What is the optimal time frame for an option buyer?

Discussion in 'Options' started by inandlong, Sep 11, 2002.

  1. All the gurus that can tell you exactly what it will do never made an option trade ...
     
    #21     Sep 12, 2002
  2. pearls of wisdom from metooxx ( not being sarcastic )
     
    #22     Sep 12, 2002
  3. I think by now we are well into 7 or 8 figures of tuition in the option markets ...
     
    #23     Sep 12, 2002
  4. bone

    bone ET Sponsor

    Why not a Bear Put or Bear Call Spread? That takes alot of the time decay element out of the equation and it is cheaper to put on because you are selling premium to finance part of the position.

    If you are buying premium, like a put outright, the shorter the holding timeframe, the better. You are really putting yourself under the gun, and there's nothing worse than having an option turn around to your favor ten or eleven weeks later, and still losing money on it (done that).
     
    #24     Sep 12, 2002
  5. Obviously, he is looking to short stocks which he expects to crash. If he hits an Enron or even just an RJR or TYC, he can make a lot more, also buying just one put will minimize commissions.

    Regarding a synthetic short position, if those two option round-trips cost you $2 per contract more in commissions than shorting stock, you have to take that into account. Otherwise I agree with bone, instead of doing a synthetic short, I would rather sell a call spread instead of just the call.

    You can only be assigned an option that you are short, on a long option position, you decide yourself whether to exercise it or not.
     
    #25     Sep 12, 2002
  6. Nothing wrong with what you are suggesting; except it doesn't accomplish what he wants.
     
    #26     Sep 12, 2002
  7. Metoox I have the option chain up. I see what you mean somewhat about the spread too wide on some vs others.

    Also, the DITM's for example have very little time premium...even farther out. But when I close the position I will have to give up some spread.

    Of course I am looking for the bigger moves....

    Now I have to think... and that always leads to trouble...
     
    #27     Sep 12, 2002
  8. You know, I read the guy from OptionVue, the prez there, and it's all about "oh yeah, why not do this or do that?"

    "Just buy the DITM, and it's great!"

    "Just do a synthetic and it's great!"

    The only thing I really know is...
     
    #28     Sep 12, 2002
  9. Those that teach probably don't ...
     
    #29     Sep 12, 2002
  10. #30     Sep 12, 2002