My option trades

Quote from danshirley:



Trading IS a dangerous game and self doubt is hard on the stomach... and for some people, just like in boxing, takes them out of the game.

So I won't continue the argument... it's obviously pointless.

Viel Gluck in your trading... I have better things to do.

:-)
More...

Obviously if it was just a matter of having a hard stomach and no self doubt i would be rich already.. btw i love the way you recieve comments.. its almost as if you are acting like your cool and know everything.. hahah
 
I don't know if you are refering your question to me or Danshirley.
I don't think he is a wild man. He is trying to be conservative in his trades. I just don't like that so many of his bullish spreads are trading at or near their all time highs when he initiates them. If you like a stock, why wait until it has already had a run, before you consider it for an investment.
And I don't like that so many spreads are such high priced stocks, as they they are difficult to consider buying. They leave you without a potential plan "B" during difficult times...... other than close for a loss.
If your question was refered to me, then simply look up my trades posted on this thread to see how they are doing.
Currently, my $13 IGT is currently the only stock below it's strike. But at it's current price, it's still in the money making covered call range if it comes to that.
I'm currently able to, and happy to buy all my stocks..... if it should ever come to that.
 
"I don't see most of their competitors able to adapt to difficult market conditions as readily as they can"

How do you know that? Any data? any Reference?? Personal experience?? Dreams???

"You must be willing to risk considerably more cash via the spread, if you desire to earn a similar dollar amount, per similar unit of time and strike".

How do you.... never mind I demonstrated with data that that was untrue.

"Those people don't care about any of the above. They just jump on the next hot stock that has "already" moved up."

How do you know that? Any data? any Reference??... Can you name some people we know?? Who are 'those people' ??

"I think the spread trader is more likely to earn less money during good times, and suffer a greater financial loss during difficult times."

How do you know that? Any data? any Reference?? Any Example??

"I think being a so-called protected spread trader, encourages many investors to take risks they should not take.
Both in price selection, and in the amount of cash put at risk if the price drops. Since they can't buy all their stocks, they usually must close for a loss."

How do you know that? Any data? any Reference??

<You seem to be saying here that it's better to use an inferior strategy because it will scare the trader into being more careful...???>
"most spread traders will use the saved cash for doing yet another spread, on another stock."

How do you know that? Any data? any Reference?? Did you conduct a poll??

"The spread trader, who was not even on margin, can not risk waiting for recovery, can not buy most of his stocks, and MUST close at least 2/3 of his trades for potentially massive losses"

Any data any references??

The answer to the repeated question... any data any reference... would appear to be no.... which makes your post nothing but hot air.

BTW: cdcaveman: your posts add nothing to this forum and make you seem like an idiot... which I'm sure you're not :-)
 
<<< The answer to the repeated question... any data any reference... would appear to be no.... which makes your post nothing but hot air. >>>

The answer to most of your questions are.... "it's common sense".
Do you seriously believe most spread traders only use about 1/3 of their cash, setting aside 2/3 just in case they want to buy most or all of their stocks?
If so, then whatever their annualized % return is on their spread trades, they should then reduce their actual "year end expectations" by about 2/3, since they are only using about 1/3 of their cash.
All those successful 15% annualized returns through the year, are NOT going to result in a 15% annualized return at year end, if you are only using 1/3 or 1/2 your cash during the year.
Do you seriously believe most spread traders try to avoid that situation, by only doing spreads on low priced or single digit stocks?
You sure don't.
Common sense is my "reference point".
Just because what i say does not apply to 100% of the spread traders, doesn't mean it's probably not true for the majority.
 
common sense without data = hot air

I don't follow what you are talking about with the 1/3 etc. My %'s are based on a cash account which requires 100% margin as security. There is no need to put aside 2/3 of your money because, with a spread, you do not need to buy the stock no matter what happens... the margin on the spread is your max loss.

And what does that have to do with anything anyway?? That's the first we've heard that outlier.

You seem to be mixing apples with oranges.
 
<<< I don't follow what you are talking about with the 1/3 etc. My %'s are based on a cash account which requires 100% margin as security. There is no need to put aside 2/3 of your money because, with a spread, you do not need to buy the stock no matter what happens... the margin on the spread is your max loss.
And what does that have to do with anything anyway?? >>>

You are the perfect example of the spread trader I have been talking about and trying to warn.
You have absolutely no idea of the risk you are putting yourself in.

But it's now getting late and i have other things to do, so I will pick up the discussion tomorrow.
I STRONGLY suggest you go back and read my posts over the past few weeks, as they pertain to doing spreads.
Spreads can be a good strategy if you are disciplined and smart about doing them.
But they can also wipe out most or all of your account quicker than you can imagine, if you are not disciplined and smart about doing them,... as they can give investors a FALSE sense of security.
And you are the perfect example of a spread investor with that FALSE sense of security.
Tomorrow.
 
Lets just take my last trade as posted:

http://finance.yahoo.com/news/p-rai...-222004906.html

http://www.reuters.com/article/2012...tionNews&rpc=43

http://finance.yahoo.com/news/modes...-161445912.html

http://finance.yahoo.com/q/ks?s=UTX+Key+Statistics

http://investing.money.msn.com/inve...ents?symbol=UTX

http://finance.yahoo.com/q/bc?t=5y&...&ql=1&c=^GSPC

http://finance.yahoo.com/q/bc?s=UTX...l=on&z=l&q=l&c=

Trade:
Feb 55/50 bull put spread for a net credit of $32
Yield = 32/468 = 6.8% in 201 days or 12.4% annualized
Prob = 97%
Expectation = .97(32) - .01(468) - .02(234) = 31.04 - 9.36 - 4.68 = 17

The margin required for a cash account on this 5 point spread is $500 per unit minus the $32 received in premiums or $468. This is both the max loss and the margin required.

Where is this extra risk you are talking about??

On the table that started this discussion:

.................Trade 1..........Trade 2.......Trade 3
Premium........$55................$75..............$35
Cash Req......1645..............1425..............365
Yield.............3.34%...........5.26%...........9.6%
Days...............78...............169................78
Ann..............15.6%...........11.36%..........45%
Prob................79%.............80.6%..........79%
Prob*Ann........12.3..............9.15...........35.6
Expectation.......NA...............NA............-14.23

For Trade 3 which is a 4 point spread the margin required is $400 - $35 = $365. Again this is both the margin required for a cash account and the maximum risk. The $35/365 = the 9.6% return in 78 days or 45% annualized.

Again Where is this extra risk you are talking about that would require setting aside 2/3 of the account??

Please let me know so I can tell my broker because he is grossly underestimating the risk on my account.

:-)

Seriously:
Either you are bluffing or you don't know how spreads work or (i suspect) both. If you don't know how spreads work then your predilection for naked short puts is understandable.

BTW: Arrogance and condescention are not substitutions for knowledge.

You are fooling no one on this forum I assure you.
 
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