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Mistruths about Options
- Thread starter aphexcoil
- Start date
Originally posted by aphexcoil
Ahhh fuck it, everything I do is apparently wrong to someone.
I'll just learn through experience.
Right or wrong isn't the issue.
The issue is can what you are doing make money over a thousand trades; given your resources and cost basis.
And, produce a enough income to make you happy.
Contrary to poplar opinion; in the end it is about the money, not the intellectual pursuit ...
Originally posted by aphexcoil
There seems to be a lot of mistruths floating around about options, in my opinion. This probably stems from sheer ignorance about how they work. EliteTrader should have FAQ, but here are some of my opinions about options. Feel free to jump in.
First of all, places like Motley Fool and other sources say that options are generally unprofitable -- especially for those who purchase them because of the wasting time value asset of the option.
Well, I think they are wrong. Options have something called "Delta" that determines how much they move in response to a move in the underlying commodity price. "Gamma" measures how much Delta changes, but I'll just keep it simple for now.
Let's say you don't have enough money to daytrade because of this stupid rule by the SEC meant to protect people with much more money than you have. Let's also assume that, right now, you expect us to retest lows within the next month or two.
You could purchase an ITM $25 November QQQ put that has a higher Delta than a OTM option. This currently costs about $1.95 (you could probably get it for $1.90 -- I have never hit the bid or ask on a QQQ option yet always get a fill). Now, you are paying about 80 cents in pure time premium on this option, the rest is in the money.
You could then do one of two things. If you are REALLY bearish on the one month outlook on QQQ, you could just stand pat on that option and wait. If, however, you are only moderately bearish, you could sell perhaps a NOV QQQ $22 PUT for .50 cents.
What this does is partially finance your time-premium of the higher strike put. In essence, you are cutting the ability for your profits to run in exchange for reduced risk on your initial capital.
I personally think this run-up is a retracement up from a stronger trend down -- but that's just my opinion and not based on anything but a mere hunch.
"Well, I think they are wrong."
Try proving them wrong. You have an opinion on everything, but it is based in theory---not practice.
When you can prove your theory, and make money trading options consistently, then perhaps your ideas will have some merit.
Until that time, once again you present to the traders here that you are nothing but a paper boy.
Aphie
Theres nothing wrong with throwing out your opinions and theories on this board. Thats what boards are for, imo. However, as your have seen, one opinion invites another. I think that controlling your temper is absolutely essential in trading and this is a good place to practice. I used to lose my temper all the time but very seldom do it anymore except when I see a post by that goddam friggin stupid ass so and so. You know who Im talking about you innane, ignorant, flippant, asshole...grrrr, arrrghh,
Theres nothing wrong with throwing out your opinions and theories on this board. Thats what boards are for, imo. However, as your have seen, one opinion invites another. I think that controlling your temper is absolutely essential in trading and this is a good place to practice. I used to lose my temper all the time but very seldom do it anymore except when I see a post by that goddam friggin stupid ass so and so. You know who Im talking about you innane, ignorant, flippant, asshole...grrrr, arrrghh,
If you ever really do develop any insights about options trading in one, two or three years from now, you are going to find some of these posts that you just wrote and laugh at them (or even worse-cringe)...Somehow you imagine that you have developed some form of "insight" into options trading, but this is not insight, this is just about the mid-term exam for Options 101...
I told you not to trade options the other day in a post.
I traded my first option back in 1975. In 1978 I was trading a large amount of money for the firm I worked for at the time in the options market. My guess is that I've made more option trades than any 100 traders combined.
But hey, what do I know? Or worse, what do I know that you don't know?
OldTrader
I traded my first option back in 1975. In 1978 I was trading a large amount of money for the firm I worked for at the time in the options market. My guess is that I've made more option trades than any 100 traders combined.
But hey, what do I know? Or worse, what do I know that you don't know?
OldTrader
Originally posted by OldTrader
I told you not to trade options the other day in a post.
I traded my first option back in 1975. In 1978 I was trading a large amount of money for the firm I worked for at the time in the options market. My guess is that I've made more option trades than any 100 traders combined.
But hey, what do I know? Or worse, what do I know that you don't know?
OldTrader
How old are you?