My option trades for the past 6 months, feel free to ridicule, or offer guidance

[Johno]

Quote from OddTrader:

A problem is too many sellers and too little buyers would artificially lift many options prices to be higher than normally needed.

Higher options prices would discourage not only potential buyers for speculation but also buyers for hedging. Sellers competing each other would make the premium up to a higher and higher level.

The overall equity market would be forced lower because that is the only way to make money for the professionals.

Trading options can be done with very limited knowledge in options, cf Korean options market that would make prices of options very cheap to beneficial to all market players.

Basically I think the opposite is true on all pretty well all counts. Also overall market volitility, as well as supply and demand dictates the price of options and a bear move will tend to increase the cost of the options whilst a bull move will normally reduce the cost of the options, these are general comments.

Regards

Johno

 

[dagnyt]

Quote from Johno:

I'm not in the arena to compete, just to win! I actually prefer the percentages as they are, as less competition best suits my purposes! Perhaps this logic also explains the apparent absence of options buyers on this and other forums

Regards

Johno

Unless you routinely trade several thousand contracts per trade, you needed be concerned with competition.

Mark

 

[Johno]

Quote from dagnyt:

Unless you routinely trade several thousand contracts per trade, you needed be concerned with competition.

Mark

No I don't, but rather making the observation that more competition would have the potential to push prices up.

Regards

Johno

 

[OddTrader]

Quote from thebubs:


Everyone seems to feel I should'nt be buying options b/c I will be wiped out (based on my last to posts), I'm not investing alot of money as seen above and enjoy it,

Would you mind to share a bit of your risk/ money management rules/ approach?

Do you set target price to take profit individually?

 

[Johno]

Quote from OddTrader:

The main reason you live in Geelong?

No, my wife is a country girl who didn't want to live in the city so we compomised, me I lived in Alphington down by the river with the wealty professional people, tree lined streets merc's ect. My children still haven't forgiven me for moving here!

Regards

Johno

 

[OddTrader]

Quote from Johno:

No, my wife is a country girl who didn't want to live in the city so we compomised, me I lived in Alphington down by the river with the wealty professional people, tree lined streets merc's ect. My children still haven't forgiven me for moving here!

Regards

Johno

Nice!

 

[atticus]

Quote from OddTrader:

Should I say every options buyer is also a seller of options of basically the equal amount of options bought earlier.

Ugh.

 

[thebubs]

Would you mind to share a bit of your risk/ money management rules/ approach?

Do you set target price to take profit individually?

Nothing set in stone changes option per option. Basic approach is buy a call that in my reaserch seems undervalued.
ie. the sock has moved 10% either direction a few times in the past 30-60days, and the option call or put that is 10% out from current strike is priced low in relation to that. Ideally I want to buy options at least 60 days out, although sometimes will do 30 or even less if there is a near term event that may cause a move.
As far as price and I know I will be mocked for this I like 10-40c to me that means they are out of favour, and I like options with LOW volume (not alot of experts in the pool).
As far as risk money management- I put 1000 in account and bought with that, have taken out 2000 from account thus far, (playing with houses money for now-mock again).
My game plan for closing position is if I can sell 1/3 of position to break even on intial purchase then do that, let the other 2/3 ride ,if not moving my direction 10-14 days out from expiration sell the rest (as they quickly go to $0-the churn if you will) after that- so far have been lucky/succesful with that approach, but looking for others, recently started toying with calender calls. Biggest single bet thus far is $350 on an option (vertical call)- not playing with alot of money

 

[dagnyt]

Quote from thebubs:

I know I will be mocked for this I like 10-40c to me that means they are out of favour, and I like options with LOW volume (not alot of experts in the pool).

As far as risk money management- I put 1000 in account and bought with that, have taken out 2000 from account thus far, (playing with houses money for now-mock again).

No mocking. Just observations:

10 to 40 cents does not mean they are 'out of favor.' it merely means the price of the option is 10 to 40 cents.

You are not playing with the house's money. It is your money. You earned it. Treat it kindly and it will remain yours.

When you get (or used to get) a paycheck, is that the company's money or your money? It's yours - exactly like trading profits are yours.

Good trading.

Mark

 

[dmo]

Quote from dagnyt:



You are not playing with the house's money. It is your money. You earned it. Treat it kindly and it will remain yours.

This is a great point and failing to heed it is one of the most common reasons for loss.

It's tempting once you've made a profit to let your guard down, lower your standards, have a little fun with that money, take a chance you wouldn't otherwise have taken.

BIG MISTAKE! Much better to continue trading with the same unwavering discipline you used to get that money in the first place. Solid, steady profits are built inch by inch, with uncompromising discipline at every step.