I am just dabbling in Options trading using the CBOE's Virtual trading for now. Today I made these two trades: Sold: BIDU June 79 Call 1 $2.15 ($215.00) Sold: GOOG June 470 Put 2 $15.00 ($3,000.00) I was wondering if you guys with real money would dare to do the same trades if mine are too risky? Thanks.
Too risky, wide spreads, Start with qqq,spy,, move into single names after success in the qqq/spy/dia,
Naked options would be concidered high risk. As long as one knows and understands the risk. What may be too high a risk trade for one , may be perfectly acceptable for another. For me... I rarely do naked options. The program I use to calculate option strategies with the price of BIDU @ 72.21 shows the margin requirement of $980 and margin requirement of $19,181 on GOOG @ 486.37. Based on that the current return would be 21.94% and 15.64% respectively. Margin requirements can increase substantially should the market move against the position. The BIDU looks like the better trade. The GOOG for me would be too forbidding.
Thanks Stoic, but isn't more money to be made in the 'naked options' than in covered calls instead, because you don't have any stake in the underlying stock should it fall?
You're not giving yourself a "proper" simulated experience if you are doing things that trading firms don't allow rookies to do and for which you would need a "large" account balance to be safely margined. :eek:
yeah, of course but there's also a lot more risk involved in naked options trading. provided you never got pulled over, you could probably save quite a bit of money by not paying for car insurance too, but make a mistake and it will cost you big time. They same can happen with naked options trading...