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"The rational small retail investors won't invest in options at all. Am I right? " One thing non option traders don't take into account is the amount of $ one winning trade can bring you. MSO was at $8 with the $10 LEAPS for that year at $50. MSO finished the year at $40. Say you risked $5000...

"The rational small retail investors won't invest in options at all. Am I right? " I only have one friend who is a successful trader. He makes most of his $ trading options . I think you will find a number of small traders have made a living trading options, especially on the QQQQ's or OEX.

"He's referring to long calendar spreads. Problem being, a high front month vol usually equates to a high decile across the term-structure. Vegas increase with duration, so there is no free-lunch. Be careful where you get your information." True there is no free lunch. But sometimes you come...

There are some publications that list the most over/under priced options. I don't remember the names but they frequently pop up on yahoo finance. This might be the best information you will get for small retail trading. I think many of us just sell options with high IV and buy some further out...

When I wanted to trade the S&P 500 I traded options on the OEX. Easy and liquid.

use the volatility calculator on ivolatility.com

This is the 3rd time this has happened to me in as many months with 3 different stocks and i can never get an answer as to why. Placed order with IB to sell a GWK2 Jan 90 call for $2.45 at 10:40 with the spread at $2.35x $2.60, option modeler showing $2.46. 10:44 spread is still 2.35x2.60 only...

I don't think trading naked options is a bad thing. Usually on a vertical spread you've got about a 1:1 risk ratio ( risk $125 for every $125 potential gain). I don't think that is a very good ratio. I have vertical spreads out now on GWK2 that I legged in so I made $50 on each position and...

This has gotten way too complicated, where did the naked calls come from? Your original position wasn't bad at all. There is some risk of it going to zero and you losing some $, but the risk isn't much and every trade has risk. I just wouldn't put out the $ for the 300 shares of stock. You can...

I disagree. This is the option strategy forum, not the risk management forum. The man didn't open a $40,000 position, he got there by averaging down and now he comes to this forum looking for INTELLIGENT advice on strategies for dealing with this situation and he's told to take the loss and...

It's a covered call when you are long the stock and sell calls against it. If you are long Jan $5 2010 calls and short $5 2008 calls, the position is called a calendar spread, no margin required. If the long 2010 calls are at a lower strike price than the short calls, it is debit spread and no...

I think criticizing the size of this position misses the point. His $40,000 position might represent less than 1% of his account, which makes it a pretty conservative trade. Let's look at the choices a trader with lot's of $$ can use to trade out of a situation like this. I know many of my...

I guess my point on my post was that in hindsight, I lucked out buying the stock and having it pop shortly before it went to zero because the company decided to issue new stock when they came out of reorganization. I would probably be content with the profit from the put spread and leave the...

Interesting to see this post because I just put on a position on ETFC. I kept it simple though and bought 2010 $5 calls and shorted April $5 calls. The specter of bankruptcy is keeping me from risking too much here. This situation reminds me of a trade I did on NWA right before it declared...

I don't know, anytime I've sold options at a loss I've regretted it. I've let a few expire worthless, but that was a decision made when I entered to let them run to the end. If I'm long near month options that are headed south and I still believe the underlying will eventually go my way, I'll...

When splitting the spread I use the option modeler to give me the hypothetical price. I know from experience a bid to buy below that price is not going to get filled unless the underlying starts going down. I almost always get filled if I bid a little above the model price. Now this is for...

Relying on IB's servers on a heavy volume day. Bought 50 contracts on the QQQ's the Monday after Saddam was captured. Market started to tank fast and I couldn't get out fast because IB's servers went down.

I know this doesn't help you but, I shorted tasr puts with an sp of 25 some years ago. Had them executed when the stock was at $8. I sat on the stock for 2 full years waiting for it to bounce then finally cashed it out at $8.50 a few months ago and took it off my screen and never looked at it...

From Barron's "At Goldman Sachs, the options strategists are advising the firm's clients to fight the temptation to sell elevated implied volatility. Normally, traders reflexively enter the market to sell high volatility and buy low volatility. Why? Because volatility is mean-reverting...

"Look at china they produce but consume few things," Are you only talking about consuming imported good? They are a very small consumer of imported goods, but a huge consumer of local products.