It's my understanding some of the popular,large cap stocks have lots of Options available to trade intraday and have become popular to do just that. However the only advantage I've seen is the insane leverage some brokers offer on those Options. Which can be dangerous for newbie traders who are seduced by that leverage. Am I missing some other edge or advantage to trading Options intraday as opposed to just using a plain old Stop?
My Daytrading Plan
- Thread starter Quanto
- Start date
OK the put protects the downside for the original buy.
The price is falling and you are day trading long only, you are probably going to have several trades stop out and end up with a loss for the day.
At the end of the day you take your positions flat.
You are now holding only a put. Is that correct?
Because I see nothing on entries and exits - which pretty much is what you need to nail down as a directional day trader.
Yes.
We have to differentiate:
1) The protective Put protects only against a falling of the stock below the strike (ie. $10).
2) The protective Put does not protect against losses from daytrading the stock.
(For example current spot is 11 and a new stock trade is opened, stock falls to 10.7250 and gets stopped...)
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ummm... the put option does not move 1:1 with the price of the stock.
Based on your description of your plan, maintaining the original put for multiple days is a completely different position that does not even "protect" day-trading the underlying. It is not a hedge. What is the point of this put?... It is a standalone position that does not move 1:1 and incurs decay.
"We" don't have to do anything. YOU have to rewire.
At expiration the Put option has the same value the stock has lost from its origin ($10).
Example: stock at expiry is $9.50. This means the Put option is worth $0.50. So, it very well "moves 1:1".
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Now you partial admit you were wrong, it is a good start
Your basic premise was not correct. *Stock has static delta* and *stock options has dynamic delta*
I tried to point that out in my first reply to this thread.
So, now you admit the stock options put not protect you from daytrading losses. But you still want to buy it! and keep the put for a week!
So, when do you admit spreads, commisions matters and that your *YOUR BASIC PREMISE WAS NOT CORRECT.
And yes I admit that English is not my native language, I am so sorry
Your basic premise was not correct. *Stock has static delta* and *stock options has dynamic delta*
I tried to point that out in my first reply to this thread.
So, now you admit the stock options put not protect you from daytrading losses. But you still want to buy it! and keep the put for a week!
So, when do you admit spreads, commisions matters and that your *YOUR BASIC PREMISE WAS NOT CORRECT.
And yes I admit that English is not my native language, I am so sorry
At expiry AND ITM. Otherwise ZER-O, even before expiry possible!!