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Margin vs. options time decay
- Thread starter crgarcia
- Start date
Quote from TraderMojo:
The only statistics I referred to was that mentioned earlier in the thread.
If you want to debunk it you can do so yourself using your built in black box.
Just because the information is on a website does not mean it has any credibility. Even if it is a financial site, or rather, especially if it is a financial website.
Having said that, I hope the CBOE have some credibility in this area:
http://options2.registeredrep.com/myths/
If that wasn't definitive enough for you, maybe Lawrence McMillan has enough credibility for you:
http://www.traders.com/Documentation/FEEDbk_docs/Archive/012001/Abstracts_new/McMillan/McMillan.html
Lies, damned lies and statistics.
Thanks TraderMojo. With due respect the following article,
http://options2.registeredrep.com/myths/
does not show,
a. The name of the person who wrote the article.
b. The article does not mention any research carried out.
I would rather see hard evidence backed with real research. Cheers.
Derivman
Quote from Derivman:
Thanks TraderMojo. With due respect the following article,
http://options2.registeredrep.com/myths/
does not show,
a. The name of the person who wrote the article.
b. The article does not mention any research carried out.
I would rather see hard evidence backed with real research. Cheers.
Derivman
You're right, I'd be skeptical about anything the Chicago Board Options Exchange has to say about options - they are not likely to know what they are talking about and probably don't have very good access to data to base their judgements on.
Why don't you show me the hard evidence backed with real research that you have? After all, that is what you've been working up to.
Quote from crgarcia:
If you buy options, buy them on margin, preferably portfolio margin.
Options can only be purchased with cash, so no buying options on margin. I believe this is an SEC reg. Of course, if you have a portfolio of stocks, you can margin against them and hold the options in cash.
ROFL!
Derivman is a ridiculous troll. I suggest you walk away from this thread and don't look back, lest ye be turned to salt. It is perhaps unfortunate for the OP, but now that Derivman has glommed onto the "90% expire" sound bite, he will run it and this thread into the ground. Just move along and enjoy the better things in life.
Derivman is a ridiculous troll. I suggest you walk away from this thread and don't look back, lest ye be turned to salt. It is perhaps unfortunate for the OP, but now that Derivman has glommed onto the "90% expire" sound bite, he will run it and this thread into the ground. Just move along and enjoy the better things in life.
Quote from TraderMojo:
You're right, I'd be skeptical about anything the Chicago Board Options Exchange has to say about options
Quote from jeffm:
ROFL!
Derivman is a ridiculous troll.
I think everyone is aware that Derivman is in fact the same troll that got banned at the weekend who went by the aliases CYOF and theht.
I was however curious to see what hard evidence he was going to come up with to refute the links I posted when his very own "expert source" that he is championing on the other thread also debunks the 90% expiring worthless myth:
http://www.optionsnewsletter.com/expert2.asp
Unfortunately, this expert then goes on to say a lot of nonsense with regards to options not being a zero-sum game.
I am not going to post in this thread any more as I can see that I am not welcome here. I apologise if my simple basic questions have offended anyone but as I mentioned previously some of us newbies take our trading education seriously. I know some might find that hard to believe but that is their own choice.Cheers.
Derivman
Derivman
I will leave you with these links to consider as I have just posted them on another thread. You may find them interesting and if you decide to partake in the discussion on the other thread please refrain from going off topic. I have posted the links here as they are very relavant to the topic of this thread. Your comments and views on these links will be greatly appreciated and also appreciated by other newbies that visit here as well, I hope. Cheers.
Derivman
http://www.trade2win.com/knowledge/articles/general_articles/the-cash-cow/?r
http://investrio.investopedia.com/articles/optioninvestor/03/100103.asp
http://www.optionsxpress.com/educate/investing101/players.aspx?sessionid=
Derivman
http://www.trade2win.com/knowledge/articles/general_articles/the-cash-cow/?r
http://investrio.investopedia.com/articles/optioninvestor/03/100103.asp
http://www.optionsxpress.com/educate/investing101/players.aspx?sessionid=
i applyied for portfolio margin under IB
will they have the same margin requirement for ES and SPX option sellers ?
do they have interexchange margin ? like short a SPX call covered with an ES long ?
will they have the same margin requirement for ES and SPX option sellers ?
do they have interexchange margin ? like short a SPX call covered with an ES long ?
Quote from crgarcia:
Margin at 9% equals paying 0.025% per day.
July 149 SPY Calls Ask: $4.40
have an theta (time decay) of: -0.031
This equals losing 0.70% per day, 28 times margin.
Which means:
Options writers have an edge over buyers.
If you buy options, buy them on margin, preferably portfolio margin. You get more leverage, losing less as time passes.
It's not surprising 90% of options expire worthless.
Quote from jeffm:
ROFL!
"90% expire" sound bite
... Anyone using that sound bite immediately fails the financial markets IQ test. No further testing required. "Hey, I bought car insurance, and 90% of years, I didn't total my car!" "And I bought homeowners insurance, and 90% of years my house didn't burn down!" "I want a refund!"