I am not necessarily suggesting you use options across the board. But adding them as hedges to these very speculative plays can cut down overnight gap losses significantly while allowing you to be right on the upside without a profit cap.
Lessons learned from a losing trade: NFLD
- Thread starter ACM Trader
- Start date
Thanks, Optioncoach. I am definitely going to study the possibility of optioning the high risk stocks I buy. And biotech stocks qualify as high risk ! This business is all about learning and improving.
I appreciate your suggestion and I am going to include this "safety net" in my backtesting.
I am sorry to hear of your loss, but all things considered you faired better than most. I stringly suggest you learn about collars and married puts.
If you had a collar on the stock, you would have perhpas lost nothing. Options are a little intimidating at first to learn, but they are really powerful tools.
Thinkorswim has a list of reading on their "affliates" area of their web site that has many great books to chose from.
Linda
If you had a collar on the stock, you would have perhpas lost nothing. Options are a little intimidating at first to learn, but they are really powerful tools.
Thinkorswim has a list of reading on their "affliates" area of their web site that has many great books to chose from.
Linda
Why do you say that, rallymode?
If you want to play a news event with options, especially FDA plays, your best bet is using short calendars. Long gamma, short vega. Much better expectancy than anything else you can put on.
You are doing nothing with those collars or protective puts but paying -edge and commissions in addition to the gamble you have already taken by playing the ticker. Anyone who recommends this ahead of FDA announcements should not be listened to.
OK> My goal is not to make money on the options, as much as protecting my capital invested in stocks. Also, I keep stocks only for a few days, like 2 to 5.
ACM, fair enough. My comment wasnt addressed at you. If you have a swing system that plays tickers 2 to 5 days, that's great, i would say avoid stocks with big news as i doubt you can find a worthwhile way to factor news such as FDA announcements into your system. Increase in implied vols would be your giveaway.
Good luck
What's done is done. If you like higher risk swing trades, as I do, take a look at DDSS. It should make a move in 2-3 weeks. No options available on this one. PPS is 5.90 with limited downside IMO. Do your own DD of course.
Rally you should not jump to any conclusions. This guy is a STOCK trader as evidence by his 800 share bet on NFLD. SInce he uses stock I made the suggestion that he add a put hedge for the riskier bio-tech plays.
You are suggesting that he do reverse calendars and disucss greek terms he is not familiar with when he made it clear he knows very little about options.
So you need to put the advice i the context it is being given before making a blanket recommendation that is inapprioriate.
He did not seek option advice here, he made a general stock comment and I offered a hedge since he uses stock. This was not an option post but a stock trading post.
You are suggesting that he do reverse calendars and disucss greek terms he is not familiar with when he made it clear he knows very little about options.
So you need to put the advice i the context it is being given before making a blanket recommendation that is inapprioriate.
He did not seek option advice here, he made a general stock comment and I offered a hedge since he uses stock. This was not an option post but a stock trading post.