¿how good would faang stocks be to be buy options on? ¿are there better alternatives?

Discussion in 'Options' started by rtw, Mar 5, 2018.

  1. rtw


    i appreciate your reply. thanks.

    i would just like some clarification on your recommendation. ¿are you saying that buying calls for any particular individual stock or future contract is much better if i pay for deep in the money strike prices? i'm having trouble understanding where any advantage might lay if prices for deep itm calls are proportionately super high and currently i'm of the idea that one should only buy the cheapest options possible as the lowest price to pay minimizes the risk of the trade and maximizes the possible profit.
    #11     Mar 7, 2018
  2. rtw


    also, with the qqq at 168.54 as of the most recent close, as an example, ¿how much lower a strike price would you recommend to buy a call at? ¿do you recommend looking for some particular delta level, or some percentage of the price lower? ¿what number of days to expiration? ¿and is this kind of trade more suitable to close before expiration or to hold until the contract gets assigned? thanks.
    #12     Mar 7, 2018
  3. Buying options long term is neither profitable nor sustainable.
    #13     Mar 7, 2018
  4. Aww thanks for noticing the resemblance! You didn’t wish the creator a happy birthday! And if you understood theta, you would realize buying options is a losing proposition!
    #14     Mar 7, 2018
  5. spindr0


    Are the premiums of these stocks really that ridiculous? If all else is constant, time premium is linear, considering price. FB and AMZN have similar IVs in the low 20's. AMZN is 8.5 times the price of FB so the time premium of its options will be approximately the same. Low 20's IV for such stocks isn't whacked out.

    The reason that these stocks are better instruments for speculation is because of the volatility of the stocks. The option is just the vehicle.
    #15     Mar 7, 2018
  6. He's giving you poor advice: ITM calls tend to have higher IV's, making them overpriced when compared with OTM calls. They also are more expensive, so they are not only overpriced but entail far greater risk of loss. Their greater probability of expiring in the money comes with those two costs and one more: lower leverage - one of the main purposes of options in the first place. What you give up in return for higher probability is extremely overpriced.
    #16     Mar 8, 2018
  7. a fang stock is no different then any stock you want to buy a call on