Can I be profitable simply by going long calls/puts?

Johno · Jan 29, 2010

Quote from increasenow:

is this for real?...honestly...how much do you have to put up margin wise for "worth it" spread option trades per day or week?...meaning...need to put up $20,000 to make $500 per week??...not worth it...please give exact examples...thanks
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Think long mate, short can, and at some point often is deadly for most retail speculators!

Regards

Johno

uptickk · Jan 31, 2010

Quote from increasenow:

is this for real?...honestly...how much do you have to put up margin wise for "worth it" spread option trades per day or week?...meaning...need to put up $20,000 to make $500 per week??...not worth it...please give exact examples...thanks
More...

Whats wrong with making 2.5% a week?

HumbleBobby · Feb 1, 2010

Quote from trader46:

At the moment I'm trying my hand at options spreads and am finding that it isn't fitting into my trading style as well as I would have liked. I mean a credit spread for instance, will profit if the underlying goes up or stays where it is or even goes down a bit, right? Why would anyone even be trading if they didn't have a good idea at least in their mind of a feasible price target? Also when I generate risk profiles, I keep getting very poor risk/reward.. usually negative.. risk 600 to make 200, etc. Not comfortable with that. Would rather risk $150 to make $450 if the price goes to where I think it will based on my system. If it doesn't fine, I exit. Move on to the next trade. I'm obviously trying to make the transition from buy/sell stocks to options.. and I realise there's more to it, but I would be a lot more comfortable just doing straight calls/puts.

I was making good progress by simply buying calls and puts by themselves in small quantities and exiting when the underlying would hit a certain price. Need to work on the greeks a bit more, like gamma and vega, but am reading a fair bit on it now. Did about 100 trades during most of last year and came short of breaking even but I had good discipline and money management in place, there was certainly light at the end of the tunnel. I certainly understand charts, support and resistance, fibonnaci retracements, divergence, high probability trading, money management, etc. The thing that put me onto options was the idea of using less capital per trade.. the idea of owning 1000 shares of a stock and watching it make a huge gap down move the next morning scares me.. at least with options you can only lose what you put in. period. Which is vastly smaller than stocks. I'm not looking at making 600% gains, slow and steady is what its all about, but spreads and condors are just too.. indecisive I guess you would say and add a degree of what would seem unnecessary complexity to the game.
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Hey these guys have about 100 pages just about options, althogh they talk about evething else. They also have their option trades posted on there.

http://financialsaint.com/cms/cms/viewer/page/324/p_id/304

trader46 · Feb 6, 2010

Lot of great info there, thanks guys.
I guess it really does boil down to whatever your comfortable with. Right now I'm doing both side by side on my virtual trade account and I guess that's really the only way to know for sure. No one can tell you how you should be trading, whether that be position size, frequency, spreads vs long calls/puts, trading is highly personal, and almost spiritual in nature. When you've found what you're good at, you'll know it.

Thanks again,

trader46

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Can I be profitable simply by going long calls/puts?

Johno

uptickk

HumbleBobby

trader46