you net a profit of 12pts which is 60%

i didnt have time to look up the last trades on them but those numbers should be close to be good examples

Do you recommend any books or training lessons on options? I think I understand, but I need more info before I start. Also, what is the best options broker to use? You seem pretty knowledgeable and I look forward to your posts.

[aiki14]

Do you recommend any books or training lessons on options? I think I understand, but I need more info before I start. Also, what is the best options broker to use? You seem pretty knowledgeable and I look forward to your posts.

The "Complete Options Player" by Ken Trester

[Chubby Khabob]

Thanks Aiki14. I like you picture! Any help on an options broker?

[aiki14]

Thanks Aiki14. I like you picture! Any help on an options broker?

E*Trade is Ok, I hear IB is good. I trade directly through the CBOE with Thompson which is best.

Thanks on the Pic, I think they got my good side.

[wallstreetsedge]

best brker really depends on what you need.. if youre going by price... id say theyre all almost equal, it just fluctuates a few cents

here we go on BZH!!

[Rich]

The "Complete Options Player" by Ken Trester

Aiki, is this book written for everyone elses level of comprehension or your level? I don't want to waist my money on something I can't possibly begin to understand !

Rich

[netwrangler]

Aiki, is this book written for everyone elses level of comprehension or your level? I don't want to waist my money on something I can't possibly begin to understand !

Richimo, Options are a classic example of something that is easy "once you get the hang of it." :?

The best options intro I have seen is on the Morningstar site, and is part of their free content. Here is a link to their options page. (http://www.morningstar.com/Cover/Options.aspx)

There are lots of other good sources posted on the OTF. I do recommend slogging through the "if you don't say you read this, we won't let you trade options" booklet from the CBOE. It is as dull as a butter knife, but a pretty good test of your understanding. When that booklet starts seeming exceptionally simple and repetetive, you are catching on.

BTW: No way are options harder to master than HVAC. But then, how long does it take, and how much effort is involved, to progress from apprentice to journeyman in HVAC? ;)

[aiki14]

Aiki, is this book written for everyone elses level of comprehension or your level? I don't want to waist my money on something I can't possibly begin to understand !

Rich

It runs from advanced beginner to near expert. I would look at it as a reference text. My recollection is that is was pricey, so a beginner book might be a better start if you are really just starting. I would go to the CBOE website and take the tutorials for a start,
http://www.cboe.com/

These guys have a free newsletter or two,
http://www.optioninvestor.com/default.aspx

Start by understanding the concept of options, then by learning options strategy. Options can be extremely risky, but can be employed to reduce your portfolio's risk. Once you figure out how that works you're in fat city.

[Chubby Khabob]

does anyone have a torrent for that? I'm sure it can be had for free somewhere. Thanks in advance.

[Rich]

Thank you gentlemen, I'm putting these on my list to read in 2008! I'm still getting through two technical books and these will be next.

As always, thank you for your kindness.

Rich

BTW, concerning hvac, it seems this is the way I'm approaching stocks. I'm not comfortable until I know how everything works so I can be comfortatble with some level of certainty of what is happening. It will probably take me a few more years since I've never done this before, but I will over time become a contributor to this group instead of a parasite, at least I hope to be able to help others in the future as you and others have done for me.

Thanks
Rich

[netwrangler]

BTW, concerning hvac, it seems this is the way I'm approaching stocks. I'm not comfortable until I know how everything works so I can be comfortatble with some level of certainty of what is happening. It will probably take me a few more years since I've never done this before, but I will over time become a contributor to this group instead of a parasite, at least I hope to be able to help others in the future as you and others have done for me.

Thanks
RichYou broke the code, Rich.

Lots of folks spend a career learning and working a trade, then think that somehow investing expertise is just a magazine article and a coupla forum posts away. The approach you are taking is the approach of a winner. :D

As far as contributing, you already are asking intelligent questions. Don't underestimate the value of that contribution -- especially for the lurkers. The rest will come, probably sooner that you expect.

[madcowdisease]

Once you figure out how that works you're in fat city.

Is this the good kind of fats or the bad kind of fats? ;)

[netwrangler]

Is this the good kind of fats or the bad kind of fats? ;)Fat City is where Minnesota Fats, Fats Domino, Harmonica Fats, Fats Waller, Theordore [Fats] Novarro, Omaha Fats, Juan [Fats] Rodriguez, Frisco Fats, and a repentant Fatty Arbuckle live.
They, of course, are the celebrities of the city.
There is a city-full of "Fats" who are less well known.

As with any city, there are the good and the bad [fats].
Kinda goes with city life.

BTW: I have heard that Chubby Checkers lives in a suburb.

[wallstreetsedge]

there go my positions!

[Maverick_Investor]

Thanks Aiki14. I like you picture! Any help on an options broker?

I use OptionsXpress, and I'm thinking of moving over to Think or Swim (which seems like an awesome platform!)

Fascinating thread here, people!