i will readily admit i am not that sophisticated in my understanding of options however, i am reasonably profitable, so i must be doing something right i write options on stocks (naked puts) that i don't currently own, but want to own (usually a combination of fundamentals and technicals), and just keep collecting premium (might write several of these things over time) until the stock sells off for some reason and there you go. a good example of this was PIXR. loved the stock. but too expensive for me. So, i wrote a nekkid put. it sold off on the "dissapointing DVD sales of incredibles news" and of course the market overreacted. great company. steve jobs. nothing more needs to be said, and that was my long entry. worked well i sell only covered calls (not naked) on stocks I own, usually when the stock is near resistance) as for position plays, I choose directionals i like. then, I wait for some overreaction selloff (if wanting to buy calls) where people are dumping the calls left and right and they get oversold, and i'm in. i realize this is not very sophisticated, and i don't get into the greeks very much if @ all. but it does work. i like spread trades too, but i find futures fit my needs more for these. like being long one index futures contract, and short another because i see a tightening (or widening) of the spread between their performances. this is not too difficult to discern (which indexes are underperforming vs. others). the trick is more determining when the good entry is - when the divergence is unsustainable and a regression to a mean is more inevitable. futures work great for these, but options obviously an option (no pun intended ) too
The rule is simple - smart ones learn anyway, ...others never learn, so it is just big waste of time talking to them. Your are proving that no valuable advice should be free - because arrogant and ignorant people like you never appreciate this. To make it clear: I am not interested in continuing this discussion.
??? I think many of us write options due to our confessed inability to predict underlying direction. Maybe you aren't defining the word "adjustment" as others do. From your implication that option writing puts you in a hole as a matter of course, I take it you don't highly regard the strategy. Some of us have made it work quite well, with adjustments being a necessity at times.
"??? I think many of us write options due to our confessed inability to predict underlying direction. " ktm, no matter what option strategy you use, you have to be right about the future underlying movement. For example, if you think a stock is going to fall or stay flat, you can write a naked call. Or if you think a stock is either going to move up or down significantly, you can buy a straddle. If you are poor in predicting the underlying movement, no matter what option strategy you use, what adjustment you make, you are just going to be wrong again and into an even deeper hole. As for ChrisM, why don't you just keep your mouth shut when you have nothing valuable to add? Thanks.
I have to disagree. I've been doing this for some years and have done quite well. Time will usually expire before my wrongful prediction comes to bear.
ktm, you must be thinking like Vinny1. Read the below post by Maverick74 way early in this thread: Maverick74 Registered: Mar 2002 Posts: 4217 07-28-05 08:28 PM -------------------------------------------------------------------------------- Quote from Vinny1: The advantage to selling options is that they lose value because of time decay. -------------------------------------------------------------------------------- You obviously do not understand a single thing about the greeks. Theta is not an edge. It's a function of volatility. Volatility is a function of delta. Delta is a function of price. The delta of any given option is priced very efficiently as to not favor the buyer or the seller. If what you are saying is true. One could trade synthetics to make millions. What you are saying is that selling a 20 delta option has some sort of implicit edge. That would mean one could sell any given option and buy it's synthetic counterpart for a risk free profit. Obviously if you understand put-to-call parity, you would know this is not possible.
Verbose Main Entry: ver·bose Pronunciation: (")v&r-'bOs Function: adjective Etymology: Latin verbosus, from verbum 1 : containing more words than necessary : WORDY <a verbose reply>; also : impaired by wordiness <a verbose style> 2 : given to wordiness <a verbose orator>
to give some examples, I bot some AAPL Jan 57.5 calls yesterday and took some profit on 1/2 of them. they are up quite nicely. i am longterm bullish on aapl. i also bot some AAPL SSF's and sold 1/2 of those today when AAPL hit over 62 i have several SMH calls in various strikes and expiries, and same for the Q's and VPHM
ChrisM..you KTM and Coach are on my short list of ppl I would/will entrust my money to...when the time comes. All of you have been very giving and informative and appreciated by many.