Search results

Relax LN. There should be clarification about the leverage issue on a naked position. In the example I laid out, a stock trading at 60 lost 30 points of value, which means that the put option rose at least 30 points in value. Since each contract represents 100 shares of stock, how would the...

The only risk involved is the stock closing below your break even point (the strike price of the put minus the premium), which would give you a losing position. If something terrible happens to the stock, and its share price plummets, that is where the real risk is. So if a stock is at 65 and...

I personally trade mostly in 300 share or 500 share blocks at most, but you should be able to trade 1000+ share lots just the same. Obviously your success is still dependent upon finding enough liquidity to trade against, but you face that with whatever broker you trade with. Here is the...

Yes, you are correct in your assessment. If the stock closes at expiration below 60 you will be assigned, and can sell the stock right back out after it's been put to you with no restrictions. You could even short the stock before expiration, and when it's put to you that would cover your...

Market makers can hold your order and choose whether to fill it or not. I think the delay is in them actually considering whether to execute it, rather than confirm the execution. That is why I rarely use Market makers to execute against. Fortunately I trade very liquid stocks, where there is...

Usually a drop in volume means that a stock is consolidating or making weak moves. Price movements on lower than average volume usually don't hold up, so if for instance a stock breaks through a resistance level on low volume, chance are high that it is a false breakout and will fall back...

LN, Liquid means that there is steady and substantial trading volume. A stock or option that has good liquidity has good volume, and subsequently is easy to get in and out of, since there is always a steady supply of buyers and sellers. Another byproduct of liquidity is tighter spreads.

A stock with a low float can move much more quickly and powerfully due to the basic laws of supply and demand. If there is a low float, that means there is a low supply of stock to be traded in the market. Therefore, when there is alot of buying interest, but relatively little stock to go...

Here's another issue that factors into the way options, and consequently stocks trade with regard to expiration. Most of the "big boys" who sell a lot of the options the little guys buy don't want to see a lot of those guys make money with their options positions, which is why you hear about...

Interactive Brokers charges $2.95 per futures contract. You can get more info at http://www.interactivebrokers.com.

If I understand your question correctly, if there is no ECN at or near the inside, and you send in a limit order, your order will post on level II. Once it's posted, any participants who see it can hit your bid or offer by either using the same ECN you posted your order on, or by using...

yk, To elaborate on what rtharp said, in case you still had any doubts, yes, you can buy and sell options just the same way you do with stocks, so if you bought some calls and the trade goes against you, you could sell them right back for a small loss. In fact, you can daytrade options just...

Paper trading can be valuable in the sense that you can get a feel for types of trades, and learning how stocks move. It is useless, however, in factoring in the emotional and pressurized aspects of trading, which can change your whole outlook and landscape of trades. Regarding paper trading...

For daytrading I use the 3 minute charts. 1 minute for me contains too much "noise".

I derive my primary source of income from trading now. It took me a year and a half to get to the point that I was consistently profitable to make trading my primary job. I also would recommend that you take into account the added pressure that comes with trading as a primary job and assess...

Mr F, With regard to your technical question with IB, if I'm reading your question correctly, you're asking if you can keep your naked positions open through expiration. The answer is absolutely. What happens is if your naked position (let's say 3 naked puts) is in the money at expiration by...

Actually, I believe Mr. F's math is correct in that no matter what happens, he will end up with a gain, regardless of where the stock closes. In white17's example, the stock is at 75 the day of expiration. Based on your options positions, you are forced to short the stock at 60, but have the...

Anyone selling a service or product that claims to "know" what will happen in the future is selling bad goods. The best traders don't predict what will happen, but rather react to what does happen. There is no "holy grail". Success is all about reacting and stop management.

Jeffrey, I use options as a balanced part of my overall trading. I do plays from naked strangles to collars (see thread entitled "Selling Puts??"), to straight put and call buying. I often will buy puts, for instance, on a stock that has had a huge runup over a week or two week period and...

There is another, safer way to work with covered calls, which still provides similar upside potential but limits your worst case scenario to break even or a small loss. It is called an options collar, and it works by selling calls at a higher strike than where you purchased the underlying...