absolutely. I will add a bit more; without a strategy to the underlying you have no business putting on option positions. Even the so called market neutral ones; if you dont have a positive expentancy for the time frame you are shooting with the underlying (in this case the system being underlying not moving much; whichever way you define it), you got zero chance with options. Actually youve got negative chance; because there are more spreads involved; and more commisions per delta (coming to that futures are a better bet than stocks). -gariki
And for this, you dont trade full time to start with. You do this as a side obsession while your bread and butter comes from whatever else it is you already do. Markets might give you money; they might take it away. So until you are consistently (2 or more years) making more dough here than your regular job - significantly more (say 200% more) - then dont do it full time. Maybe not even then. The way i see it its better to have an alternate stream of income. Cutting off the main hose trying to depend on an alternate hose that might work, might not work is not wise. -gariki ps: and thats my 100th ET post; yee haa..
=============== Sneak-Trend-big trends; Big Trends book by Price Head [ Stocks & options]. Well frankly i would { and did well ]shorting Citigroup thru put options ; but really , as the elitetader said, underlying stock study is better buy.OptionsXpress has good info, charts..... Futures Magazine[free to qualified traders, stocks, derivatives-options...] Wisdom is priofitable to direct. Options are like insurance,expiration dated, easiy to limit risk; a study of insurance contracts is helpful. Most people sell insurance as a business; rather than buy it full time, but its possible to buy fulltime...
+1. If you can find a repeatable edge on the UL, using options is relatively easy. it's when people don't have an edge they lose money trading options (trust me i know from experience).
Thanks guys. Someone told me it was harder to learn options but easier to profit consistently from trading options. I will focus my time on stocks and futures for the time being.
Everyone has different experiences with what works and what fails so opinions as to what's best will very (strategy, vehicle traded, etc.). Options provide options . You can go for big time leverage, scalp volatility, chase small safe positions (spreads), acquire stock at better prices (NP's), etc. But the common denominator is timing and selection. After years of mostly option trading, I now priimarily trade pairs/groups where the long UL hedges the short UL and vice versa. Less slippage, no delta, decay or IV issues. It's not better. It's not easier. It's just a niche that suits me and that's what you have to find - something that you understand, feel comfortable with and have some degree of success at.
OPtions and their theory are a dry subject, if you wish sexy seminar and excitement - go to Vegas and get a whore, after-which you can take a baccarat seminar (the Chinese pay as much as $5000) Good luck.
I know, I was worried my comment would be miscontrued that way. I wasn't expecting an exciting novel when I was reading options. I just meant that watching the options video was much more engaging than reading about it. I was wondering if anyone had any good videos to recommend. I have Natenburg's video and the Tradingology videos. Just started Natenburg's video and I would recommend both to others (although the same info can be found for free online).
Spindr0, do you use options for pairs trading or trade UL directly? Is it possible to use options for this? I am a noob at options too. My guess would be that only long month expiries should be suitable for such trading. Please share your thoughts. Thanks, Pillager.
First options experience for me was writing covered calls on a stock in my portfolio that was stagnant. Watching time decay at work bought them back shortly netting a nice percentage; and immediately sold again same strike next month out. It startled me that I could churn revenue out of a non-performing stock. Not sure why a guy, as advised by others here, could not learn about and buy an underlying and judiciously write covered calls, as a begining experience. Not that I'd necessarily favor that in this current market. The Options Industry Council [OIC] has a covered call evaluator tool on their free website [many others are available too]; and one can use their simulator to paper trade. No doubt DVDs are available, as are free modules at OIC, and CBOE used to have archived vids from Sheridan and others, plus free webinars abound. Adding rules to covered call writing has worked even better often enough for me. May not be glitzy, yet in right market conditions can be decent- averaging 4-7%/month. Might seem boring, but the returns are compounded. The adding of spreads and so forth or taking positional postures would then have an experiential basis with underlying stock selection, valuations, and especially time decay.