Intra Day Trading Options

I am new to this game, so am not going to argue with you since I am still learning.

But you should read some of the posts by Maverick74, among others regarding what happen when the trade gone bad. Also, remember Karen the Supertrader who wrote naked puts and calls exclusively.

Peace.
 
Thank you for the suggestions, I'll definitely look up Karen and Maverick.

There are some constraints of course, and it can end badly. No argument there.

That's partially why in my first post I said I do not recommend this :-).

That said, it's all about choosing the stocks. Volatile stocks the buyer pay premium, and much riskier to the writer (no free meals). Another possibility is to write options on stable stocks (i.e. MSFT, ORCL, etc) that have less risk (and premium), and can produce a passive income.

I'm still learning these setups and will keep you posted.
 
Those of us who have been through both sides of selling premium and thus have a healthy respect for the risks involved shiver a little when we hear the naiveté this fellow is spouting.

It makes you want to grab him by his lapels and shake him until his eyeballs rotate.

But hey. He will eventually get the picture and probably in a tragic debacle. After that he will be a candidate for having a clue. Maybe.
 
ironchef said:
Also, remember Karen the Supertrader who wrote naked puts and calls exclusively.
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Listen to oldnemesis. He is one of the wise one around here.

She wrote naked puts and calls since ~ 2002 and claimed to make tons of money with her hedge fund and was a star at tastytrade. But she incurred massive losses since 2014 doing such and had to resort to fraud to claimed continue profits. DOJ is considered a law suite against her for fraud.
 
Going back to my original question.

I typically trade directional. Spread commissions/contract fees don't justify the risk/reward for me. Intra day, there are small opportunities for quick profits in either direction. But scalping for nickels and dimes while staring at a chart all damn day gets old after a few years.

Many Options traders like to swing trade. If the data looks good, no need to stare. Just buy and hold. But for how long? How far out an expiration would justify the extra cost of time value. Holding it more than a day and I start to see time decay in more significant ways.

Even blue chip stocks are hard to predict (I.e. AAPL) when you have back to back gap down days. How do you make money on swings then?
 
Picking a direction is the same as picking a direction for a stock, only here you have to account for volatility, time to expiration, rate of change, etc.

For argument sake, one could buy ORCL after yesterday's plunge with expiration of a month or so. (And you can play their ER on 6/16). Provided you believe the news (cooking books) was over reaction.

I tried to open such position today, but the order was not filled.
 
ShadowEEngineer said:
You are right, I was wrong. Seems the number of options expiring worthless (which you want) is much higher.


"Studies (and experience) show that the options buyer does not have a 50/50 chance of winning. They actually have a very high probability of losing. A study done using Chicago Mercantile Exchange (CME) data showed 83% of all options on stock indexes expired worthless.

Remember that there is a winner for every losing options trade. If the buyer loses on 83% of these options that means the sellers win that often.

We can even tilt the odds in our favor slightly more by looking at whether call or put selling would be more profitable. A call option gives the buyer the right to buy the underlying stock and a put optiongives the buyer the right to sell the underlying stock. Call buyers profit when prices go up, while put buyers profit when prices decline.

CME data showed that 60% of calls expired worthless while 94% of puts expired worthless. This data shows that selling puts has a high probability of success."
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Hi Shadow Engineer,

Reading your post I just had a few thoughts to add. Although those stats are great and all, I wanted to say that did CME include only the options that are ATM? Most of the trading is done OTM, so if you trade ATM then doesn't that mean these odds might change? and those stats don't include the pay-out of those options.

Using supertrader Karen as a shining beacon of what I'm trying to explain....

She traded for years and probably won... what ... 95% of her trades. However now she's under the SEC spotlight because of all the $$ she has lost. The options are specifically priced taking in the odds of what could happen to them based on the volatility of the underlying.
 
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