For someone starting out

[rallymode]

Quote from austinp:

They need to accomplish the first step, first

Hope this helps
Austin

So are you saying a person who has no clue about direction can not succeed in options?

 

[rallymode]

Quote from austinp:


Any stock trader who is/had been short any of the symbols trending down since mid-May would do even better while holding atm or otm LEAP puts.

yes because it was a vega bet and vols increased dramatically. Try doing that with LEAP calls off a bottom and tell me how well your port will perform. Moot point at best.

 

[austinp]

I'm saying <i>directional option traders</i> aka long calls or puts need to be skilled with the underlying first.

The last part of my original post summarized my belief on spread trading. That also includes any delta-neutral attempts, which are spreads between option and underlying to negate risk.

Anything other than a straight purchase of calls or puts is a spread... defined by "spreading" risk outside of the long option contract itself.

If I were to trade options again, my personal choice would be credit spread strategies in the SPX cash index. For those who lean toward long option premium with nothing else involved, gotta be good at directional trading.

 

[rallymode]

Quote from austinp:



If I were to trade options again

Well, that explains it. Sorry, didnt mean to pick but its hard to ignore advice such as "If you play direction with calls and puts, buy LEAPS instead".

 

[c.chugani]

Regarding straight calls & puts being too tough to trade:

What if the underlying is an index?

And you bet on a particular direction (with either a call or a put) based on the dominant trend which the index is following?

 

[MTE]

Quote from c.chugani:

Regarding straight calls & puts being too tough to trade:

What if the underlying is an index?

And you bet on a particular direction (with either a call or a put) based on the dominant trend which the index is following?

It doesn't matter, you still need to get those 4 factors right.

 

[Eliot Hosewater]

Quote from MTE:

It doesn't matter, you still need to get those 4 factors right.

And since indices are less volatile than individual stocks, you can get the direction right and still lose.

 

[MajorUrsa]

Quote from ryank:
Thinkorswim has awesome software that is free with your account. You can try it free for 10 days, then you have to fund your brokerage account. It allows you to model and change tons of things to see what would happen in different situations. If you haven't done so you should check it out.

Thanks, will do,

Ursa..

 

[kny3]

Hi. The CBOE has a link at its home page to an options simulation program offered by optionsXpress. I haven't tried it, but for noobies that want to test strategies with real-time prices, commissions, etc. it might be worth looking at.

kny 3

 

[jj90]

Not to say one doesn't have to be right on direction, move, timing and vol, but one can negate most of those by using frontmonth deep ITM options.