I am not real confident in a short of GTLS right now. Looking at the weekly chart below you can see it just broke above previously set highs to make a new 52week high and there is no obvious point of resistance (supply) above it until you get to the $45 level. However since the recent rally to it's current point was fairly weak, we could look for it to come back down below the upper red line and consider a short at that point (roughly $27.00). If you go short at $27.00 you have 4 potential target points. 1. $22.25- from early to mid-August '09 levels 2. $21.25 - from early January '10 levels 3. $19.00 - from mid-June and again mid-July levels 4. $15.00 - from many base levels Which target point you pick will depend on the momentum of the stock as it nears each point as well as your own personal strategy and taste. As far as stocks or options on this one (assuming single option plays) I would probably say short the stock itself with a stop loss close to $30, if you want to play a short. The reason is that for this stock, you only have a choice of buying either $30 strike puts or $25 strike puts and both of those have low volume and open interest and high spreads. Add to the that the Volatility levels are currently a bit on the high side means the prices on the options are probably a bit over inflated anyway so you would be better off just shorting the stock itself. It might be possible to use a credit spread option play but explaining all of these other potential plays is just way too much for me to write on here. <img src=http://www.fantasydaytraders.com/eqpics/gtls-1.jpg>
Maturity has nothing to do with whether they are good or not. The honest answer is trade em if you like them and know how to use them, if not stick with what you know. I learned a long time ago I do not have to convince or justify to anyone about anything. Everything has pros and cons and it is up to you to decide whether it is right for you. Options are not special now or then or in the future, they are just one tool misused by hundreds of people who do not know how to use them correctly.
At least for now, we figured out that options are not a good option to short not very liquid stocks for a short period of time.
Keep it simple guys, just stick to IWM and SPY options. Plenty of money to be made with those two ETFs and spreads/liquidity are very very good for both. Why make your work harder and riskier than it needs to be.
I would like to add QQQQ and GOOG, pay attention to the weeklies for long Call positions of a few days. ----
Could you give an example how to make money trading IWM options? As far as I understood, in any case you will need to know the direction of the market. I have no idea where IWM will be going tomorrow.
That is correct. For option trading I stick to assets that have highly liquid option chains with low bid/ask spreads. Whatever edge you might have in your trading strategy must overcome that bid/ask spread before it has a chance of doing better than break even.
Patience young grasshopper. ; ) Let the trade come to you. You seem like you are chomping at the bit to get into a trade and unfortunately that is usually when we get into the wrong one. Some days there may be no trade at all and that is still better than a bad trade. in other words sometimes you just have to wait for the right setups. Watch the ETF's they listed and wait until they setup so you do have a high probability trade.
To get the feel of a live trade just buy a couple of 1 strike out-of-the-money (OTM) QQQQ calls - or puts - in the $0.50 range.