DIA and OEX Options Question

T

Tom631

Friday I was looking to buy some puts as I felt the market might go down more. I first looked at OEX options as I use to see them many years ago be very active....But when I looked it seemed to me that there was hardly any action in them...Why is that?

Then I looked at options on the DIA....Very active but doesn't seem to move much.

Could you please explain the best option to buy when you make a bet on the direction of the Dow? ( no futures)

And is the OEX not popular any longer?
 
The proliferation of various options on the S&P500 has stolen much of the thunder from the OEX.

I'm guessing you don't have a futures account so I won't exalt the virtues of E-mini options or pit traded SP but the SPX contract traded at the CBOE should suit you fine.

One word of caution though. CBOE index options trade more volume via open outcry than on the screen. Hence the bid/offer electronically may seem too wide. If you have access to a traditional broker who can place your order on the floor you'll experience price improvement from the screen quoted markets.

Quote from Tom631:

Friday I was looking to buy some puts as I felt the market might go down more. I first looked at OEX options as I use to see them many years ago be very active....But when I looked it seemed to me that there was hardly any action in them...Why is that?

Then I looked at options on the DIA....Very active but doesn't seem to move much.

Could you please explain the best option to buy when you make a bet on the direction of the Dow? ( no futures)

And is the OEX not popular any longer?
More...
 
Quote from Pa(b)st Prime:

The proliferation of various options on the S&P500 has stolen much of the thunder from the OEX.

I'm guessing you don't have a futures account so I won't exalt the virtues of E-mini options or pit traded SP but the SPX contract traded at the CBOE should suit you fine.
More...

You're correct I don't have a futures account as I have only experience in stock options and when I wanted to bet on the direction of the market I would just use the OEX options..

Can you or anyone else here recommend a good way for me to learn about futures and the E-mini options you mentioned. A book recommendation maybe?
 
Quote from Tom631:

Friday I was looking to buy some puts as I felt the market might go down more. I first looked at OEX options as I use to see them many years ago be very active....But when I looked it seemed to me that there was hardly any action in them...Why is that?

Then I looked at options on the DIA....Very active but doesn't seem to move much.

Could you please explain the best option to buy when you make a bet on the direction of the Dow? ( no futures)

And is the OEX not popular any longer?
More...

You would be paying a very large premium for those puts.
 
Quote from Tom631:

You're correct I don't have a futures account as I have only experience in stock options and when I wanted to bet on the direction of the market I would just use the OEX options..

Can you or anyone else here recommend a good way for me to learn about futures and the E-mini options you mentioned. A book recommendation maybe?
More...

Tom, the Chicago Board of Trade does a fab job of providing educational resources.

Here's just a sample.

http://www.cbot.com/cbot/docs/56511.pdf

http://www.cbot.com/cbot/docs/49707.pdf

http://www.cbot.com/cbot/docs/42357.pdf
 
Thanks for all the suggestions.
And those links are just great. And FREE. Thank you for providing them. Just awesome.
 
1. Any book by Dave Kaplan for a good understanding of option strategies. Very readable but somewhat out of date.

You might want to look at Dan Sheridan's webinars on CBOE once you understand the basics.

2. IWM is good for the new trader, but RUT is more efficient when you are ready to do serious trading.
 
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