Comparing two UL's, if all other pricing factors and relationships are the same, premium is linear in regard to price. Hence, option prices on higher priced stocks move more but the percentage is the same
Liquidity is a moot point and is no barrier at all. The ONLY problem you have in turning $5000.00 into $30,000 is getting the direction right. Options for GOOG, DIA, AAPL, NFLX, PCLN, QQQ all have high enough volume for your trades, and they all have strikes that produce 100%+ returns on a weekly basis. Over analyzing the situation just creates noise and prevents you from making trades. You have to sh!t or get off the pot.
spindr0, I understand what you mean about percent, but to make the same money would require increasing the number of contracts, which means added liquidity problems and added commissions. ForexForex, thanks for the input. I actually ran a filter on Finviz ($>100, AvgVol>1M, PE>0, Current>1, USA) and came-up with: AAPL, AMZN, CMG, GOOG, MA, NFLX, PCLN so it's good to see I'm on the right track. I'm not going to be sitting too long. I just want to start following these stocks for a while to learn their personalities. And, I am interested in how your trade goes. Thanks. Of course, I was reading today, and bam, something huge, *IV*: http://www.investopedia.com/university/optionvolatility/default.asp#axzz1Rp2r18RV And here I was thinking this was going to be as simple as, I "know" a movement is going to happen. I guess now I will need to know before everyone else in order to capture it.
The double vertical credit spread may gives beter risks/rewards. Keeping the long leg all the time , then actively trading the short side....