I would not mind owning the dividend stock, and selling calls against it. My historical assignment rate on put writes is under 3%, and I've always made a profit on those via calls/div. Re. delta/ask price ratio: dividing the ask prices by their delta...ranges from 0.015 an up(0.05+). I'm trying to determine if there's a relationship between the delta cost and the underlying's price cycle.
Just owning a stock because it has paid a dividend not something I look for in an options strategy. Since the "delta" changes over time and a number of other variables looking at it vs. the current ask is not all that useful. Both the ask and the delta are essentially in flux. No offense but your past record is not relevant since we donât know it and we're just discussing the methodology.
Trading options since 2004. Very flexible trading vehicle, it allows you to trade different market scenarios at multiple time frames. Find the strategies which fits better to your personality and paper trade them until you understand the risks implied in Options trading. IMO, understand Implied Volatility, Time Decay and Delta is critical. CBOE.com (in particular the Dan Sheridan videos in the Learning Center are very insightful) Schaeffers website has good learning tools and his contrarian strategies (free stuff too). Larry McMillan material (free stuff in his website). His sentimental indicators are very useful. I use 2 brokers (OptionsXpress and Thinkorswim)... but TOS has a free software to analyze strategies and backtest tools and continuous support education. Voila! Don't spend money on seminars... nobody can learn in 2 days how to trade options... it takes time and passion.
There is much to say about being a successful trader and learning and exploiting the free stuff that exist out thereâand there is a lotâthough most are just a waste of oneâs precious time. However, here are some additional FREE resources which I think are very useful/educational: 1) Ivolatility.com has a free weekly trading digest/blog with actionable trading suggestions: http://www.ivolatility.com/roller/page/trader 2) The Market Huddle Webcasts (from OptionVue) , http://www.discoveroptions.com/public/pages/education/markethuddle.html worth your time, as is: 3) The weekly Wednesday and Friday archived seminars of Thinkorswim.com 4) whatstrading.com and their blog is an excellent free sources for those who appreciate trading flows/volume and the likes âsimilarly also see crimsonmind.com 5) For those who are do not wish to get too busy trading the market (options/equities), as I do, read the free blog of philstockworld.com or even subscribe to their daily PSW report/alert for free âuse my handle as your coupon code. (yes, I think I will get a 10% discount and I will become very rich at your expense). And finally forget about Schaeffers --it took me a year and some $$ to fully understand that I am paying someone else to have me chase my tail. Good luck. BBen1006
Dan is a great instructor and I recommend watching his FREE web casts on the CBOE web site. If you are thinking of taking his mentoring, it is important to know that he generally does not do the one-on-one mentoring himself anymore.
Mark Wolfinger. The best, in my opinion. blog.mdwoptions.com/options_for_rookies/ Written in very clear, human language and not overloaded with technical terminology. A MUST read for anyone interested in options, beginner or otherwise. In a rare move towards something that is not free, I've recently purchased two of Mark Wolfinger's books. Sheridan: too much of Sheridan himself, too much humor, tiring McMillan: boring. He must think options traders are robots. The books read like a set of machine code instructions for a 1982 PC. The only other thing worth reading is Sheldon Natenberg's work on volatility.
No one here has mentioned any TA education. It goes hand in hand with options. I have been a member of Marketedge.com since 2003 ad has helped my stock and options trading hugely. The company has been in business since the 1970s and has developed a suite of technical indicators that evaluates each stock in their universe daily. There are some great tutorials and a daily market comment that is very timely and well written. Much more helpful that Stockcharts. If you have questions their customer service responds promptly and courteously and with no upsell. They give you a 2 week free trial with no strings, then they have 3 packages ranging from $10-$30 monthly. If you are a Schwab customer its half price. Good luck Tom
There is an easy case to be made that t/a and options dont have to go hand in hand. Most institutional traders are not always directional players, there is a whole big world out there in options who are volatility traders.
I second your opinion about Mark. While I have not read his books, I did use his mentoring services. He introduced me to index option trading, something I would not have had the courage to do on my own (I was trading equity options and thought indexes were over my head). He taught me many things about what to do and what not to do.
I have bought a lot of material from this place; http://www.traderslibrary.com/ They have deals every once in a while too.