Made money with straight calls or puts?
- Thread starter the13th
- Start date
My biggest single winner is a straight call purchase (BKS for earnings a while back).
Some stats out of my portfolio (for whatever its worth).
I've traded 307 positions so far this year (all options based). Position means "one or more legs which was not entirely closed out. ie. if I have a long call, then later sell 2 calls against it, that's still one position. However, if I did so, that would become a "spread" position, rather than a long-only position)
Long only positions:
I win 29%. My average winner is 300% my average loser.
Spread positions:
I win 41%. My average winner is 200% my average loser.
Short only positions:
I win 86%. My average winner is 80% my average loser.
In general, I only enter long-only positions if:
1) It's earnings related and I expect a pop
2a) It's too far from expiration to put a good spread together
-or-
2b) I'm pretty sure I'm right
I always prefer spreads over straight long-only positions.
Some stats out of my portfolio (for whatever its worth).
I've traded 307 positions so far this year (all options based). Position means "one or more legs which was not entirely closed out. ie. if I have a long call, then later sell 2 calls against it, that's still one position. However, if I did so, that would become a "spread" position, rather than a long-only position)
Long only positions:
I win 29%. My average winner is 300% my average loser.
Spread positions:
I win 41%. My average winner is 200% my average loser.
Short only positions:
I win 86%. My average winner is 80% my average loser.
In general, I only enter long-only positions if:
1) It's earnings related and I expect a pop
2a) It's too far from expiration to put a good spread together
-or-
2b) I'm pretty sure I'm right
I always prefer spreads over straight long-only positions.
Two strategies to look into for trading options outright;
Use the QQQQs and NQ to figure out what the opening bid should be for QQQQ options at 9:30am. Often you will be able to buy at the bid and sell at the ask within the first five minutes or even less time.
Do a little TA for ZN and find S/R level, fibs often work well. If ZN moves up to a resistance level, buy a put. If it moves down, well buy a call.
While I do trade like this as an "outright" strategy, often I trade like this to enter into spreads, or use the underlying to profit from a more liquid market.
Use the QQQQs and NQ to figure out what the opening bid should be for QQQQ options at 9:30am. Often you will be able to buy at the bid and sell at the ask within the first five minutes or even less time.
Do a little TA for ZN and find S/R level, fibs often work well. If ZN moves up to a resistance level, buy a put. If it moves down, well buy a call.
While I do trade like this as an "outright" strategy, often I trade like this to enter into spreads, or use the underlying to profit from a more liquid market.
I really dun see why it's that hard to play straight calls or puts. Ok if we can play stocks using Technical Analysis and stuff can we do the same with options? Isn't it the same? Say we see a stock hit a support and it shows that it's bouncing back, can't we go in with a straight call and then place a stop at the same time? If we get stopped put we lose 20%. If it goes up we trail the thing. So I mean theoretically it should be ok if you can catch the direction of the move no? I mean I have always belived that the most important thing is money management. If I make sure I always place a stop, does it not mean that I would cut my losses and when the stock runs I would milk it, meaning for one win of 100% I can cover 4 losses.
When you buy straight calls/puts you need to get exactly right 4 things:
1. Direction
2. Magnitude of the move
3. Timing
4. Volatility (with this one you need to be at least not wrong)
That is, even if you get direction right you can still lose money if you miss on volatility and timing, for example. So it is not the same as simply trading the stock or the futures contract.
I have a reasonable success with straight long calls/puts, but the equity swings are big and it usually takes a lot of losers to hit one winner.
Futures, or stock if you prefer, are the better instruments for directional plays. No volatility, no complications, just buy or sell.
MTE,
I agree.......... but what bothers me is the price data flow. For example the Emini futures is very snappy and fast but the OEX straight options are nice and slow. So, I don't get emotional as much with the OEX and this helps a lot with perspective and I am not as fatigued after a couple of trades. So I am hunting for that smoother, slower type trading.
Suggestions appreciated.
I agree.......... but what bothers me is the price data flow. For example the Emini futures is very snappy and fast but the OEX straight options are nice and slow. So, I don't get emotional as much with the OEX and this helps a lot with perspective and I am not as fatigued after a couple of trades. So I am hunting for that smoother, slower type trading.
Suggestions appreciated.
If people could consistently make money of straight long positions, there wouldnt be all these other more complex trading strategies.
I have never "won" on a simple long position. They were negligible losses (approx. 50% loss of less than 2% of my total account/trade) because I was never willing to risk significant cash on them.
Just go with spreads
I have never "won" on a simple long position. They were negligible losses (approx. 50% loss of less than 2% of my total account/trade) because I was never willing to risk significant cash on them.
Just go with spreads