Thirsty's options

Discussion in 'Options' started by thirst, Mar 15, 2006.

  1. thirst


    So I had been just posting my trade on mutioption's thread. I figure I'd start my own.

    Most recently, i closed out a itm call option on SUNW. Given the strength of today's rally, I bought QQQQ April 39 calls for 2.9. Stop at 1.8, target 4.4.
  2. How many contracts?
  3. thirst


    I plan to allocate 50% of my option trading account into this trade. I have bought 1/4 of the position I am looking to own. I am hoping for weakness to pick up the rest. So 12.5% of my option portfolio.

    I think the number of contracts is irrelevant, more so, how much of my portfolio am I risking here. I am risking, currently, about 4% of my options portfolio. I also trade futures and stocks.
  4. This thread is making me thirsty.
  5. thirst


    Water does a body good. I am new to this, so feel free to offer any thought you may have.

  6. novel20


    I guess people want to know how big your portfolio is. If you are just trading 1 contract, probably not many people will be interested.
  7. ra1


    Mr thirst, could you please expand a little on your money management - I thought you said you were allocating 50% of your option trading capital on this one trade and you've already achieved a quarter of the allocation? Did I get this right? If so then isn't that rather risky?

    P.S. I just realised that it isn't very risky if your option trading capital is only $1000. So, you would risk $500. Right? I'd be interested to see how it pans out.
    All the best.
  8. thirst


    well let's assume i am trading with 1000 dollars. I have bought 1/4 of my desired position, which is half my capital, or 125 dollars worth. Keeping in mind my stop loss is at 1.8. Currently my risk is (1.1/2.9), 38% potential loss. so I am risking 47 dollars. On a percentage of portfolio basis that is 4.7%. At maximum holding, which I plan to do if the market does sell off, I anticipate that my avg price will be around 2.6 on the position. My potential loss is (.8/2.6), or 30% of the invested capital. If I am 50% invested, I am risking 15% of my option portfolio.

    And the reward is 1.8, a 70% ROI, or 35% as a % of total portfolio.

    As far as interest goes, if the fact that I don't disclose the size of my portfolio will mean that I will be only person paying attention, then that is fine. I personally feel that results are what matters, in % terms. The absolute dollar is relatively irrelevant for anyone but me. If I lose my 150 dollars, I will be the one left with only 850 to trade.
  9. I disagree with novel20, and agree with thirst,
    the size of the portfolio and dollar are irrelevant.
    Percentages are the most important.
    The comment regarding people not being interested
    unless the dollar amount aren't above a certain level
    border on being elitist.

    Maybe novel20 should post his/her net worth, portfolio $ value,
    and other personal financial information on the internet.

    Kinda silly.
  10. novel20


    Arnie Guitar,

    You can disagree with me. But when you are playing with size, you will think differently. You will know in future.

    #10     Mar 16, 2006