Palawan, thanks foir the thoughtful reply. May ask, have you build up actual equity throlugh trading of straight options?
For Directional traders
- Thread starter palawan
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Thanks, Palawan, for clarifying a bit. I think I realized already the obligations with selling calls/puts, but don't know yet when seller would be called to deliver, if at all, before expiry. Same with shorting stock. Never done it, and don't know when to buy it back to keep from being called to deliver. I suppose if they all stay ITM (for the seller), few worries. I do need to read up more - any suggestions?
I'm still sitting on my last 3 calls languishing in a deep drawdown (GOOG + EBAY), and haven't anymore cash in the acc't. If they don't recover, I'm done for now, and will be paper trading to guarantee my next attempts better. But, yes, I should have stayed with fewer more distant calls instead of trying to milk as much as possible out of a short-term pos'n. I certainly didn't expect GOOG's falling out of pattern this last week, I was too optimistic as usual and not technical enough. If I get out of this with enough to buy 1 call, I'll play Canadian ECA as I can daytrade it if necessary to correct a bad pos'n same day. I think I have a system that will work, the question is, will I have the discipline to stick to the mechanical strategy given my whims to resort to intuition which tend to feed off greed at the expense of risk. It would be nice if oil prices pulled back this week for me and let the Nasdaq bounce up again at least briefly.
Will keep you posted. Thanks again.
I'm still sitting on my last 3 calls languishing in a deep drawdown (GOOG + EBAY), and haven't anymore cash in the acc't. If they don't recover, I'm done for now, and will be paper trading to guarantee my next attempts better. But, yes, I should have stayed with fewer more distant calls instead of trying to milk as much as possible out of a short-term pos'n. I certainly didn't expect GOOG's falling out of pattern this last week, I was too optimistic as usual and not technical enough. If I get out of this with enough to buy 1 call, I'll play Canadian ECA as I can daytrade it if necessary to correct a bad pos'n same day. I think I have a system that will work, the question is, will I have the discipline to stick to the mechanical strategy given my whims to resort to intuition which tend to feed off greed at the expense of risk. It would be nice if oil prices pulled back this week for me and let the Nasdaq bounce up again at least briefly.
Will keep you posted. Thanks again.
greetings:
To answer your question, and make it short, I place my stops based on the underlying, a notch above or below previous support or resistance accordingly.
I look for a min of 2/1 risk/reward. In most cases I can do much better than that, because I try to enter a trade as close as possible to prev sup/res.
You remind of the saying "the grass is always greener on the other side of the fence".
Which I don't think is true in this case. If anybody is looking for another system to trade is for two reasons.
1.- The system works, but it is not being applied well by the trader.
2.- A system that works in trends, will not work in flat markets and vicerversa.
So one has to know what one's system is capable off and on which market conditions it can be used.
Selling options and buying options can be profitable, it really boils down to the trader and his ability to master risk. I think that for the buyer is all about patience and for the seller all about creativity.
Cheers !
p.s. I a curious as to how you will unwind your RIMM pos.
Thanks.
Bought back four of the aug 70 calls, which I had sold for .85, for .75. Now I have a "ratioed" calender spread -- 10 contracts of the sept 70s long, six contracts of the aug 70s short. I have no upside risk -- my 10 contracts long will always be worth more than my four contracts short -- and a downside breakeven of 68 and change. It's a wimp's version of a long call position -- sort of a long call with attenuated (although still theoretically unlimited) upside with reduced downside risk (again, compared to straight long calls) and positive theta. Basically, my position says, I think the upside is more likely than the downside on RIMM over the next few days (or, perhaps, longer) but I don't have religious convictions on the matter.
Cheers.
i mean, my ten contracts long will always be worth more than my SIX contracts short....
Thank you. I also think RIMM is going up in the short term.
Good luck !
yes. every year since 2000, i've been playing options. i actually have been saying the wrong info, i made money in 2000, it's just i lost it all in 2001. 2002 was a negative as well as 2003 and 2004.
This year, I initially put 1K in April (that was only the beginning as I usually have a budget of 3K for the whole year) and it exploded because of my CME plays (2 separate plays). I've posted all of the other plays besides the CME plays, and none have turned out as homeruns, but they've been net-positive over all(so far, hopefully i don't jinx it).
Today, I lost 300 (mark to market as it's not closed) as AMZN went up .84
The delta of being syntethically-short 390 shares seems to be right.
I guess you can say I'm really swing-trading the underlying but using the options for leverage and risk-control for most of my plays.
Good Trading.
I am truly sorry to hear about your situation, Rob. I can honestly tell you I know how it feels.
there's another thread that talks about the reasons for not day-trading options, and when you're trading the short-term options, those same reasons apply because you feel the pressure. the anxieties are too much and you end up making the wrong decisions (taking profits too soon not cutting your losses early and just freezing-up and giving up, etc.)
ITM Options are usually not execercised until expiration because the time-value will be wasted. Sometimes, there's reasons such as a dividend that would make it appropriate to exercise the calls (i.e. xyz announces a $10 one-time dividend payment per share) as options holders don't collect the dividend.
i think you can hold a short on the stock indefinitely as long as you have enough margins, but there are times when you are forced to cover if the stock's short interest is too high and there's a sudden demand for the stock. that's what happens during short-squeezes.
options on mcmillan is a very good book and the disciplined trader by mark douglas is awesome for trading psychology.
I wish you the best and I hope you get to develop the best trading system suited for you. Just a thought, have you considered another trading vehicle besides options? it just seems that the majority of technical traders are using mini-futures. maybe it's just my perception.
Best of luck to you...
Very nice, Chagi!! Way to go! I hope your plays all turn out this nice (or better
) Your very good assessment paid off well. I'm glad for you!Not to change the subject, but I think the NVDA March 32.5 calls have more than doubled since you recommended NVDA (and TASR) as possible options plays
Good Trading to you...