Buying calls and puts
- Thread starter danjuma
- Start date
All the good stuff seldom written. But then those who have good stuff who may entrust others to know it expect it not to be handed out, and that is why one must keep closed mouth cause many can't keep promises.
I am not an expert in Options when doing just them for profits, been studying and trading them last four years, what I have learned is they have to be part of a Credit spread eventually. Even when you buy them and market going in right direction, you can still be wrong, only times they seem to be going one for one is very close to expiration but then if you bought much earlier, you are rapidly losing the original premium, so when you buying outright, my testing is still losing. I do have much experience since 90s of using them as a hedge in futures/stocks and have learned much doing that. But as far as options trading, I use very little of the "Greeks" other than comparisons between nearby and what they supposed to be valued at. I am Primarily directional chart reader with well back tested Trading Plan. I do wide Credit Spreads and more distant till expiration options that concentration on getting out is foremost ability. My back testing show OTM and deep OTM is like flipping a coin and bet it lands on it's side.
Good Trading to you.
This answer, like alot in trading, can't necessarily be given in a black or white format -- it's much more grey.
I myself am a successful options trader; I'm a buyer of them...not a seller.
You can make much more buying them, rather then selling them for the instant premium collected.
But I wouldn't advise anyone to buy them...most/alot of people...are much better or safer off selling them for that relatively small premium.
It takes a much more skilled Trader to understand and trade Options successfully. -- not everyone has the qualities or characteristics to do it.
...it's kind of like comparing a fighter pilot to a casual personal gliding aircraft only; the latter being a safer/slower longer term stock investor.
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Hey Danjuma,
I'm a buyer only, I just don't like the risk involved in selling options. Of course they perform better, because there is more risk.
When I first started trading options there was a story on JP morgan which involved JP placing a relative big trade on something and it went against them. There were unable to get out of the position and lost quite a lot of capital, if I hunt around I could dig it up.
I basically got spooked and always brought my options to cap the risks involved. U gotta understand that selling options have brought major corporations into liquidation. You're just "seeing the light" involed with selling. I've met people that have losts multiple investment properties selling / writing options.
Best of luck.
I'm a buyer only, I just don't like the risk involved in selling options. Of course they perform better, because there is more risk.
When I first started trading options there was a story on JP morgan which involved JP placing a relative big trade on something and it went against them. There were unable to get out of the position and lost quite a lot of capital, if I hunt around I could dig it up.
I basically got spooked and always brought my options to cap the risks involved. U gotta understand that selling options have brought major corporations into liquidation. You're just "seeing the light" involed with selling. I've met people that have losts multiple investment properties selling / writing options.
Best of luck.
I started trading around 2012 (studied the market for about 2 years before hand) and this was a major story back then. I remember them addmitting that they couldn't get out of the trade.
http://www.businessinsider.com.au/jp-morgan-loss-grows-2012-5
and wikipedia
https://en.wikipedia.org/wiki/2012_JPMorgan_Chase_trading_loss
Uz might laugh but I wouldn't even open a open futures position without a corresponding option to cap the risks..... Well mbey short on the indexes as I can't really see any major index moving 15% up.