Buying OTM LEAP calls on mining and oil stocks

Discussion in 'Options' started by DarkProtoman, Mar 17, 2008.

  1. Would buying OTM LEAP calls on mining --PCU, RPT--, and oil --RIG, HERO-- companies be a good swing trading strategy? All four companies I've mentioned have solid fundamentals. Thanks!!!
  2. stocon


    Who sponsers the option market? Will it dry up?
  3. I do not understand your question
  4. stocon


    I think at some point in time those option markets will dry up or seize as this thing plays out. Take those 10s of thousands of Bear Stern puts trading for pennies that blasted off to nine dollars in 1 day, who's gonna make good on that?
  5. subban


    Even if there is no market to unload your puts, you can always buy shares of bsc and exercise those opitions. Much better cause then you don't get screwed on a bid-ask spread.
  6. Out of the money options are almost always a waste. Delta is usually so small that it takes huge moves to get a little squirt of money out of them. If you really want to make money on the move, just scale in slowly to build a position on the dips. If you use options, buy some time and make sure they have at least .50 delta or more.
  7. Oh, right. I keep forgetting OTMs are money-wasters. So, buy high delta calls w/ low vols, w/ at least --for my purposes, anyway-- six months to expiration. During high VIX periods. And thoroughly research the underlying, w/ both technical and fundamental analysis. And a good time to trade out would be when the call's IV is high, VIX is low, and technical analysis of the call indicates a sell signal.

    BTW, any good ways of technically analyzing options themselves? Like RSI, MACD, Bollinger Bands, BB Width, etc.?