That's not true. With options you don't get 1 for 1 movement so in order to get your leverage you need to multiply the stock price by the option's delta and then divide by the option price.
i stay away from the greeks....it complicates something that should be much more simple..in this case...my trading method. as long as your out of the money price is no more or less than 10 to 15 percent away from the strike price and the conditions are right with the market as a whole as welll as the trend of the underlying stock..the odds are with you on making your target percentage....and actually i was wrong earlier...you divide the stock price by the strike price to get your leverage ratio.
Stock price by the strike price!? Well, this one is definitely not the leverage ratio, it just tells you how far ITM or OTM your option is. In any case, I'm not questioning your method, if it works for you then who am I tell you otherwise.
I'm trying to make a steady income from trading. So far I've been trading for 8 months. I say I'm "trying" because I am not yet consistently profitable. -- and I have $30,000 .00 (including margin) that should be enough. After all, I want to learn to hedge with options, before I try to make serious $$$ .
I wholeheartedly agree with your statements. I couldn't have put it better myself! Finally, someone with a clue on these forums. Where have you been all these months when I needed someone to back up my point of view? All these freaks that are so obsessed with their little greeks. I don't care if they have software that does all of the calculations for them, knowing the greeks helps not one iota when it comes to critical tasks like knowing where your risk exposure is. Ugh! I bet not a single one of them even makes any money unlike you and I. Bunch of greek losers. What is the point of knowing the greeks when you can come up with your own much simpler proprietary ratios like stock price/strike price? Kudos. I got your back.
The greeks measure your risks. Though you may be profitable without knowing them I think it's always beneficial to know your risks...
I agree with the view that when you trade simple positions like straight calls, puts and spreads then the knowledge of greeks is not necessary as it is easy to see where the risk is. However, when you manage a portfolio of options across different stocks, strikes and expirations then you can't get away without the greeks.