Joel, A couple of things besides the books. Books are fine because they help drive home some basic concepts and help get a grasp on advanced concepts. Books like Natenburg's will probably have you dazed and confused after the basics (or at least they did a dummy like me). What really helped me start to make sense of the books (and now I use them for reference quite a bit) is getting some real world experience. Fortunately, with ET as a wonderful resource you get pseudo-real world experience through others. My eyes really started to open by reading the SPX Credit Spread thread (it's over 2000 pages now), but you start to understand how option positions play out. I also recommend watching everything you can with Dan Sheridan @ the CBOE website. He takes various strategies and picks them apart and offers suggestions as to how to enter, exit and adjust. They're free and you can see them here: http://www.cboe.com/LearnCenter/webcast/archive.aspx
Open interest means nothing. Could be long calls, short calls, credit spreads or debt speads. Volume and open interest on Calls and/or Puts can be both bullish or bearish.
Are you suggesting that buying a couple of days before Jan expiration would be a great opportunity? Just making sure I understand. The issue for me is choosing the call to buy. I don't want to go to 100 and the premiums on the 90 calls are quite high (5.50 ask - .36 = 5?). With the 95s there's still risk that the calls will expire worthless. The break even on the 95s at 3.40 is 98.40 according to ToS and this includes the 14.75 commission. I know it's very risky but I'm much inclined to go with a couple of 80 call which would set me back ~2.5k. I would then put a mental stop loss on the position. Well, I have a Jan 40 put on Sony and while the market has been going down today, Sony is up .23. There are no news to justify this, nothing apart from Sony promising to stuff their rocket-science CPU into new consumer products. Go figure! SNE went up on a huge volume spike in the morning and has been hovering about +.20 throughout the day. I obviously have a lot to learn since I can't explain happenings like this.
That's what I'm busy with right now at ToS. Just in: BOT +2 AAPL 100 JAN 07 80 CALL @ 12.20 PHLX I suppose I just had to teach myself a lesson. Yep, I have yet to read through the whole thread but I have it open in the browser. Will do, thanks a lot!
Thanks for bringing this point up. This goes without saying and I didnt mean to imply it, that every single option contract open at those strikes meant necessarily a long bullish sentiment. I was merely saying that, there are some others out there, that must share or speculate with the views of this thread poster.
I would recommend a Debt Spread on AAPL instead of long calls only. Sell one or two stikes out with the same expiration to reduce your loss if the stock moves agianst you.