I guess I'm the 1 in. 3:1; I started trading options almost 6 months ago and I am far from blown out ( I initially tried to keep a journal but didnt really gain a benefit from it nor was anyone really reading it) OP, while I do not have as much experience as others here , I'd suggest trading only a couple of contracts at a time and having strict discipline with respect to stops. In addition, I'd suggest writjg down in some form your trading plan(s) and not deviating from it during the trading day.
Answer: Those are horrible commisions! Interactive brokers is < $1.00 per contract (no minimum) and gets progressively cheaper if you buy multiple contracts. Your brokers $9.95 will generally do damage to a small account.
Hi, I am looking to day or swing trade SPY or DIA options. For note 2: Which is more important the volume being 10,000-30,000, the price, or the spread? For example, right now SPY 137 puts are 2.81 with a 4 cent spread and 23,000 volume, but the next highest volume is the 136 puts at 6800. I made a papertrade yesterday at the close on the DIA 126 puts, buying 10 at 2.13. Today's huge gap down on the dow only gave me an 15% gain on those puts, I thought it would be much much higher. Any suggestions? Thanks!! Susan W
You need to understand various other concepts such as delta. Delta is the dollar change in the price of the option for each dollar change in the underlying. In the case of a put, delta is negative. In absolute value delta is between 1 and 0. If you want to have a movement of say .80 for each dollar in underlying, you need to buy an ITM put. But the risk is higher. I understand that our option gained around 0.40. That is a good money. If you could repeat the process, then compounding and time will do the main work.
thank you. Yes my papertrade did very well today, but repeating is the hard part. What is your strategy? Thanks again!
I am a net seller of premium, but the main part of my portfolio is a type of trades that relate to my handle (but I cannot share them in a public forum)! If you do not sell premium, I recommend you look into it. If I were a net buyer of premium I would never risk more than 2% of my portfolio on anyone trade.
Hi Susan, While you were buying DIA 126 puts near the close on Wednesday, I bought SPY 137 puts for 2.29 earlier in the day on Wednesday when the INDU (Dow30) hit my entry trigger target of 12,755 (prior resistance from Feb 1 2008). The SPY 137P opened today at 3.05 and traded in a range from 2.66 to 3.35. I am stll holding this trade and waiting for a 50% profit target on half the contracts with the stop moved to breakeven on the second half. If that occurs, I am then looking for a 100% profit target on the second half of the contracts. My time limit is Friday (02/29) at 4:00pm, when the trade will be closed regardless. This is one of those infrequent Large Gain swing trades that I mentioned in an earlier post on this thread. Jeff
Update: Pre-market futures were too strong in my favor this morning to use an incremental sale. All contracts on the SPY137 puts were exited at 4.60 (100%).
Great job Jeff! Looks like we bought the puts at the same time, when Dow Jones hit a double top. If you trade the Dow alot, there's a guy on stockcharts who calls every single turn, he's impressive. It looks like it has found support so I will be closing the trade now. Too bad it's fake money