Covered Call Strategy...

Discussion in 'Options' started by pandorasbox, Apr 12, 2007.

  1. No offense, but do you know what you're talking about? complexity/chaos theory and you don't know a CC is a synthetic short put?
     
    #11     Apr 12, 2007
  2. No clue!!!

    Just kidding, you don't need to know anything about options or the stock market for that matter to be an expert in chaos mathematics. I doubt Harold Hurst knew how to put on a Butterfly spread :)

    Besides it's not that I don't know about options, it just didn't occur to me to use a short put position to accomplish my goal.
     
    #12     Apr 12, 2007
  3. lol, good point I guess... I've gone down the complexity of chaos road and couldn't make it work. More power to you.
     
    #13     Apr 12, 2007
  4. It looks like this on a graph:

    The magenta bars signal the extreme points of a trend, usually signaling the end of the trend. The blue show extreme non trendiness, often leading to the start of a trend.
     
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    #14     Apr 12, 2007
  5. bgp

    bgp

    pandorasbox that graph looks interesting . did you come up with this formula ? why dont you just position yourself with the stock ?

    bgp
     
    #15     Apr 12, 2007
  6. there ya go..options have a life and expense unto themselves...if you have a winning formula then just do the underlying...
     
    #16     Apr 12, 2007
  7. G-Boa

    G-Boa

    Why not position yourself in a dividend-paying stock that yields 14% and pays monthly, that trades in a nicely defined channel and write covered call options against that to up your yield to 20-23%, provided the price doesn't rise through your strike price and exercise you back into cash??
     
    #17     Apr 12, 2007
  8. The Hurst Exponent is used in a unique and really measures the end or beginning of non linear volatility in a time series. In others words, the magenta bar signals the end of a trend, which doesn't necessarily mean a reversal of the old trend, some times it just results in flat period, which is why it is better suited for options trading.

    The signals also have a 'shelf life' of about 20-30 bars, which fits well with the expiration of options.
     
    #18     Apr 13, 2007
  9. No, I am not the creator of this thing. The brains behind this is a rocket scientist that is really not a trader, but a real hard core scientist. I do understand chaos mathematics, but not at the level of this scientist.

    It's not the 'Holy Grail', just another tool in the tool box, I guess it's like going from a hand saw to an electric circular saw.
     
    #19     Apr 13, 2007
  10. What big cap stocks pay 14% div????
     
    #20     Apr 13, 2007