Here are the sites to which Blue Water Sailor was referring...
All About Options
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Start with long OTM calls and OTM puts first...
These are PURE directional bets, so if you have a hunch and think $X has stalled for now and most likely will rise to lets say $14 in the next few weeks you can buy the $14 OTM call in December or even January and see what happens..
Your premium will be low cost which means your risk is also low. These are great for people just starting. Once you got that down, start adding an additional short strike. This is now a long call vertical. Verticals are still one of my favorite spreads and its great for beginners, once you get verticals down you can move on to more advanced strategies.
These are PURE directional bets, so if you have a hunch and think $X has stalled for now and most likely will rise to lets say $14 in the next few weeks you can buy the $14 OTM call in December or even January and see what happens..
Your premium will be low cost which means your risk is also low. These are great for people just starting. Once you got that down, start adding an additional short strike. This is now a long call vertical. Verticals are still one of my favorite spreads and its great for beginners, once you get verticals down you can move on to more advanced strategies.
Even after checking out two different books from the library on trading options, I wasn’t finding the kind of information in which I was most interested. Then it finally dawned on me that I ought to be using key words “how to read an options chain” to pull up descriptions/explanations on the particular topics I was looking to learn about, which did the trick. Now I need to find out if there is any way to trade options virtually so I can see in real time what choices one has in terms of how close to expiry options can be purchased, how this impacts the purchase price, and how it affects potential profits/losses, etc. (I’m kind of shocked that “how to read an options chain” was not standard fare given any book or article I tracked down about trading options.)
From TheBlueCollarInvestor:
This video looks like it ought to give me a decent start...
From TheBlueCollarInvestor:
This video looks like it ought to give me a decent start...
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I select stocks based on opportunity, which is in turn based on market structure. However, not all securities have an options chain, which leads me to believe that there might often be candidates for an option trade for which no options are available. If true, this would be yet another reason why trading options probably is not for me.
Last month, I put what looks to be the final touches on my Numerical Price Prediction Forex day trading system, and having now seen the final product in action, any former motivation I might have had to attempt to learn more about trading options has (for the time being at least) gone completely out the window.
For one thing, I’ve been checking out entries posted by Blue Water Sailor from time to time, and recently, he made the comment that at this point, he is averaging a bit better than $100 per day. My impression is that this has been no easy task—that there has been quite a lot involved in his reaching this level of competence.
However, it seems like if an individual day trades Forex using NPP, generating $100 a day is almost "a walk in the park" by comparison.
The four trades executed Sunday night:
In listening to AJ Monte talk about trading options, I’ve formed the impression that it’s a great way to "hedge your bets" in case you turn out to be wrong about the ultimate direction a given asset ends up eventually going. However, with the level of precision demanded by the system I use, I should normally have the direction correct, and in those cases where I don’t, this should become apparent to me right away, prompting me to exit positions gone awry immediately. I therefor don’t really see a bet-hedging need to cover myself.
Some other thoughts shared by Blue Water Sailor were that… "My focus these days is on learning directional trading…and…There's still a huge amount for me to learn in lots of other ways, too.
He also wrote: "I'll be exploring all kinds of avenues while keeping my current processes running... hopefully, my brain remains plastic enough to keep learning and absorbing this stuff at the same clip that it has been. Although it often feels like the info is overflowing my brain pan and sloshing out of my ears."
Call me lazy if you like (I commend options traders for their dedication and commitment to mastering this particular market) but if I can make the same amount of money simply by continuing to trade using what I already know (which I think I can do) the impetus to learn all about options has to recede (in my case) to make room for other interests and pursuits.
Perhaps a bit pathetic to say...but true.
For one thing, I’ve been checking out entries posted by Blue Water Sailor from time to time, and recently, he made the comment that at this point, he is averaging a bit better than $100 per day. My impression is that this has been no easy task—that there has been quite a lot involved in his reaching this level of competence.
However, it seems like if an individual day trades Forex using NPP, generating $100 a day is almost "a walk in the park" by comparison.
The four trades executed Sunday night:
In listening to AJ Monte talk about trading options, I’ve formed the impression that it’s a great way to "hedge your bets" in case you turn out to be wrong about the ultimate direction a given asset ends up eventually going. However, with the level of precision demanded by the system I use, I should normally have the direction correct, and in those cases where I don’t, this should become apparent to me right away, prompting me to exit positions gone awry immediately. I therefor don’t really see a bet-hedging need to cover myself.
Some other thoughts shared by Blue Water Sailor were that… "My focus these days is on learning directional trading…and…There's still a huge amount for me to learn in lots of other ways, too.
He also wrote: "I'll be exploring all kinds of avenues while keeping my current processes running... hopefully, my brain remains plastic enough to keep learning and absorbing this stuff at the same clip that it has been. Although it often feels like the info is overflowing my brain pan and sloshing out of my ears."
Call me lazy if you like (I commend options traders for their dedication and commitment to mastering this particular market) but if I can make the same amount of money simply by continuing to trade using what I already know (which I think I can do) the impetus to learn all about options has to recede (in my case) to make room for other interests and pursuits.
Perhaps a bit pathetic to say...but true.
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Given the lackadaisical attitude I now have with respect to learning more about options trading, listening to Shadow Trader and working to decipher what the heck he's talking about little by little over time might be a more engaging way for me to continue pursuing this low-priority side interest...
TC2000 v19
On Apple, I believe we’re okay. Right? There’s really no problem with the trade. As you can see here, we’re looking at a 121… a 124… and if we go in here, right? We see that we’re short…
This is our Long Vertical, and remember, we’ve sold a bunch of Shorts against it. This is looking good. It’s all the way down to 14ȼ now. So, I think we’re in excellent shape on Apple.
Remember that if these Puts go out worthless… this is trade #479… we already make money on the trade without even selling the Long Call Verticals. So, even if our Long Call Verticals go out worthless, we will still make money on the trade.
All right?
On Apple, I believe we’re okay. Right? There’s really no problem with the trade. As you can see here, we’re looking at a 121… a 124… and if we go in here, right? We see that we’re short…
This is our Long Vertical, and remember, we’ve sold a bunch of Shorts against it. This is looking good. It’s all the way down to 14ȼ now. So, I think we’re in excellent shape on Apple.
Remember that if these Puts go out worthless… this is trade #479… we already make money on the trade without even selling the Long Call Verticals. So, even if our Long Call Verticals go out worthless, we will still make money on the trade.
All right?
This thread should provide you with additional content to consume and resources to consider...
https://www.elitetrader.com/et/threads/buy-a-call-option-v-sell-a-put-option.353202/
https://www.elitetrader.com/et/threads/buy-a-call-option-v-sell-a-put-option.353202/
TC2000 v19
Let’s go to ZOOM, Trade #484.
As you can see here, we still have one unit open. That’s this here. And it’s currently trading at fourteen twenty. You can see here I have a limit order out for $18.
Obviously this is pretty cool, because remember our cost here was $1.49, and then we took off the calls that we had at four ninety, which we didn’t need. Okay?
And I want you guys to notice now how it really turned out to be the right play—that we really didn’t need the four nineties. Because look, over here, we never rallied high enough for the four nineties to matter. And if we look at our chain, what are they now? Well, they’re zero bid.
So, this really fell apart quickly…these four nineties, and we got a dollar and eighty cents for them if I look back on my sheets here. So, that was good. So, we had already dropped our cost down significantly, even before we started selling…you know, closing out of these ratios here.
So, it’s pretty exciting. And remember, the original ratio price was $1.49. We got out of one at two zero five, and again, now we’re still holding this one to see what we can get for max value here.
Obviously, max value is the four sixty. But I think we can just wait a little bit longer. Now, right now, things are really starting to come down to the wire, and here’s where it gets really exciting.
What I think is going to be probably the exit here, unless we fall down hard, would be when this starts to drop below a dollar. Then you know that it’s really starting to really, really fall apart.
Now, if we rally here a bit, and we go to four sixty, it’ll take time for this to drop, obviously. It’s going to take a little bit of time. But, obviously just an absolutely phenomenal trade in terms of what we were looking at technically and in terms of risk reward, to be able to put on that ratio spread for $1.49, then…or actually, broken-wing butterfly, excuse me, for $1.49…take pieces off of it to take back a lot of its debit, and then be closing the last unit for, you know, up in the teens here.
We’re looking at fourteen to fifteen dollars now, which is just absolutely fantastic. So, trading fourteen twenty-five now, obviously, we have about fifty-three minutes left to expiry, so, I think given what the chart is doing, we just leave this along for a second.
If we flip it to the 15, you see here we’ve got some decent support...
So, we can just kind of watch this support level here underneath here on the four fifty-six. If we see the four fifty-six get taken, then maybe we just jump out very quickly. All right?
But again, looking to just maximize that.
Let’s go to ZOOM, Trade #484.
As you can see here, we still have one unit open. That’s this here. And it’s currently trading at fourteen twenty. You can see here I have a limit order out for $18.
Obviously this is pretty cool, because remember our cost here was $1.49, and then we took off the calls that we had at four ninety, which we didn’t need. Okay?
And I want you guys to notice now how it really turned out to be the right play—that we really didn’t need the four nineties. Because look, over here, we never rallied high enough for the four nineties to matter. And if we look at our chain, what are they now? Well, they’re zero bid.
So, this really fell apart quickly…these four nineties, and we got a dollar and eighty cents for them if I look back on my sheets here. So, that was good. So, we had already dropped our cost down significantly, even before we started selling…you know, closing out of these ratios here.
So, it’s pretty exciting. And remember, the original ratio price was $1.49. We got out of one at two zero five, and again, now we’re still holding this one to see what we can get for max value here.
Obviously, max value is the four sixty. But I think we can just wait a little bit longer. Now, right now, things are really starting to come down to the wire, and here’s where it gets really exciting.
What I think is going to be probably the exit here, unless we fall down hard, would be when this starts to drop below a dollar. Then you know that it’s really starting to really, really fall apart.
Now, if we rally here a bit, and we go to four sixty, it’ll take time for this to drop, obviously. It’s going to take a little bit of time. But, obviously just an absolutely phenomenal trade in terms of what we were looking at technically and in terms of risk reward, to be able to put on that ratio spread for $1.49, then…or actually, broken-wing butterfly, excuse me, for $1.49…take pieces off of it to take back a lot of its debit, and then be closing the last unit for, you know, up in the teens here.
We’re looking at fourteen to fifteen dollars now, which is just absolutely fantastic. So, trading fourteen twenty-five now, obviously, we have about fifty-three minutes left to expiry, so, I think given what the chart is doing, we just leave this along for a second.
If we flip it to the 15, you see here we’ve got some decent support...
So, we can just kind of watch this support level here underneath here on the four fifty-six. If we see the four fifty-six get taken, then maybe we just jump out very quickly. All right?
But again, looking to just maximize that.
Here is another thread to which you're going to want to return...
https://www.elitetrader.com/et/threads/options-strategies.353226/