For those of you that trade options

Quote from optionsfreak:

dac8555

i agree with some of your answers...however, the only way to make serious money with options is to buy options out of the money. leverage is the name of the game. if you divide the price of your out of the money option by the price of the stock, you get your leverage...
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That's not true. With options you don't get 1 for 1 movement so in order to get your leverage you need to multiply the stock price by the option's delta and then divide by the option price.
 
i stay away from the greeks....it complicates something that should be much more simple..in this case...my trading method. as long as your out of the money price is no more or less than 10 to 15 percent away from the strike price and the conditions are right with the market as a whole as welll as the trend of the underlying stock..the odds are with you on making your target percentage....and actually i was wrong earlier...you divide the stock price by the strike price to get your leverage ratio.
 
Quote from optionsfreak:

i stay away from the greeks....it complicates something that should be much more simple..in this case...my trading method. as long as your out of the money price is no more or less than 10 to 15 percent away from the strike price and the conditions are right with the market as a whole as welll as the trend of the underlying stock..the odds are with you on making your target percentage....and actually i was wrong earlier...you divide the stock price by the strike price to get your leverage ratio.
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Stock price by the strike price!?:confused: Well, this one is definitely not the leverage ratio, it just tells you how far ITM or OTM your option is.

In any case, I'm not questioning your method, if it works for you then who am I tell you otherwise.
 
Quote from ryank:

In #1 you say you trade for income, in #2 you want to get experience by trying. I'm confused :confused:.
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I'm trying to make a steady income from trading. So far I've been trading for 8 months. I say I'm "trying" because I am not yet consistently profitable.

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and I have $30,000 .00 (including margin) that should be enough. After all, I want to learn to hedge with options, before I try to make serious $$$ :D .
 
Quote from optionsfreak:

...never take anything that doesnt give you atleast a 10 to 1 leverage. every 10% move above the strike price is a 100% gain on your money. if you find and screen for some good smallcaps with the right conditions...which you can do for free at msnmoney.com....you can make gains above your strike price with out of the money options in a 3 week average time period or less. just make sure you buy an option with no less than a 4 - 6 month expiration date. just my 2 cents. this method works for me extremely well....but to each thier own...bottom line...as long as your accumilating points (cash)...thats all that matters.
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can you enlighten us with a 10 to 1 example?
 
Quote from optionsfreak:

i stay away from the greeks....it complicates something that should be much more simple...you divide the stock price by the strike price to get your leverage ratio.
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I wholeheartedly agree with your statements. I couldn't have put it better myself! Finally, someone with a clue on these forums. Where have you been all these months when I needed someone to back up my point of view? All these freaks that are so obsessed with their little greeks. I don't care if they have software that does all of the calculations for them, knowing the greeks helps not one iota when it comes to critical tasks like knowing where your risk exposure is. Ugh! I bet not a single one of them even makes any money unlike you and I. Bunch of greek losers. What is the point of knowing the greeks when you can come up with your own much simpler proprietary ratios like stock price/strike price? Kudos.

I got your back.
 
cheers.gif
 
I agree with the view that when you trade simple positions like straight calls, puts and spreads then the knowledge of greeks is not necessary as it is easy to see where the risk is. However, when you manage a portfolio of options across different stocks, strikes and expirations then you can't get away without the greeks.
 
Quote from momoneythansens:

I wholeheartedly agree with your statements. I couldn't have put it better myself! Finally, someone with a clue on these forums. Where have you been all these months when I needed someone to back up my point of view? All these freaks that are so obsessed with their little greeks. I don't care if they have software that does all of the calculations for them, knowing the greeks helps not one iota when it comes to critical tasks like knowing where your risk exposure is. Ugh! I bet not a single one of them even makes any money unlike you and I. Bunch of greek losers. What is the point of knowing the greeks when you can come up with your own much simpler proprietary ratios like stock price/strike price? Kudos.

I got your back.
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LMAO

Don
 
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