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roperfam, YES, you can lose money doing that!!! Here's why: If you write far out of the money spreads, you will receive only a modest premium at best. As the stock price moves toward your strikes the options you have written may increase in value, and perhaps dramatically. A five point...

If your broker shows other people's orders, check and see if there is a spread there that matches what you want (them buying and you selling or vice versa). If there is you may be able to offer right at their price and get a very good deal since most people wind up buying about 10 cents away...

xtanda--- does Interactive Brokers (usually referred to here as IB) operate in Australia? If so, you should check it out. I live in Canada, and have service from TOS which charges a decent level of commission and give first class service, but they don't operate in Australia, (I don't think).

MTE-- I take your point. Of course, the distance from the money makes a huge difference in the return and also in the probability of loss. Most advisory services (and there are lots of them, some good, some not so good) try to set up IC's like the ones I described-- more than 1 Standard...

Chris, actually I make many trades that I think might be losers because I know that my average of predicting the market (and I mean magnitude, direction, and timing altogether) is nowhere near 100%. I therefore hedge many of my trades so that losses may be mitigated. Sometimes those little...

Re: forex's comment on knowing the risk beforehand with Iron Condors. I agree that you know the risk up front, but you never want to be saddled with taking the maximum loss or even close to it. IC's typically will earn 3-10% per month on your margin depending on the risk you are prepared to...

I didn't check out every trade you made, but I think that the market is beginning to make a rebound. It moved 10% back in one week, and many stocks are starting to look somewhat attractive on a PE basis. A lot of companies will report in the next few weeks and then the PE figures will be more...

Since when is Canada joining the EU?? I'm Canadian, and I don't think we'd be interested in doing that. We have solid banks, sensible mortgages, decent government, surplus budgets, and more oil than all of Europe and the US combined. Why would we want to join the EU???

IronCondor--Here's my answer. Don't trade Canadian options! As a Canadian, I hate to say it, but most Canadian options aren't very liquid, and the bid ask spreads are not too good. Start your trading in very liquid American options and use ThinkorSwim. They have the best options tools, and...

Your AAPL spread picture looks interesting. Theoretically, there is a place between 95 and 100 where you could lose everything ($4.45 ), but with earnings and the craziness in the market, that is unlikely at NOV expiry, I think. The only unfortunate thing is that the most you can realistically...

Go with regular NDX options. Expiry will not match exactly, but correlations on price (which I assume is more important) will be 98% + which should be good enough.

Walt, Good conversation so far. Now can you set up a specific example, using AAPL for example. Pick your spreads and use real, during the day quotes, and we'll have a close look at it. By the way AAPL is one of the best to trade relative to slippage because it is very liquid. Looking...

Oops, didn't read your post clearly enough. You were talking about debit spreads.. In that case, you would pay mighty close to a dollar to make a dollar. After slippage and commissions, you will make zip all.

Walt, an ATM IC will very likely lose money. You will not receive enough credit to offset the likelihood of a complete loss on one side of the spread. For example, if you enter two $1 wide (as small as you can get) spreads you will probably get less than $0.90 in total revenue resulting in a...

Walt, Just a quick note-- Nassim likes to finance his position with CREDIT spreads, not debit spreads. There is a crucial difference between the two, and slippage is not a problem on exit for many of the spreads because half of them will likely expire worthless! With a good broker (TOS or...

I think Atticus means that they had to pay up big time. If they were completely naked, they could actually have gone in the hole with the incredible change overnight. Those with "credit" spreads just lost all they margined unless they were way, way, OTM.

Getting back to covered calls. The reason they're a poor hedge is really simple. You own stock or indexes worth 100K, you sell 30 day (current or next month depending on what day of the month it is) puts ATM... that gives you about 3-5 K depending on volatility. Now the market dives like...

jhucti, You send in a limit order at the midpoint or a few cents off it and hope it is traded. Do this on Thursday afternoon with say a half hour to go. Remember that other retail traders will be also looking to buy and sell that contract (someone may have the other side of the spread in...

I think you may be confused about strike prices. On a $10 stock, the strikes will either be $1 apart or $2.50 apart depending on the interest in the options. So you would probably have to choose a 5 call or a 7.50 call is you thought the stock would skyrocket or a put if you expected it to...

NDX options are very good for trading. Generally there is good volume, and 0.10 off the mid is achievable within minutes almost all the time. Far OTM options are a little trickier, but generally anything with 200 points of the ATM is just fine. If you have found a pattern, you can of course...