Search results

If it does go bankrupt, you lose your entire investment instead of your entire investment. And if it doubles, you make 17% instead of doubling your money. So just how high do you expect this turkey to fly? Spin has it right. Buy the $0 call. There isn't even any time premium in it.

I'm sure he'll come out and show his face if you pay your accountant peanuts ;)

I think Spin is talking about going long to short in the same account, when he has a deductible loss upon closing the original long trade. It sounds like it would avoid the wash sale rule, because the short isn't the same position as the long - it's the opposite. But don't take my word for it.

Naked put = covered call. Instead of buying the shares and writing a call, don't buy the shares and do write a put. Same strike, same date. If you don't think they're equivalent, pick a few strike prices and compare the two at expiration at a few stock prices.

Umm... here:

I'm going to out on a huge limb here and assume the objective of covered writing is to earn premium. Based on that assumption, you should be writing the call when you think it is the most expensive it will get that month.

Market makers don't lose money when you make money. They are not playing a zero-sum game. They make money every time you trade, both as a market maker and a broker, and it is always in their interest to make a market that will encourage you to trade more in your account.

You don't really need to know anything about the greeks for this, but a basic w**king knowledge will help somewhat. You're a swing trader. That means you want your option position to move with the stock. Ideally, you want lots of option price change (lots of delta) in the direction you...

Well, there's your problem. There are fresh options every month. You can take some time to learn, and there will still be trading left to do once you're finished. If all you want is to know how to tailor an option strategy to your (highly specific) outlook for a stock, that's painfully...

To put into perspective how badly this type of strategy can go, one of this monkey's trades was brought to my attention today. He wrote a 2009 $35 put in June 07, for $1.35 credit, on a stock trading at $65ish. In early November, with over a year to go before expiration, that option was at...

To kind of summarize what the others have told you, what you are doing with this approach is: 1) Assuming the risk that something will go wrong, and 2) Allowing a lot of time for something to go wrong. Strikes me as a bad combination.

Sure, the time value lost will be minimal, but all that intrinsic value is potential loss. Your supposed protection is so far out of the money that it's no protection at all. Your maximum loss is 35 points in either direction, which is effectively an unhedged position. It's worth paying a...

For starters, you could have an equivalent position and save yourself 100 points by buying the 150 put and the 250 call instead. Those short options are where your risk is. Not the long ones. You're writing strangles and if the index strays outside your 185-215 range you will still lose...

People regularly ask for historical options prices, and I have yet to see a single person explain why that information would be useful to them in any way. You might get more mileage out of historical stock prices, which are free and ubiquitous.

Don't get ahead of yourself, xflat. The big hedge fundies don't start pinning stocks till Wednesday.

The total delta is instantaneously the same, but you should also look at gamma, which is the rate of change of delta. An ATM option will have higher gamma as it moves ITM, which means your delta increases and makes you money faster. Another not-completely-unrelated factor is that as time...

You mean, you get filled if the price gets better but not if the price gets worse. With a market order you get filled even if the price gets worse. I still don't understand why you think that's a good thing. When was the last time you went into a store and said "I'll take one of these, charge...

That's a little wide for my taste, and it sounds like the options you were trading weren't that expensive to begin with, since a "FAST and FAR" whipsaw only cost you 50 cents. Generally, I don't chase my fill unless I'm prepared to modify my limit order to the then-market price, and even...

So why not place a limit order at the market price? What makes you think that would turn out any worse? I'm with IB. And I have never placed an option market order. If I'm desperate for a fill, I offer the ask or ask the bid and always get filled. If not, I place a limit order in between...

Why risk getting filled at a bad price with a market order? With a limit order you specify the maximum you want to pay, or the minimum you want to receive. That means you can't get ripped off, because you will never get a fill at a worse price than your limit. Therefore, market orders are...