karennma
8,057 posts
msg #82478
- Ignore karennma |
11/5/2009 10:57:18 AM
skymuse
- skymuse 11/5/2009 9:20:46 AM
you just have to be able to correctly guess/understand if a particular stock is particularly volatile for the next 1-3 weeks.
========================================================================================
Exactly!
Which is Y the 3X ETFs are so much more option-friendly.
To make money in the options you MUST have the volatility ... a HUGE move up OR down.
IMHO, if the stock doesn't move 4-5% in ONE day, ... forget it!
FAS and TNA PAY most days.
|
Kevin_in_GA
4,599 posts
msg #82479
- Ignore Kevin_in_GA |
11/5/2009 11:06:37 AM
Also consider UPRO/SPXU - trade it off the VIX volatility, above/below the BB(10,2).
Options are available - UPRO trades at 130 today, with ,SPXU at 43 right now.
|
karennma
8,057 posts
msg #82482
- Ignore karennma
modified |
11/5/2009 11:19:36 AM
More Musings from Karen ....
OR ...
Playing earnings as opposed to 3X ETFs ...
look at FSYS. .. up 25% today on earnings.
Yes, you could've bought calls YESTERDAY, but how would you know to buy calls and not puts?
Look at CVS .. down 20%.
Would you have bought puts on CVS yesterday?
Kevin,
BTW, next to FSYS and PCS, ... STEC options volume is HUGE.
|
medowz
59 posts
msg #82517
- Ignore medowz |
11/5/2009 5:48:41 PM
I would think if your approach is to day trade these options (and it apparently is), the the front month options would be the logical choice despite the Greeks. If you think you might hold on to them more than a couple weeks, then go to the further out months, but check the Greeks. Holding expensive options long term is risky unless you hedge them.
Also, it may be wise to trade only those options with small bid to ask spreads. This is sort of a function of the stock price. More liquid options trade at a couple pennies between the bid-ask. Good low priced stocks trade on a .05 spread. Many people have the opinion that spreads in excess of .15 or 20 cents aren't worth playing short term. Everybody has their preferences. High volume and high open interest lend themselves to small spreads generally.
Also, at the money options will give you more bang for the buck on small moves on the stock and in the money options, more so, because of Delta. For out of the money options, you must to be right about the trade direction plus it has to be a relatively large move. If you're confident about both, then out of the money options can be lucrative. Some people think of them as lotto tickets with an edge.
FWIW
|
Kevin_in_GA
4,599 posts
msg #82518
- Ignore Kevin_in_GA |
11/5/2009 6:05:17 PM
Medowz:
That is my thinking as well - short term ATM or near ATM options, for a few days max (you can see this strategy in my TRADING JOURNAL thread.
Delta is important, and tends to be max at just in the money on either side.
The bid/ask spread - I commented on this earlier today in this thread. Keep the spread as tight as practicable, but also make sure that it is not a large percentage of the current bid either (it usually isn't for options just in the money, so stay in that range).
If you are not looking for outrageous gains, consider verticals - example: buy a call at 10 and sell the call at 15 - it limits your upside potential, but if you are planning to exit at a set profit anyway that is within the range of the vertical, why pay extra?
|
mystiq
650 posts
msg #82538
- Ignore mystiq |
11/6/2009 1:41:12 AM
karennma
For the benefit of those reading this thread, would you kindly expound on what you mean by "the best".
i.e.,
Delta < or > or = $$$$$$ - the higher - the better
Vega < or > or = $$$$$$
Theta < or > or =
Gamma < or > or = $$$$$$ - the higher - the better
Rho < or > or =
The 5 Option Greeks are:
Delta (Greek Symbol ä) - a measure of an option’s sensitivity to changes in the price of the underlying asset
Gamma (Greek Symbol ã) - a measure of delta’s sensitivity to changes in the price of the underlying asset
Vega - a measure of an option’s sensitivity to changes in the volatility of the underlying asset
Theta (Greek Symbol è) - a measure of an option’s sensitivity to time decay
Rho (Greek Symbol ñ) - a measure of an option’s sensitivity to changes in the risk free interest rate
>> http://www.optiontradingpedia.com/free_option_greeks.htm <<
Kevin_in_GA
NEVER buy options that are priced over $1.00*
So you would never buy an in-the-money option on AAPL, BIDU, GOOG, etc? I look at both the bid and ask. On a 25 cent ask, the bid is usually 10 cents or 15 cents. I am looking at a 40-60% loss to be made up before the option can be sold at a profit, so the option better go up alot! If I buy an option at a 2.00 ask, the bid might only be 1.70 (a 15% loss to be recovered before the option is of any value).
no..i wouldnt if it didnt meet my criteria. only options priced under $1.00 *if bid/ask meets ur criteria* options priced under $1.00 tend to move ALOT more...not every trade u want to be in.
avoid same month options....
Why not buy same month options? I know that there is time decay, but there is also volatility (and you can use time decay to your advantage in some cases).
yes you can...but use same month options as a guage for picking next month options (or LEAPs) you can find volatility in next month options when they present themselves. you have to wait for this opportunity to present itself.
ONLY buy under-priced value options....
how would you determine this?
use any option pricer...
>> http://www.cboe.com/framed/IVolframed.aspx?content=http%3a%2f%2fcboe.ivolatility.com%2fcalc%2findex.j%3fcontract%3d5E85582A-8ADB-4C7D-8420-AC295E87A4A2§ionName=SEC_TRADING_TOOLS&title=CBOE%20-%20IVolatility%20Services <<
i like >> http://www.mngt.waikato.ac.nz/kurt/frontpage/StudentWork/DanielChaiNov2003/main.html <<
*the key is to wait for an oppurtunity, under-valued(priced), good greeks(delta/vega/gamma), time(next month options[Leaps])* same month options are for more experienced traders imho.
(-.-)
|
sojeff62@gmail.com
1 posts
msg #145643
- Ignore sojeff62@gmail.com |
12/20/2018 2:18:05 PM
What was the Delta value?
|
shillllihs
6,045 posts
msg #145645
- Ignore shillllihs |
12/20/2018 3:07:03 PM
This thread is a decade old. Most of these traders have retired and moved to Branson Island or Belize.
|