Hello, i been day-trading options, mostly ETFs. But i am considering trading stock options instead, because they are more volatile that ETFs. ...which type of options are the most profitable for day-trading? or which options do u prefer to day-trade? - penny priced options with high volatility like RIMM & AAPL - penny priced options with lower volatility & lower stock price (<$50) like CSCO, MSFT, etc - penny priced options with lower stock price + higher volatility like YHOO, C & DNDN - penny priced ETF options like QQQQ, SPY, XLF, IWM, etc - highly volatile stocks like DRYS, FSLR, BIDU - any others? if you can spare a few minutes, can u please tell me why a certain type of options are better than others?!
I don't think any stock options are good for day trading because of the bid/ask and the after hour market is were the big moves can occur.
The short (and facetious) answer is that the best options are the ones that make you money. Options are derivatives and their value is primarily based on what the underlying does. For the most part (ignoring a couple of little details like time decay and IV change , if you get the timing and direction of the underlying right, the options will take care of themselves. Now if you get the timing and direction wrong and you hang around and get the time decay wrong (if long) and the IV moves against you (long or short), you're in deep doo. Yes, narrower spreads and liquidity are good but it's a pyrrhic victory to save a few cents and lose the position.
what i was trying to ask is that: if the spread isn't an issue, are volatile options better than less volatile options for day-trading? for instance, which is better for day trading: RIMM vs SPY vs MSFT?
LOL. I must want an ET gold star 1) Suppose you buy 10 RIMM calls @ 3 pts ea and they go down 2 pts each. Down 2 grand. 2) Suppose you buy 10 SPY calls @ 4 pts ea and they go down 2 pts each. Down 2 grand. 3) Suppose you buy 10 MSFT calls @ 5 pts ea and they go down 2pts each. Down 2 grand. Which of these was the better option to trade?
wait, i am confused, so what happens if they go down 3 points? no RIMM for me? well, thanx anyway. i guess i will try to read thru cottle's book this week.
OP, You're asking a question based on opinion. The answer depends on your risk tolerance, timeline, and access to the markets.
I like to daytrade RTP and Bidu because when they jump they really jump. In my opinion though these are some of the riskiest stock options to be daytrading, even riskier to hold overnight positions with, and kind of crazy to hold over the weekend, unless it's really close to expiry time in which case my experience has been positive.