best options strat for newbee starting with 3k

[Windlesham1]

Xmas tree- example buy SPX 1500 put, sell 1480,sell 1460 etc
ratio spread buy 1x 1500 sell 2x 1480 put. there are so many different combinations,it's what makes stocks one dimensional with 1 in 3 hope,as opposed to options where you can get a credit and extract even more when the market moves towards your long strikes. You don't have to be directional ever,as you can do this both sides of the market

 

[cdcaveman]

Quote from Windlesham1:

Xmas tree- example buy SPX 1500 put, sell 1480,sell 1460 etc
ratio spread buy 1x 1500 sell 2x 1480 put. there are so many different combinations,it's what makes stocks one dimensional with 1 in 3 hope,as opposed to options where you can get a credit and extract even more when the market moves towards your long strikes. You don't have to be directional ever,as you can do this both sides of the market

thats typically called a ladder , and a ratio write, and or a ratio backspread..


http://www.theoptionsguide.com/call-backspread.aspx
http://www.theoptionsguide.com/long-put-ladder.aspx

 

[dfantome]

Quote from probe1957:

You need to talk to a member here who goes by the handle "fantome" (among others). He makes thousands of percent on every trade he makes and has absolutely never made a bad call.

Lol, This is my only account..

& OP I could turn your 3k into 10k in about 3-5 months.

 

[justrading]

Quote from cdcaveman:

thats typically called a ladder , and a ratio write, and or a ratio backspread..


http://www.theoptionsguide.com/call-backspread.aspx
http://www.theoptionsguide.com/long-put-ladder.aspx

I remembered seeing that expression somewhere so I checked my notes.

Natenberg calls them Christmas trees, a.k.a. Ladders, or if Delta neutral a variant of Ratio Vertical Spreads.

Nothing like a bit of simplicity to keep the newbies unbalanced.

 

[justrading]

Quote from dfantome:

Lol, This is my only account..

& OP I could turn your 3k into 10k in about 3-5 months.

My you are being modest.

Based on your previous target it should be $107K in 3 months.

 

[Windlesham1]

Strategies are important to understand,as is the language of options.
It takes years to get comfortable with options-I've been trading them since '99 and still come across new things- broken wing butterfly for example.
there's some great free education- such as 21stcenturyinvestor.com and SanJose options.
It's good to have lively debate but in trading we trade our beliefs-so each to their own.
Ys you can call a Xmas tree a ladder and collars= reversals but it's important to know the possibilities-only then can you find your own utopia

 

[justrading]

Quote from Windlesham1:

Strategies are important to understand,as is the language of options.
It takes years to get comfortable with options-I've been trading them since '99 and still come across new things- broken wing butterfly for example.
there's some great free education- such as 21stcenturyinvestor.com and SanJose options.
It's good to have lively debate but in trading we trade our beliefs-so each to their own.
Ys you can call a Xmas tree a ladder and collars= reversals but it's important to know the possibilities-only then can you find your own utopia

Appreciate the links, there's usually time to squeeze in a video when one doesn't day trade.

 

[probe1957]

Quote from dfantome:

Lol, This is my only account..

& OP I could turn your 3k into 10k in about 3-5 months.

Of course. Fortunately all anyone has to do is check your rather limited (under your current handle anyway) post history to see exactly how credible you are.

 

[regardspratik]

just wondering something.

ie. VOD is trading at 28.45. I can sell the (cash secured) put for july @ 29 VOD for 2.2.

Doesnt that mean its a good idea to do this? my BE would be 26.8, so even if the stock dropped to 27.5 from here, I would STILL make money off the prem. OR essentially, I have bought the stocks for 26.8 isnt it?

I understand the TVM effect and 115 days are long long time for options, but i have been keeping my eyes on VOD, it has been in 25-28 range for past 1 yr.

n e idea or comments for VOD stock?

please advice.

 

[probe1957]

IMHO, it depends on your objective. If you really want to be put the stock at your $29 strike then, by all means, sell the put. But since you indicated you only have $3k in your account does it really seem wise to put all your eggs in one basket?