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A question for options traders
- Thread starter Thunderdog
- Start date
Quote from spreadn00b:
Another thing I thought of that was extremely useful (and free)
http://www.cboe.com/LearnCenter/webcast/archive.aspx
Watch these educational videos, especially the ones by Dan Sheridan.
I'm not recommending that you should follow any of them as is, but it really gets you thinking and understanding options.
thanks for the link. just listening to that Dan Sheridan guy. he is one hyper dude.
http://www.iseoptions.com/education/webinar.aspx
ISE Webinars
ISE Webinars
Just some random questions from an options newbie:
If one's methodology in a particular market concentrates on capturing strong and fast directional moves (and not much else), where would the greatest benefit in wielding options lie? If one is willing to take the risk of just going long or short the futures contract (in other words, leverage and risk of using leverage is not an issue here), what would be the most salient way options could be added to enhance performance, if any? Or would they primarily be used to limit the downside?
I guess what I mean is: if straight up calls/puts seem to be the best options play for a particular strategy, but would likely still be secondary to an outright futures position, is there much use for me in employing options, given that I have little experience trading them and just a very basic understanding of the "greeks" involved (not to mention slippage, spread, etc)?
If one's methodology in a particular market concentrates on capturing strong and fast directional moves (and not much else), where would the greatest benefit in wielding options lie? If one is willing to take the risk of just going long or short the futures contract (in other words, leverage and risk of using leverage is not an issue here), what would be the most salient way options could be added to enhance performance, if any? Or would they primarily be used to limit the downside?
I guess what I mean is: if straight up calls/puts seem to be the best options play for a particular strategy, but would likely still be secondary to an outright futures position, is there much use for me in employing options, given that I have little experience trading them and just a very basic understanding of the "greeks" involved (not to mention slippage, spread, etc)?
Quote from lindq:
You can answer your own question very simply.
Are you currently successful...consistently...in trading equities?
If the answer is no, then options are very likely to accelerate your losses. You're compounding the difficulty and putting extra hurdles in your way.
I don't agree with the statement. You have to look at your background and personality and see if option trading fits you better.
I trade equities, but I have found that option trading fits my personality very well. BTW, I like games, and math. I don't want to generalize and tell you what the characteristics of option traders are. You have to experience and see if it fits you.
Coach's SPX Credit Spredit thread is one of the best journals in et, and it helps me a lot in my option trading process.
Quote from illiquid:
Just some random questions from an options newbie:
If one's methodology in a particular market concentrates on capturing strong and fast directional moves (and not much else), where would the greatest benefit in wielding options lie?....given that I have little experience trading them and just a very basic understanding of the "greeks" involved (not to mention slippage, spread, etc)?
If your methodology is successful then there are possible merits to leveraging options to capitalize on it.
You touched upon the some of the hurdles that need to be tackled. Slippage can be quite severe but choosing an appropriate instrument and the introduction of penny quotes et al could go some way to alleviating this problem for you.
It's going to be difficult for you to really grasp which options are optimal for buying/selling in accordance with your methodology without furthering your education of the options and arguably that includes learning about the greeks to some extent.
I say go for it! Invest some time in your education. Fortunately, you can focus on the specifics that are pertinent to your strategy.
Prosperous trading!
MoMoney.
I'm in a similar situation, although my moves are not quite as fast (can take up to 15 or so trading days at times). I'm still edjumicating myself (books and videos) and getting a lot of help from the journals and people here, but I'm happy to say that so far its working out. I think I'm doing better with options than I was with equities because of psychology. Equities were scary because of the loss potential. Now I can take several strategies into account and ask "which strategy best fits my trading style" and "can I live with this loss?" and know going in what that max loss is. I can put the trade on with confidence.
I find that just educating yourself with regard to each strategy is useful. Obtaining an option pricing calculators or risk analysis software (ToS's package is nice and free if you're customer). This has helped me understand how the various strategies react in real time. The software lets you play "what if's" with various strategies. Would a vertical, calendar, diagonal or just a plain jane buy work well here?
Finally, I started with 1 or 2 contracts. You pay a lot more attention when it's real money, even if only a little. You also get a feel for getting filled whether or not to leg in, leg out, etc. Just like trading anything else, gotta get your own feel for it.
As you probably know, the drawbacks are that the b/a spreads suck compared to equities, it takes time to get in and out, it takes more time to analyze the various strategies, there's a more to consider than just price too. You have to either have a feel for volatility and time or figure out a way to neutralize them (usually at the expense of potential profit).
Just my wee bit of experience in a nutshell thus far. Not sure if its useful or not.
I find that just educating yourself with regard to each strategy is useful. Obtaining an option pricing calculators or risk analysis software (ToS's package is nice and free if you're customer). This has helped me understand how the various strategies react in real time. The software lets you play "what if's" with various strategies. Would a vertical, calendar, diagonal or just a plain jane buy work well here?
Finally, I started with 1 or 2 contracts. You pay a lot more attention when it's real money, even if only a little. You also get a feel for getting filled whether or not to leg in, leg out, etc. Just like trading anything else, gotta get your own feel for it.
As you probably know, the drawbacks are that the b/a spreads suck compared to equities, it takes time to get in and out, it takes more time to analyze the various strategies, there's a more to consider than just price too. You have to either have a feel for volatility and time or figure out a way to neutralize them (usually at the expense of potential profit).
Just my wee bit of experience in a nutshell thus far. Not sure if its useful or not.
Quote from illiquid:
Just some random questions from an options newbie:
If one's methodology in a particular market concentrates on capturing strong and fast directional moves (and not much else), where would the greatest benefit in wielding options lie? If one is willing to take the risk of just going long or short the futures contract (in other words, leverage and risk of using leverage is not an issue here), what would be the most salient way options could be added to enhance performance, if any? Or would they primarily be used to limit the downside?
I guess what I mean is: if straight up calls/puts seem to be the best options play for a particular strategy, but would likely still be secondary to an outright futures position, is there much use for me in employing options, given that I have little experience trading them and just a very basic understanding of the "greeks" involved (not to mention slippage, spread, etc)?
Like anything else, options has tradeoff.
If you are a good directional/speculative trader, go for the underlying. Anything else, options give you the flexibility to stay in a directional trade, or to trade in a choppy market.
Get an account with TOS for their exceptional tools, and use their free/low cost education at redoption.com.
If you are a good directional/speculative trader, go for the underlying. Anything else, options give you the flexibility to stay in a directional trade, or to trade in a choppy market.
Get an account with TOS for their exceptional tools, and use their free/low cost education at redoption.com.