Yup. I bought 6 Sept OTM calls for 10 cents each. A whopping $60. So what if they expire - I just won't eat at Ruth Chris this weekend. If I get a pop, then I'll buy Ruth Chris (I set a very small part of my account for small gambles - just to keep me awake).
There is no inherent advantage in any one strategy. Bull spreads, ratio spreads, bear call spreads--none of them in and of themselves has an edge built in to it. If the market analysis behind the strategy (why someone places a ratio spread) proves accurate (in hindsight), then the strategy may be a winner (or not--depends on many things). Options are wonderfully flexible instruments. Unlike stocks, which have only two possibilities, long or short, options can be used as tools to create all kinds of positions representing all kinds of opinions. Nevertheless, no strategy in and of itself has an "edge."
edge this. edge that. sometimes that word just makes me wanna slap someone when he keeps on using it with wreckless abandon.
Mavrick, someone needs to be schooled: "Basically, an options buyer is the gambler and the options seller is the house. When an option is priced, the volatility component is one of, if not the most important part of the equation as it determines the likelihood of a strike price being achieved within a certain amount of time. Simply put, if the strike price of an option is more than 10% out of the money, and volatility is below 10%, it is very unlikely that the buyer will make money. More importantly, it's unlikely the seller will lose money."
In all honesty, there really is no such thing as an edge because the markets, like any future event, cannot be predicted. The delusional and those full of hubris are welcome to disagree. But that does not make them right.
Dude, I used to date a figure skater, and she'd always talk about landing on this edge, using this edge. Dddly enough, never wanted to slap her for it...