Oh, sorry my bad, I read it wrong.
Buying/Selling Options
- Thread starter pcgeek86
- Start date
Oh, sorry my bad, I read it wrong.
If you mean equity options, Thinkorswim will take you no problem and so will Optionsxpress.
20% on capital in 6 months with no loss at all - assuming that you had enough trades to make this statistically sound - is not what I call a "mildly profitable" performance, but it could be just me. Rounding this to 40% per year, over the years you compete with some pretty good fund managers in my opinion. It would also depend on what your proffit/trade distribution looks like.
Consider also one thing: the DowJones generated about 20% return over the past 6 months, right ? If your strategies are biases to the longs, you have to adjust for this as well.
Anyway, I'm not saying that Futures are "better" than options, but they definitely leverage you in different ways.
Options will leverage you on the cash price of the underlying, but also on its volatility - which you won't get with Futures.
Also, with options you will enjoy - and suffer from if you're wrong- the gamma effect.
On the other side, with Future you won't pay for time and its price will follow pretty much linearly that of the underlying (different with options).
Which is why I suggested you run some simulations. On the same chart, draw 2 lines: what the option will be worth, and what a leveraged position on the underlying will be worth, at different time, for different levels of volatility, at different underlying price. And see if options are really what you want.
Not saying your idea isn't good at all. I'm just suggesting alternatives and testing.
Thanks. I'll do more research on futures and compare them to equity options before making any rash decisions
The 20% I've made over 6 months isn't that great, but at least it's a start. All this stock market lingo is new to me, and I'm trying to decide who to listen to ... technical or fundamental analysis. I'm just playing by ear for now, but eventually I will formulate my own strategies based on what I learn early on. Thanks for the advice on futures.
Also good advice, and something I have considered. I may end up not trading any options contracts, however I wanted to leave the option (no pun intended) open, at least learn a little bit about it and get a bit of experience. Until later though, I may just stick with trading equities and see how my performance goes.
Out of curiosity, why do you say the market is bearish, and what are you basing that on? Thanks
I've been with OptionXpress for over 6 months now.
They set me up for Level4 Trading right from the beginning, with no problems. I was going to go with Scottrade, but I do not think they allowed Credit Spreads.
With O.X. you can sign up without any deposit and try out the platform.
Do some simulations with Credit Spreads. ( GOOG, SPX, RUT, NDX)
Easy to make 8 to 11% a month.
My 2 cents...
They set me up for Level4 Trading right from the beginning, with no problems. I was going to go with Scottrade, but I do not think they allowed Credit Spreads.
With O.X. you can sign up without any deposit and try out the platform.
Do some simulations with Credit Spreads. ( GOOG, SPX, RUT, NDX)
Easy to make 8 to 11% a month.
My 2 cents...
Yes, you can close the position and take the profit. And in that case you would be smart to do so. No need to hold until expiration.
However, I am very much against shorting puts or calls unless you are highly experienced and well aware of the pitfalls.
Selling options has been the death of many an inexperienced trader.
pcgeek, this is good advice. Give yourself more time to become consistently profitable before taking on leverage.
It is very easy to confuse brains with a bull market. Your initial success may have a lot to do with the extremely strong market in the past 6 months.
If six months from now you are still profitable and confident, then you may be on to something. But give it more time before you start paying with fire or you may get scorched.