yes because it was a vega bet and vols increased dramatically. Try doing that with LEAP calls off a bottom and tell me how well your port will perform. Moot point at best.
I'm saying <i>directional option traders</i> aka long calls or puts need to be skilled with the underlying first. The last part of my original post summarized my belief on spread trading. That also includes any delta-neutral attempts, which are spreads between option and underlying to negate risk. Anything other than a straight purchase of calls or puts is a spread... defined by "spreading" risk outside of the long option contract itself. If I were to trade options again, my personal choice would be credit spread strategies in the SPX cash index. For those who lean toward long option premium with nothing else involved, gotta be good at directional trading.
Well, that explains it. Sorry, didnt mean to pick but its hard to ignore advice such as "If you play direction with calls and puts, buy LEAPS instead".
Regarding straight calls & puts being too tough to trade: What if the underlying is an index? And you bet on a particular direction (with either a call or a put) based on the dominant trend which the index is following?
And since indices are less volatile than individual stocks, you can get the direction right and still lose.
Hi. The CBOE has a link at its home page to an options simulation program offered by optionsXpress. I haven't tried it, but for noobies that want to test strategies with real-time prices, commissions, etc. it might be worth looking at. kny 3
Not to say one doesn't have to be right on direction, move, timing and vol, but one can negate most of those by using frontmonth deep ITM options.