Useful Quotes related to Options Trading

option911 · Aug 23, 2009

"There are some years that the dumbest person in the world can make money, there are some years where the greatest traders in the world are happy to break even. Its the other 80% of the time that seperates the men from the boys"

www.option911.com

drcha · Aug 25, 2009

and the ever popular "Forget the cheese--just get me out of the trap"

Greenrush Drew · Aug 25, 2009

I had a friend who only bought options.

When he finally blew up he told me 'Drew, when I'm dead I want my tombstone to read: Here lies John. Expired Worthless'

drcha · Aug 26, 2009

Experience is a hard teacher; she gives the test first, the lessons afterward.

OddTrader · Sep 1, 2009

Quote from FullyArticulate:

Options may not be right for you under the first analysis. If you believe the fundamentals are good and want to take advantage of price spikes, then just buy the stock.

The catch with options is that you have to be right about both direction AND time (and to some extent, Implied Volatility). Your analysis should be something like:

"I think the stock will close over 80 at October expiration", (Oct vertical)
"I think earnings next month will be good, but you never know how the market will respond, so I want limited risk", (Nov calls or vertical)
"I think earnings next month will be a surprise, but I don't know if it will be good or bad, but it will be a big move" (Nov straddle, strangle)
"I think the stock is going to rally to resistance at 85 and consolidate until October expiration", (Oct butterfly, calendar)
"I think this stock isn't going anywhere for the next 15 days", (Oct butterfly, short straddle, short strangle)
"I think the IV for the front month is way too high" (Oct/Nov calendar)

Options require at least 3 opinions (of varying importance): direction, time, volatility.

I hope that helps!
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Useful Quotes related to Options Trading

option911

drcha

Greenrush Drew

drcha

OddTrader