Can I be profitable simply by going long calls/puts?

[turkeyneck]

Quote from spindr0:

A lot of people suggest that options vs. stocks is a lot like chess vs. checkers.

Isn't success in stocks a prerequisite for success in options?

 

[Premium]

Quote from sonoma:

USCF not UCSF. Maybe spin lives on Parnassus?

I think spindr0 is referring to the United States Chess Federation - the good old days!

Quote from turkeyneck:

Isn't success in stocks a prerequisite for success in options?

not for people like me who are directionally challenged.

 

[spindr0]

Quote from sonoma:

USCF not UCSF. Maybe spin lives on Parnassus?

USCF - as I wrote.

Clio, Erato, Euterpe and the other gals have great digs a bit up the hill.

Quote from Premium:

I think spindr0 is referring to the United States Chess Federation - the good old days!

Bingo! One Kewpie doll for Premium.

 

[spindr0]

Quote from turkeyneck:

Isn't success in stocks a prerequisite for success in options?

Yes and no. If you're utilizing directional strategies then you have to get the underlying right. But many have no clue about the underlying and successfully implement non directional strategies (iron condors) and manage them accordingly.

 

[sonoma]

Quote from spindr0:

USCF - as I wrote.

Clio, Erato, Euterpe and the other gals have great digs a bit up the hill.

Bingo! One Kewpie doll for Premium.

I was trying to clarify for MathAndLogic that it was chess you were referring to, not the medical community at UCSF. Unless, of course, you were medical. And lived down the street from UC.

 

[Johno]

Quote from trader46:

At the moment I'm trying my hand at options spreads and am finding that it isn't fitting into my trading style as well as I would have liked. I mean a credit spread for instance, will profit if the underlying goes up or stays where it is or even goes down a bit, right? Why would anyone even be trading if they didn't have a good idea at least in their mind of a feasible price target? Also when I generate risk profiles, I keep getting very poor risk/reward.. usually negative.. risk 600 to make 200, etc. Not comfortable with that. Would rather risk $150 to make $450 if the price goes to where I think it will based on my system. If it doesn't fine, I exit. Move on to the next trade. I'm obviously trying to make the transition from buy/sell stocks to options.. and I realise there's more to it, but I would be a lot more comfortable just doing straight calls/puts.

I was making good progress by simply buying calls and puts by themselves in small quantities and exiting when the underlying would hit a certain price. Need to work on the greeks a bit more, like gamma and vega, but am reading a fair bit on it now. Did about 100 trades during most of last year and came short of breaking even but I had good discipline and money management in place, there was certainly light at the end of the tunnel. I certainly understand charts, support and resistance, fibonnaci retracements, divergence, high probability trading, money management, etc. The thing that put me onto options was the idea of using less capital per trade.. the idea of owning 1000 shares of a stock and watching it make a huge gap down move the next morning scares me.. at least with options you can only lose what you put in. period. Which is vastly smaller than stocks. I'm not looking at making 600% gains, slow and steady is what its all about, but spreads and condors are just too.. indecisive I guess you would say and add a degree of what would seem unnecessary complexity to the game.

Option Spreads are one of the wonders of the financial world, up there with compound returns thanks to the leverage they provide! I give thanks every day that they are available to me.

Your comment - "the idea of owning 1000 shares of a stock and watching it make a huge gap down move the next morning scares me." is quite revealing regarding one of your important issues - situational awareness.

No matter what you trade you must have a clear understanding of the state of anything knowable that will have a major impact on your position, the most important ones being trend which is closely followed by overbought/oversold but not forgeting impending reports. How these relate can have an enormous impact on outcomes. For example, If you are short, the trend is down and the market is overbought then it would generally take something extreme (rare) for it to gap against you, it will in all probability move sharply in your favour quite often. On the other hand, if you are short and the market is oversold then the odds increase that there may be an adverse move in the offing which could appear as a gap against you, I will leave it to you to figure out the probable outcomes if you were long. There are to many other issues and to little time to canvas at the moment, but the ones mentioned are a good place to start!

Best Regards

Johno

 

[spindr0]

Quote from sonoma:

I was trying to clarify for MathAndLogic that it was chess you were referring to, not the medical community at UCSF. Unless, of course, you were medical. And lived down the street from UC.

Ahhh, I get it now

I am (was) in medical but I don't live down the road from UC. So now all I have is bad chess pains (cough cough)

 

[increasenow]

Quote from Johno:

Option Spreads are one of the wonders of the financial world, up there with compound returns thanks to the leverage they provide! I give thanks every day that they are available to me.

is this for real?...honestly...how much do you have to put up margin wise for "worth it" spread option trades per day or week?...meaning...need to put up $20,000 to make $500 per week??...not worth it...please give exact examples...thanks

 

[xflat2186]

Quote from spindr0:

Ahhh, I get it now

I am (was) in medical but I don't live down the road from UC. So now all I have is bad chess pains (cough cough)

Stop taking Viagra with your nitro and the chest pains will go away. Trust me I know my dad is a cardiologist

 

[spindr0]

Quote from xflat2186:

Stop taking Viagra with your nitro and the chest pains will go away. Trust me I know my dad is a cardiologist

If I did that, would I be soft hearted ???